GE to Sell Commercial Lending, Leasing Businesses to Wells Fargo

General Electric Co. agreed on Tuesday to sell its commercial lending and leasing business—the largest remaining chunk of its U.S. financial services operations—to Wells Fargo & Co.

The sale, which includes about $32 billion of assets and 3,000 employees, is made up of GE Capital's global commercial distribution finance, North American vendor finance and corporate finance platforms. It is expected to be completed in the first quarter of next year. Financial terms weren't disclosed.

GE disclosed plans earlier this year to part ways with the bulk of GE Capital, the giant finance business that long accounted for around half the company's profits but whose risks have rattled investors and weighed on its stock.

With Tuesday's move, GE has sold off the guts of GE Capital's middle-market lending business. This is perhaps the most important milestone yet for the company in its exit from GE Capital, since selling this U.S. based commercial lending business will be key to applying to exit from supervision by the Federal Reserve. The remaining $5 billion sliver of franchise finance, which makes loans to acquire fast-food restaurants and other business franchises, is expected to be sold later this year.

Keith Sherin, GE Capital chairman and CEO, called Tuesday's plan "the largest transaction to date" in the company's bid to slim its operations.

GE Capital executives have labored since April to sell off pieces of the business, starting with those most likely to lose their value and their most valuable employees if they languished on the market, like the company's Antares unit, which lends to private-equity firms. But to achieve GE's goals of rapidly shrinking the lending business and finding a way out of the Fed's oversight, the deals team needed to find a buyer for its U.S. commercial lending and leasing business, the division sold to Wells on Tuesday.

GE Capital deal makers have raced to meet parent company executives' targets for striking deals. When GE announced its plans in April, the company pegged a goal of $90 billion in announced sales by year's end, then quickly raised that target to $100 billion or more. The company says it has now signed deals for more than $126 billion of the more than $200 billion in assets the company plans to sell. Focus will now turn to include more of GE Capital's overseas operations, which are expected to be sold off over the coming year.

Tim Sloan, head of wholesale banking at Wells Fargo, called the acquisition an "outstanding opportunity" for the lender to deepen relationships and strengthen its presence in key commercial lending markets.

Chairman and Chief Executive John Stumpf had said publicly there were possibilities for more work with GE following its commercial real-estate loan portfolio acquisition earlier this year. The bank acquired GE's railway leasing business in late September.

Write to Ted Mann at [e-mail], Emily Glazer at [e-mail] and Lisa Beilfuss at [e-mail]

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October 13, 2015 09:55 ET (13:55 GMT)

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