GE to sell European private equity financing unit to SMBC

Tue Jun 30, 2015 12:30pm EDT
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By Taiga Uranaka

TOKYO (Reuters) - General Electric Co (GE.N: Quote) said it would sell its European private equity financing business to a unit of Japan's Sumitomo Mitsui Banking Corp (SMBC) for about $2.2 billion as the U.S. conglomerate sheds financial assets amid a restructuring.

The portfolio represents about $2.2 billion of total invested capital, GE said on Tuesday.

The portfolio carries a wider spread margin than most corporate loans, a source familiar with the matter said.

This makes the deal attractive to the core banking unit of Japan's third largest bank, Sumitomo Mitsui Financial Group (SMFG) (8316.T: Quote), which is trying to diversify away from the fiercely competitive corporate lending sector.

Major Japanese banks such as SMFG have been aggressively buying businesses and extending loans overseas to make up for a weak domestic market.

In 2012, SMFG acquired an aircraft leasing company from Royal Bank of Scotland Group (RBS.L: Quote) for $7.3 billion and this year, Mizuho Financial Group Inc (8411.T: Quote) agreed to buy the U.S. and Canadian loan portfolio of RBS for $3 billion.

In April, GE announced plans to exit $200 billion worth of finance assets which made it subject to government regulation as a financial institution.

The U.S. industrial conglomerate has since signed agreements to sell about $23 billion worth of assets, including the latest deal.   Continued...

Pedestrians are reflected on a sign outside a branch of Sumitomo Mitsui Banking Corporation in Tokyo November 13, 2014. REUTERS/Toru Hanai