HSBC considers sale of rail division

by Gill Montia

Story link: HSBC considers sale of rail division

HSBC is reported to be in talks over the sale of HSBC Rail, its train-leasing division.

HSBC Rail provides investment and financing for the passenger and freight rail industry both in the UK and overseas.

It is estimated to be worth £1.5 billion and the bank may offer some finance to potential buyers who would otherwise struggle to raise credit.

Last autumn, RBS put Angel Trains (the UK’s biggest rolling-stock company) up for sale for around £4 billion, and it is understood that HSBC is talking to the infrastructure and private-equity firms firms that have already shown an interest in Angel.

The bidders for Angel include AIG, Babcock & Brown, Macquarie and private-equity firm, Terra Firma.

However, the sale of Angel Trains is taking longer than expected and the preferred bidder, Babcock & Brown, is rumoured to be finding it difficult to raise funds.

Analysts expect more leading UK banks to dispose of their non-core assets as a means of offsetting the writedowns that have resulted from the US sub-prime mortgage crisis.