GE Cap­i­tal sells $2 bil­lion Mex­i­can mort­gage port­fo­lio

The Pak Banker - - Company& -

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

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