Airbus Buys German Lender to Create In-house Bank
The Airbus Group, the European multinational aerospace and defence corporation, said that it plans to acquire Salzburg München Bank, a small German private lender, which it will develop into an in-house bank (IHB) providing loans to suppliers and other small-business partners.
The group, which is registered in the Netherlands and has its main manufacturing facility in Toulouse, France, was originally formed as the European Aeronautic Defence and Space Company (EADS) in 2000 through the merger of three companies. At the start of this year EADS was reorganised as Airbus Group with three main divisions: Airbus, Airbus Defence and Space and Airbus Helicopters.
Financial details of the deal were not disclosed. Salzburg München Bank, based in Munich, is a unit of Austrian financial group Raiffeisenverband Salzburg, which has about €6.5bn (US$8.9bn) in assets. The German bank unit, with assets of €350m focuses primarily on serving private banking clients in Bavaria and Austria, but also lends to small and mid-size businesses.
“Acquiring Salzburg München Bank provides us with a good platform to launch our company bank project,” said Harald Wilhelm, Airbus’s chief financial officer (CFO), adding that the purchase would also provide the group itself with increased financing flexibility. The group intends to close the deal ‘as early as possible’ this year, pending German regulatory approvals and will rename the bank Airbus Group Bank.
Plans for such an acquisition date back to the European sovereign debt crisis of 2010 when EADS, as it was then known, began examining options after lending was sharply curtailed to small and midsize businesses. Despite more recent signs of economic recovery in key European economies, lending remains subdued. Airbus is reliant on thousands of parts suppliers, many of them small and privately-owned.
Many other major European companies, including industrial group Siemens and car producers such as BMW, PSA Peugeot-Citroën and Volkswagen, have already set up their own banks in recent years. In addition to facilitating direct lending to suppliers, IHB’s also give companies the ability to borrow cash from the European Central Bank (ECB), at better rates than can be had in the corporate bond markets.
The new IHB could also provide Airbus with flexibility in aiding suppliers, some of whom have struggled to finance investments needed to keep pace as the planemaker increases output to record levels. Airbus acquired Germany’s PFW Aerospace in 2011 to keep the parts-maker in business.