GE Capital sells $2 billion Mexican mortgage portfolio
INDIANAPOLIS: GE Capital will sell its $2 billion Mexican consumer mortgage portfolio to Grupo Financiero Santander Mexico, in the latest sale of real estate assets for a business that was stung badly during the recession, Associated Press reported.
The lending unit of Fairfield, Conn.-based General Electric Co. will receive about $170 million, according to a company official who wasn't authorized to talk about the deal. That figure does not include debt.
GE has provided consumer mortgages in Mexico since 2002. The sale of its Mexican consumer mortgage business is part of a push to shrink its bal- ance sheet by dumping nonstrategic businesses that lack scale. GE said Friday it plans to continue investing in "core industrial and commercial finance platforms," including those in Mexico.
Santander said the deal will make it one of the biggest mortgage providers in Mexico.
Not so long ago, GE Capital generated more than half of General Electric's profit, but it stumbled as the recession wreaked havoc in real estate markets. The unit booked billions in write-offs.
The losses convinced GE to focus its business on making products ranging from wind and natural gas turbines to sonogram machines and ener- gy-efficient appliances.
In June, GE Capital said it planned to reduce its commercial real estate portfolio of office buildings and other commercial properties to about $40 billion from $80 billion.
Earlier this month, GE said it completed the $1.92 billion sale of its Central American lending subsidiary, BAC Credomatic GECF Inc., to the Colombian bank Grupo Aval. BAC Credomatic operates in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Mexico with about $5.1 billion in loan assets, and $5.5 billion in deposits. The GE unit is not alone in trimming its real estate portfolio. The Wall Street Journal reported Friday that Credit Suisse Group is selling a $2.8 billion portfolio of European commercial property loans for $1.2 billion to Apollo Management LP.
Meanwhile, GE Capital has started to rebound. In the third quarter, it reported an $871 million profit, up from $141 million the year before, as credit costs fell and its margins increased. The sale of the Mexican mortgage business is expected to close in the first half of next year. In a separate news item, General Electric Company (Public, NYSE:GE) reported that it has recommended U.S. Environmental Protection Agency (EPA) that it will carry put the second and final phase of the Hudson River Dredging Project.
GE is also looking forward to achieve the scientific objectives in a more effective and efficient way especially in terms of cost reduction method.
Ann R. Klee, GE's Vice President of Corporate Environmental Programs said, "We engaged in intensive and constructive discussions with EPA, and the Agency's decision reflects our discussions and many of our proposals,"
GE is planning to carry on project in late spring 2011 and is expecting the plans of its approval in Feb, 2011.
GE is also engaged in providing consumer mortgages in Mexico since 2002. The rev- enues generated from it are consumed in overcoming the sales of non-strategic businesses.
On Friday, GE has officially reported that it is planning to prolong investing in "Core industrial and Commercial Financial Platforms".
GE has also announced to vend its $ 2billion Mexican consumer mortgage portfolio of Mexican real-estate assets to Grupo Financiero Santander Mexico. The deal is expecting to close next year. Grupo Financiero Santander Mexico will receive $170 million and will make one of the biggest mortgage providers in Mexico as it has a network of retail branches and the acquirement is intended to help to grow its mortgage business.
General Electric Company (GE) is a company of varying technology, media and financial services. It is operating in more than 100 countries and is operating in five segments: Energy Infrastructure, Technology Infrastructure, NBC Universal (NBCU), Capital Finance and Consumer & Industrial. Energy Infrastructure, Technology Infrastructure, NBC Universal (NBCU), Capital Finance and Consumer & Industrial.
Moreover, Grupo Financiero Santander Mexico, part of Santander group, has entered into an agreement with GE Capital to acquire GE's consumer mortgage business in Mexico, encompassing all of its operations, including its $2bn consumer mortgage portfolio.
Headquartered in Mexico City, GE Capital has provided consumer mortgages in Mexico since 2002. Its consumer mortgage business has been part of GE Capital's Restructuring Operations organization since early 2009.
The financial terms of the transaction were not disclosed and the transaction, which requires customary regulatory approvals, is expected to close in the first half of 2011. Grupo Financiero Santander executive president Marcos Martinez Gavica said this acquisition will make the bank the second leading provider of mortgages in Mexico. -Bloomberg