DUBAI: Cash-rich Asian and Middle Eastern lenders are taking a larger share of the $100bn global aircraft financing market as Western rivals step back due to the liquidity crunch and stricter regulations, a top executive at Airbus said.
European commercial banks, previously the primary funding source for airlines, have substantially cut their exposure to the aviation sector after the continent’s debt crisis, leaving a funding gap for fast-growing airlines in emerging markets, said Francois Collet, Vice-President for structured finance at Airbus .
“Some European lenders have halved their lending availability for the aviation sector,” Collet said in an interview in Dubai.
“They have tried to fill the gap by bringing in other regional and local banks and working together in syndicated deals. Traditional banks are now playing the role of arrangers,” he said.
French banks BNP Paribas, Societe Generale , Natixis and other European lenders said last year they would cut exposure to risky and dollar-denominated assets such as shipping and aircraft financing to meet tougher capital rules and shore up reserves.
They have given way to Asian banks like Development Bank of Japan (DBJ), Sumitomo Mitsui Financial Group Inc (SMFG) and Mitsubishi UFJ Financial Group Inc, South Korean and Chinese banks, as well as Middle Eastern lenders like National Bank of Abu Dhabi among others.
DBJ expects its global aircraft financing business to double in the three years through 2013.
“We see Southeast Asian banks developing expertise and there’s lot of interest from Japan and South Korea gaining an interest in the sector,” said Collet.
“They clearly want to grow outside of their region.”
Asian giants like Singapore Airlines, Malaysia’s low-cost carrier Air Asia, Japan’s All Nippon Airways and Indonesia Lion Air are among companies that have ordered planes worth billion of dollars to support growing passenger numbers.
Airbus has recently raised its 20-year jet demand forecast, saying the world needed to double its fleet to meet demand.
The planemaker says Middle East plane orders account for 8 percent of the planemaker’s total backlog as of end-August.