GE Capital Enters Talks to Unload European Financing Businesses
December 03 2015 - 7:50AM
Dow Jones News
Continuing the dismantling of GE Capital, General Electric Co.
said Thursday it had entered into exclusive discussions to sell its
equipment and receivable finance businesses in France and Germany
to the French bank Banque Fé dé rative du Cré dit Mutuel.
Few details of the possible transaction were released, but the
deal would be valued at $1.3 billion. Any deal would be subject to
regulatory approvals.
The GE Capital European businesses being sold off provide
factoring and leasing products and services to commercial
customers, the company said. The France-based business controlled
assets totaling $6.5 billion while the German arm held $3.8
billion.
"We're pleased to sign this [memorandum of understanding]with
BFCM for a significant piece of our European business," said Keith
Sherin, GE Capital chairman and CEO.
"As we continue to execute on our strategy to significantly
reduce the size of GE Capital, we are excited that our longtime
partner for French factoring would take forward our CLL business in
France and Germany."
Under the watchful eye of the Fed, GE has been dismantling what
was effectively the country's seventh-largest bank as the company
has been unwinding GE Capital.
In October GE took a big step toward completing the process when
it said it would sell the bulk of its U.S. commercial lending and
leasing business to Wells Fargo & Co., an operation that
includes about $32 billion of assets and 3,000 employees.
Earlier deals also include the sale of a package of real-estate
investments to Blackstone Group LP and Wells Fargo for about $26
billion. GE unloaded its private-equity lending business to a
Canadian pension fund for $12 billion. And it has cut a $9 billion
deal to sell a unit that lends to hospitals and nursing homes to
Capital One Financial Corp.
The unwinding of GE Capital shows the impact Washington's
toughened postcrisis approach to banking is having on the formerly
freewheeling world of finance.
GE Capital made loans funded by debt, including money borrowed
via the short-term IOUs known as commercial paper. After that
market froze in the financial crisis, the government stepped in
with a rescue but resolved not to see a repeat of such a mess.
Though the decision to wind down the business owes a lot to
investor pressure, the closing of the easy regulatory niche that
had made its lending so attractive sealed the deal. GE said the new
federal rules left its banking business earning lower returns than
the industrial side.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
December 03, 2015 07:35 ET (12:35 GMT)
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