GE to sell CRE business to Wells Fargo

The Business provides other financial services, for example wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural financing, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing and venture capital investment.

The deal’s price was not disclosed. The agreement brought the company’s total deals till now related to GE Capital to $97 billion. The company announced its intention to do away with most of its financial assets in April 2015, as investors looking to put money into GE’s industrial business were not content with being exposed to the risks of the financial sector.

A “person with direct knowledge of the situation” told the news service that Wells Fargo is the lead bidder and that a deal could be announced before the bank reports its third-quarter earnings on Wednesday. That franchise business was the last chunk of GE Capital to be placed on the market as the company churned through a huge volume of divestitures this summer.

“This acquisition is an outstanding opportunity for Wells Fargo to deepen relationships and strengthen our presence in key commercial lending markets”, said Tim Sloan, head of Wells Fargo Wholesale Banking.

The price Wells Fargo is paying has not been made public, according to the Wall Street Journal.

In 3QFY14, Wells Fargo reported $1.02 in EPS which was in-line with the Street forecast.

Wells has been an active buyer of GE Capital’s assets. The short interest information was released by Financial Industry Regulatory Authority, Inc (FINRA) on October 9th.

“The SIFI de-designation is kind of the official capping of their challenged – a few might call precarious – journey through the global recession and meltdown of GE Capital”, said Nicholas Heymann, a William Blair & Co. analyst. About 3,000 GE employees of the 3,500 in those businesses will shift to Wells through the deal, GE said.

Wells Fargo previously agreed to buy commercial real estate assets and GE’s railcar-leasing division. That’s created a lake of surplus capital for Wells Fargo, and the bank now wants to put that cash to use.

With Tuesday’s announcement, GE has sold off the majority of its lending business. Focus will now turn to include more of GE Capital’s overseas operations, which are expected to be sold off over the coming year.

GE shares were up 0.2% at $24.75 in morning trading.