GE Capital Enters Talks to Unload European Financing Businesses

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 [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

December 03, 2015 07:35 ET (12:35 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.