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The company will sell $26.5 billion in real estate assets to Blackstone and sell the performing loans to Wells Fargo.
The company also said that it is retaining some of its vertical financial units and will return a ton of cash to shareholders.
This is not it; with selling company units it is also shedding its designation as a “Systemically Important Financial Institution.”
“GE has discussed this plan, aspects of which are subject to regulatory review and approval, with its regulators and staff of the Financial Stability Oversight Council (FSOC). GE will work closely with these bodies to take the actions necessary to de-designate GE Capital as a Systemically Important Financial Institution (SIFI). “We have a constructive relationship with our regulators and will continue to work with them as we go through this process,” GE’s current CEO, Jeffrey Immelt said.
The SIFI designation was formed by the regulators in the wake of financial crises.
The designation is given to the companies which can trigger financial crises if they face financial distress.
In the summer of 2013, GE was given the SIFI designation. GE capital would be 7th largest bank in US on its own, so additional regulation on the company makes some sense.
Over the last years the company is reshaping itself and it doesn’t think that it is systematically important anymore.
GE has spun off its personal financial arm, Synchrony Financial in an initial public offering and the company said that by the end of 2015 the company plans to divest this unit.
With the divestment of real estates and the associate loans the company will shed about $200 billion in Ending Net Investment (ENI).
This brings the company’s total ENI to about $90 billion, down for more than $580 in the years leading up to financial crises.
Analysts at Goldman Sachs noted that during financial crises, GE’s real estate business saw net income decline 170 percent.