GE Financial discards two, picks up one
General Electric's financial division (GE Money) recently made two moves that reshuffled its holdings, to build what it hopes will be a better hand.
First, it sold its commercial card and corporate payments business to American Express. This unit, which specializes in issuing travel and purchase cards for companies' employees and keeping track of the spending, was sold for $1.2 billion.
Clearly, GE saw this as a non-core asset and American Express, which is in the process of reinventing itself, saw it as a good fit with its other businesses, diluting its exposure to the now-risky US credit card business. In fact, the whole General Electric conglomerate is itself a major client of the services, and will continue in as an American Express client.
The second deal involves an asset swap worth over $1.5 billion. GE Money and Commercial Finance gave Spain's Banco Santander its full range of businesses in Germany, Austria, and Finland. GE also handed over its credit card and auto financing business in the UK.
In return, GE gets Interbanca, an Italian commercial bank, Banco Santander picked up the Italian bank as part of its deal (through a consortium) for Dutch bank ABN Amro. Interbanca was once the corporate banking arm of Banca Antonveneta of Italy, the rest of whose assets Banco Santander had already sold off to another Italian banking firm, Banca Monte dei Paschi di Siena.
Clearly, GE sees better opportunities in the area of Italian banking than in its credit card and loan operations in Germany, Canadian sources report that GE is also trying to sell the Canadian assets of GE Money, Bloomberg quotes the GE Money CEO William Cary as saying it is dropping these units "to concentrate on higher-margin areas and developing markets," though that hardly describes Italy. Cary notes that the company's targets for expansion are in India and Poland.
