Bank of America (BofA) and RBS Coutts
have recently launched businesses dedicated to financing assets for
ultra high net worth individuals (UHNW), indicating a shift back
into the exotic finance market.

Bank of America is currently focusing efforts
on its jet finance arm, particularly in jurisdictions where its
presence has been fairly limited, including Europe, the Middle
East, Africa and Asia-Pacific.

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In recent months, BofA signed a strategic
funding alliance with Avjet Corporation. Although based in
California, Avjet also has offices in Dublin and Nice.

 

BofA builds jet finance

Alex Badran, a seasoned corporate jet
financier, is spearheading this growth at BofA. Badran, who has 30
years’ experience in the sector, previously worked for Lombard, a
leasing subsidiary of RBS, Barclays and most recently at Cessna
Finance.

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A key part of his role, it is understood, will
be to provide UHNW clients of Merrill Lynch with access to jet
finance.

Another challenge is building-up the business
from a relatively small base. Until now non-US jet finance business
has been run out of the bank’s Frankfurt office by Toennies von
Limburg. The scale of this smaller operation contrasts with BofA’s
large US operation which makes up the bulk of the bank’s $7bn jet
finance portfolio.

Badran will also have to keep up with BofA’s
well-known pace of expansion. The jet finance business has been
growing rapidly ever since 2004, when the aviation finance unit of
BofA’s private banking arm merged with the bank’s Leasing Corporate
Aircraft Finance strategic business unit to form its new Corporate
Aircraft Finance Division.

In 2004, according to public records, BofA’s
jet finance arm had $4bn of assets on its books – compared to $7bn
today – and also 100 fewer clients than it has today.

 

RBS expands luxury business

RBS Coutts is another committed to increasing
its jet finance business.

Lombard, the asset finance subsidiary of RBS,
also wants to increase its jet finance offering to the private
banking clients of its parent and was recently given a mandate to
do this.

“The mandate allows Lombard to work with RBS
Wealth Management and Global Banking & Markets businesses in
certain jurisdictions where these customers are based,” the bank
said in a statement to Leasing Life, one of Private
Banker International’s  sister titles.

This move means its jet finance division is now
chasing deals worth up to £40m ($62m) each. Previously its market
ranged from very light jets to aircraft worth about £20m.

Citi Private Bank is one of the best-known
wealth managers to offer jet finance, with a specialist unit based
in New York.

SG Private Banking also has access to jet
finance through its equipment finance division.

Brendan
Malkin