General Electric Co. said a subsidiary will pay $1.7 billion to
Shinsei Bank Ltd. under an agreement related to interest payments
made by customers of a Japanese consumer-finance business that
General Electric Capital Corp. sold to the bank in 2008.
The U.S. industrial conglomerate said in a release Wednesday
that the agreement will reduce its fourth-quarter and full-year
2013 net earnings by $1 billion. The deal also will cut GE's net
earnings per diluted share by nine cents for those periods, the
company said.
GE said its operating earnings for the quarter--53 cents a
share--and the year remain unchanged. It added that the agreement
won't affect the company's first-quarter or full-year 2014
results.
GE said the agreement resolves obligations linked to the
reimbursement of Japan-based Shinsei for refunds of interest
payments in excess of the statutory rate--referred to by GE as
"grey zone" interest claims--that were made by customers of the
Japanese consumer-finance business.
The U.S. company said GECC will record an addition to reserves
in discontinued operations of $1 billion for 2013. Last month, the
conglomerate said its fourth-quarter net profit rose 4.8% as
revenue improved 3.1%.
GE said GECC and Shinsei, as part of the 2008 deal, agreed to a
loss-sharing arrangement for potential interest claims, with a
buyout option to end the obligation in the first quarter of this
year.
Shinsei bought GE's Japanese consumer-finance business for $5.4
billion in 2008, at a time when a freshly restructured Shinsei was
struggling to carve out a niche in the Japanese banking
industry.
Shares of GE were inactive premarket. The stock, which closed at
$25.27 Tuesday, is down 9.9% so far this year.
Michael Calia contributed to this article.
Write to Keith Collins at keith.collins@wsj.com