GE to Sell $30B Lending and Leasing Businesses to Wells Fargo

Dow Jones Newswires

General Electric (NYSE:GE) has reached an agreement to sell the largest remaining chunk of its U.S. financial services business to Wells Fargo (NYSE:WFC), part of the conglomerate's ongoing bid to slim its operations. Financial terms weren't disclosed. The sale, which includes about $32 billion of assets and about 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. "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 CEO. "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. Wells Fargo Chairman and Chief Executive John Stumpf has said publicly there are possibilities for more work with GE following its commercial real estate loan portfolio acquisition earlier this year. The bank said acquired GE's railway leasing business in late September. Generally these portfolios and businesses are selling at par or slightly above par because they are performing assets and not distressed, people familiar with the deals said. Wells Fargo has also been including its value of general client acquisition, some of these people said. For instance, with the commercial real estate portfolio acquisition Wells Fargo committed when they bought it to meet every quarter to assess its cross sell progress with key relationships in Canada, the United Kingdom and the United States, people familiar with the deal said. Wells Fargo doesn't need regulatory approval for this type of deal. A more formal process including an application from the Office of the Comptroller of the Currency or the Federal Reserve is required if a bank is looking at acquiring or merging with a bank holding company. Some don't require an application or license, such as loan portfolios. There have been supervisory discussions leading up to Wells Fargo's GE acquisitions including questions around the risk appetite, internal controls, who would manage it and if the bank has enough capital for it, people familiar with the process said. This is common for such deals or even deal possibilities, these people said. The regulators don't have the authority to say no, but adverse ratings or enforcement actions against the bank could be consequences, people familiar with the process said. Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

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