Mitsubishi UFJ Financial Group MUFG has entered into an agreement with DVB Bank SE to purchase the latter’s Aviation Finance division. Though the financial terms were not disclosed, the deal is expected to close in the second half of 2019.
The aviation financing business of Germany-based DVB Bank arranges and provides finance for aircraft such as narrowbody, widebody and other passenger and freighter aircraft. Also, it offers tailor-made financing solutions to clients.
Per the agreement, the entire client lending portfolio (nearly €5.6 billion as of June 2018) will be transferred to MUFG Bank and BOT Lease Co., Ltd. — MUFG Bank’s affiliate.
Further, the deal incorporates the acquisition of DVB’s Aviation Investment Management and Asset Management businesses that will be transferred to a newly established subsidiary of BOT Lease.
Masato Miyachi, Mitsubishi’s Senior Managing Corporate Executive, expects the company to benefit from the deal as he finds the aviation finance industry gaining steam. “This acquisition is expected to enhance our Global CIB Business platform in terms of higher returns, portfolio diversification and solution offering to our clients” he said.
In early February, Mitsubishi entered into a joint venture with Akamai Technologies AKAM to offer a new blockchain-based payment network — the Global Open Network, Inc.
Through this network, the companies seek to provide an extensive set of services, including support for existing payment-processing functions, micropayments, pay-per-use and other developing IoT-enabled payment transactions.
Mitsubishi seems focused on building its global presence through these strategic efforts. Also, Japan’s largest bank has placed aircraft financing as a key focus, per its medium-term management plan unveiled in fiscal 2018. Notably, its strong capital position supports such expansion strategies. However, net interest income continues to remain under pressure due to low domestic interest rates.
Over the past six months, the Zacks Rank #3 (Hold) stock has lost nearly 12% on the NYSE.
Stocks to Consider
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Stifel Financial Corporation SF has long-term earnings growth rate of 8% and a Zacks Rank #1.
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