More expensive US dollar liquidity and new regulatory rules have forced Crédit Agricole CIB to shed aviation loans from its books and alter the type of funding it has on offer.
"It is now the policy of the bank that if we can distribute to our partners, we should, so we can undertake more business going forward, said José Abramovici, global head of asset finance group at Crédit Agricole CIB, during the Ascend Aviation Finance Forum in Tokyo last week.
The French bank has arranged $2.3 billion of aircraft financings on its balance sheet, excluding debt capital markets transactions, in the first six months of 2013. However, the bank has kept $290 million of this amount "which is very modest compared with previous years," he says.
"We are doing the same volume business, on a commercial loan basis, even though we are holding less on our books," says Abramovici. "Having said that, we plan to book more in the second half of the year."
During the past few years, insurers, corporate affiliates, asset managers and non-aviation regional banks have become buyers of European aviation exposure being offered by banks looking to free up their balance sheets in the face of tighter regulation.
Also forcing change at Crédit Agricole CIB has been tougher access to the greenback, the dominant currency in aviation finance, as US investors have pulled back on lending to European banks following the financial crisis. This is has resulted in fewer export credit deals, he says.
"We are not feeding much of our books with new export credit transactions anymore, as we have arranged export credit transactions to be distributed to some banks and/or capital markets."
The change has been quick.
Abramovici admits the bank used to do "a lot of export credit transactions at attractive margins" post-Lehman Brothers.
"I would say 2009 and 2010 were our best years for export credit deals on the balance sheet because US banks were a bit down, and the European banks were not yet affected by the US dollar liquidity crisis," he says, adding, "We were like kids in a candy store."
However, following this dip in activity, Credit Agricole has set up a covered bond programme, enhanced by export credit collateral, and is again seeking high quality 100% guaranteed export credits, he says.
Credit Agricole sold $1.9 billion of its aviation exposure at a price of 99.5% between mid-2011 and end of 2012. "That is the highest sale price of any asset, or any product line at the bank, which is good for us in aviation."