Monday, 25 April 2016

General Electric Sells Another Business Segment

GE Capital Bank to sell its US online deposits to Goldman Sachs.

General Electric Company recently announced that it has finally succeeded in completing the sales of its United States online deposit platform of GE Capital Bank. This encompasses the transfer of all the US deposits of the bank to Goldman Sachs Bank. Following the deal, which was sealed on August 13, 2015, the industrial giant transferred around $16 billion of the bank deposits. Goldman Sachs has vouched to render services to the present clientele.

The bank deposits comprise of almost $8 billion of online Certificates of Deposit. Along with that, the online savings accounts and brokered Certificates of Deposit accumulate to $8 billion. Keith Sherin who the Chief Executive Officer and Chairman of GE Capital Bank stated that the sale of the deposits will eventually pace way for the company to completely evacuate its steps from the US banking system. This will be done once the company completes its US bank deed and cuts off the FDIV insurance.

Both these things are likely to be completed by this week. He further showed satisfaction on the transfer of deposits to Goldman Sachs. The company is of the view that its clients are in safe hands where Goldman Sachs will offer high-end services to them.

Mr. Sherin stated that the deposit sale deal is a step forward by the company so that they can deal with complications and reduce the size of GE Capital. It is also promoting the bank’s internal strategy to put an end to one of the two bank charters. This will eventually make the bank less important systematically.

General Electric stated recently that it has filed a request for its SIFI rescission with the FSCOC – Financial Stability Oversight Council. According to the request, the company has demanded to request the conversion of GE Capital Bank into small and streamlined financial services company. This will eventually describe them as a “non-bank Systemically Important Financial Institution (SIFI)”. So, the request filing adds volume to the assumption that the bank has considerably minimized its risk portfolio and it is not comfortable with the financial system in the United States. The company also revealed a detailed account of the changes it has made since it became a SIFI in 2013.

As per the official release, Mr. Sherin said, “We have completed over 80% of our projected asset reductions, exited leveraged lending and US consumer lending, exited nearly all middle market lending, reduced real estate debt by more than 75% and real estate equity by 100%, and reduced outstanding commercial paper almost 90%.”

The company is aiming to become a high value industrial business commodity. Thus it is important for them to keep a fair grip of its financial verticals that are closely linked to its industrial business. The company has sealed contracts that are worth almost $166 billion in terms of ending net investment (ENI) from the time that the deposit sale strategy has been announced.

1 comment: