Close Aviation Finance: A unique UK lender

While many banks are seeking to re-brand, Close Brothers, the independent merchant bank, is happy with its reputation as a conservative lender. The same is true for its experienced and active aviation finance team.

Our guide

While many banks are seeking to re-brand themselves Close Brothers, the independent merchant bank, is happy with its reputation as a conservative lender. Listed on the London Stock Exchange it did not rely on securitization to finance the bank, instead borrowing with long-term bonds.

This straightforward, prudent, approach meant that it did not suffer as much in the credit crunch as many of its competitors and it has been able to grow boths the bank’s total lending and aircraft loan book during the last three years. Close has turned to the use of retail bank deposits now that the interbank market has dried up.

Close Brother’s Aviation Finance team has a similar no-nonsense approach. “We have over 30 years’ experience financing aircraft and helicopters so talk the language of aviation. We organize credit quickly; we understand aviation and do not ask irrelevant questions; we process transactions quickly and use in-house legal teams whenever possible,” says Richard Kearsey, managing director, Close Aviation Finance. “Above all, we close deals with the minimum amount of fuss.”

Close Aviation Finance focuses on UK borrowers and makes individual loans of up to $10 million. “We do break that rule occasionally – we do finance some aircraft in Europe and although we like to limit our loans to $10 million, we have recently broken that rule and lent up to $30 million,” says Kearsey. Close Aviation’s clients range from trainer aircraft for local flying schools up to mid-sized business jets. It considers Lombard, part of Royal Bank of Scotland, to be its biggest competitor.

The bank typically lends for up to five years (sticking with its parent’s prudent approach of always borrowing on longer terms than it lends out) and has several hundred aircraft in its portfolio at any one time. He says that the bank has only had to repossess three small aircraft in the last three years.

Close Aviation Finance says that most of its business comes from referrals from customers, brokers, managers and insurers. “The UK business jet market is like a small village and we are often looked at as a village elder,” says Kearsey. Close was a founding member of the British Business and General Aviation Association and is a member of the British Helicopter Association.

Kearsey has worked for the bank in aviation finance for 18 years and many of his colleagues have similar experience.

“We are a small bank with unrivalled levels of experience and expertise,” he adds. “We talk the language of aviation and are happy to be seen as conservative.”