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(Bloomberg) — Deutsche Bank AG agreed to buy about €1.7 billion ($1.8 billion) in aviation loans from NordLB, which is exiting the sector to focus on areas such as renewable energy financing.
Deutsche Bank will start taking over the assets from the end of this month after prevailing in a bidding process, NordLB said in a statement on Monday that didn’t disclose a price for the deal. The seller, whose total aviation portfolio amounts to about €2.8 billion, will wind down the remaining €1.1 billion over time.
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Bloomberg reported in October that NordLB was considering options for its aviation financing portfolio, including a partial or full sale. One of Germany’s so-called Landesbanks, the lender had to be rescued in 2019 after it was hit by soured loans to the shipping industry. While the bank had been winding down its shipping portfolio, it maintained its business with the aviation sector.
The deal with Deutsche Bank is expected to close in the second half of 2024.
NordLB has been active in the aircraft financing business for over forty years. The current portfolio includes around 300 financed aircraft and engines.
In its latest annual report, NordLB warned that newly introduced aircraft models could put pressure on the residual value of existing planes with older technology. Unexpected extreme events, such as pandemics and international conflicts, can also significantly influence passenger air traffic and lead to challenging market developments, the lender added.
Helaba, another German Landesbank, said earlier this year it will stop signing new aviation financing business as it looks to reduce its sector portfolio, adding that expected returns are not attractive.
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