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GE Asks To End U.S. Regulatory Oversight As GE Capital Transformation Races On

April 01, 2016
Last spring, GE said it would speed up its transformation into a “digital-industrial” company by selling most of GE Capital’s assets and keep the remainder tightly tied to its industrial core. It kept its word.
The company has signed approximately $165 billion in deals and fully completed transactions valued at $145 billion from that total.

GE closed the quarter yesterday by agreeing to sell GE Capital’s majority stake in Polish Bank BPH’s Core Bank to Alior Bank. GE also closed on two transactions announced last year related to its Japan and Mexico commercial lending and leasing businesses. In total, the company has reduced its ending net investment (ENI) profile by nearly $42 billion in the first three months of 2016.

“In just less than a year since we announced our plan to divest the majority of GE Capital assets, we have made significant progress toward our goals,” said Keith Sherin, GE Capital chairman and CEO.

Since 2012, GE Capital has reduced its assets by more than a half, from $549 billion to $265 billion.

Sherin also said yesterday he believed GE Capital no longer meets the criteria to be designated as a nonbank Systemically Important Financial Institution—a regulatory label deeming an institution so deeply interconnected in the global economy that it poses a threat to its stability.

In fact, with nearly 80 percent of its transformation complete, GE Capital formally asked the Financial Stability Oversight Council (FSOC) to stop considering it a “systemically important financial institution” and release it from its supervision. “Our submission details the complete transformation of GE Capital,” Sherin said. “Our plan to change our business model, shrink the company and reduce our risk profile has been successful.” (You can find more information about the application is available here.)

When the GE Capital transformation is complete, the unit will keep the financing verticals directly related to GE: GE Capital Aviation Services, GE Energy Financial Services and the Industrial Finance segment. GE said it would share key performance highlights from these businesses during the company’s earnings report on Friday, April 22.