GE said the deal with Wells Fargo includes GE Capital's commercial lending
New York - AFP
General Electric said Tuesday that it would sell financing assets valued at $32 billion to US bank Wells Fargo as the conglomerate moves to focus on its core industrial operations.
GE said the deal with Wells Fargo includes GE Capital's commercial lending and leasing businesses and nearly completes its program to pare back the finance unit to where it mainly serves the company's industrial businesses.
"This is our largest transaction to date and a critical step in our efforts to reduce the size of GE Capital," said Keith Sherin, GE Capital chairman and chief executive.
The Fairfield, Connecticut-based company did not say how much Wells Fargo is paying for the assets. The transaction was expected to close in the first quarter of next year.
The deal includes GE Capital's global Commercial Distribution Finance and Vendor Finance platforms, employing about 3,000 people. It also includes part of the Corporate Finance business, which serves companies across the United States and Canada.
"Since our April 10 announcement, we've signed more than $126 billion in transactions, which is over 60 percent of our overall plan, and are on track to become less than 10 percent of GE's earnings as the company transitions to a more focused digital industrial company," Sherin said.
"This acquisition is an outstanding opportunity for Wells Fargo to deepen relationships and strengthen our presence in key commercial lending markets," said Tim Sloan, head of Wells Fargo Wholesale Banking, in a separate statement.
In September, Wells Fargo announced it would buy GE Capital's railcar services, without disclosing the terms of the transaction.
Sherin said that once the transactions have closed and GE Capital's retail finance business, Synchrony Financial, has been split off, GE Capital would seek removal from US regulators' list of systemically important financial institutions, which must hold extra capital because they are deemed "too big to fail" without wreaking havoc on the financial system.
Shares in Dow member GE edged up 0.3 percent to $28.17 in morning trade, while Wells Fargo was flat at $52.17.