Japan’s SMFG logs $560 million loss on sale of US freight car leasing unit

By Makiko Yamazaki

TOKYO (Reuters) – Sumitomo Mitsui Financial Group (SMFG) said on Tuesday it would post an after-tax loss of $560 million from the sale of its U.S. freight car leasing unit as the Japanese lender embarks on a portfolio review for better capital efficiency.

Japan’s No. 2 banking group said in a statement it would sell the unit, SMBC Rail Services, to ITE Management, a U.S. investment firm targeting transportation and industrial assets. Financial details of the transaction were not disclosed.

SMBC Rail was originally Flagship Rail Services, which SMFG bought from a fund managed by Perella Weinberg Partners in a transaction valued at $1.1 billion in 2013.

A subsequent acquisition of American Railcar Leasing from Icahn Enterprises, for assets worth $2.2 billion, helped expand the company.

SMFG cited tighter regulations on banks and intensifying competition in the freight car leasing industry as reasons for the sale.

The sale will free up 380 billion yen ($2.5 billion) of risk-weighted assets off SMFG’s balance sheet, which the bank plans to reallocate to areas such as investment banking, sales and trading.

($1 = 150.6600 yen)

(Reporting by Makiko Yamazaki; Editing by Jan Harvey)