Sumitomo Mitsui Financial Group Inc has agreed to acquire Royal Bank of Scotland Group Plc’s aviation division for about $7.3 billion, the news reports said.

The acquisition will allow the Japan’s second biggest bank by market value Sumitomo Mitsui and its partners to expand their business in Asia and other emerging markets.

The Japanese company had set up its aviation leasing unit with Sumitomo Corp in December 2008. The Japanese lender is also planning to purchase the assets of European banks to expand abroad.

Royal Bank of Scotland which has received the biggest bank bailout in the world is shutting units and is also cutting over 34,500 jobs.

RBS also plans to sell or close its cash equities, mergers advisory, corporate broking and equity capital market operations at a cost of about 3,500 jobs worldwide. Sumitomo Mitsui became the leading bidder after apprehensions rose that state-owned China Development Bank will struggle to gain the government approval for buying in a timely manner.

The proceeds from the deal will strengthen RBS’s core tier 1 capital position and reduce wholesale funding requirements. Barclays Plc’s Barclays capital unit and bankers from Sumitomo Mitsui’s Nikko unit are advising the Japanese bank on the deal along with Milbank Tweed Hadley & McCloy LLP.

Clifford LLP and Goldman Sachs Group Inc are advising Royal Bank of Scotland in this matter. Sumitomo plans to buy several hundered billion yen of assets being sold by European lenders.

Sumitomo Mistui Financial is the Japanese bank holding company set up by Sumitomo Mitsui Banking Corporation. The bank holds assets of around US$1.8 trillion and is one of the largest financial institutions in the world.