Jan. 12 (Bloomberg) -- Royal Bank of Scotland Group Plc favors selling its aircraft-leasing division to Sumitomo Mitsui Financial Group Inc., a person familiar with the process said.

Sumitomo Mitsui, Japan’s second-biggest bank by market value, and rival bidder China Development Bank Corp. offered about $7.3 billion to $7.5 billion for the unit, said the person, who declined to be identified because the talks are private. The Japanese lender is in the process of finalizing the draft of its offer, the person said. No decision on an agreement has been made.

RBS prefers Sumitomo Mitsui because of concerns about whether state-owned China Development Bank can get government approval for the purchase in a timely manner, the person said. The Chinese government previously blocked plans by China Development Bank, based in Beijing, to invest in Citigroup Inc. because of the U.S. lender’s mortgage-related losses, a person with knowledge of the matter said in January 2008.

Wells Fargo & Co. had also bid for the unit, according to people with familiar with the process. RBS, Britain’s largest publicly owned lender, has been seeking $7 billion to $8 billion for the division.

Yuk Min Hui, a spokeswoman for RBS in Hong Kong, declined to comment on the talks, as did a spokesman for Tokyo-based Sumitomo Mitsui who asked not to be identified. A spokesman for China Development Bank could not be reached for comment.

RBS has sold or wound down more than 150 billion pounds ($230 billion) of assets as it continues to shrink following a 45.5 billion-pound government bailout triggered by the financial crisis of 2008. A sale of the aviation unit for $7.5 billion would be one of the lender’s largest recent disposals.

Lessors buy planes and then lease them to airlines for monthly fees, seeking to profit from the residual value by selling aircraft after about 15 years. RBS’s aviation business is one of the biggest plane lessors after General Electric Co.’s Gecas and AIG’s International Lease Finance Corp.

RBS Chief Executive Officer Stephen Hester is reversing a decade of expansion under former CEO Fred Goodwin that included $140 billion of acquisitions and ended in 2008. Hester has cut more than 30,000 jobs and reduced the bank’s assets by about 1 trillion pounds since he took the helm that year.

RBS is planning to sell or close its equities and corporate finance units globally, shedding 3,500 jobs, the bank said today. The cash equities, equity research, corporate broking as well as mergers and acquisitions units may also be shut.

RBS is advising itself, alongside Goldman Sachs Group Inc. Sumitomo Mitsui is being advised by Barclays Plc, and China Development Bank is being advised by Lazard Ltd., the person with knowledge of the matter said.

--With assistance from Takako Taniguchi in Tokyo, Henry Sanderson in Beijing, Joe Brennan in Dublin, Zachary R. Mider in New York and Howard Mustoe in London. Editors: Philip Lagerkranser, Chris V. Nicholson.

Source: businessweek.com