According to the news reports, GE Capital is on a quick move to sell their $2 billion mortgage portfolio of their Mexican consumers to Santander Grupo Financiero, Mexico.
Connecticut based General Electric Company’s real estate division was impacted tremendously during the recession. According to the senior official of the company, GE Capital is expected to receive approximately $170 million and the debt with this deal. The leading unit of GE Capital, Fairfield, started offering mortgage services in Mexico in 2002.
This mortgage deal is a part of business strategy by dumping the non-strategic businesses which lacks the scale. It can be considered as a part of push to shrink the balance sheet. GE’s future plan after the said transaction would be to increase their investment in commercial finance and core industrial platforms in various regions including Mexico.
This real estate asset deal will make Santander Mexico one of the largest mortgage providers in Mexico.
GE Capital worked brilliantly in the past earning more than a half of the GE’s profit. The recession hampered the real estate market as well as the earnings of GE Capital, which reduced the billions of booked unit in write-offs.
After encountering loss in the real estate market, GE is now convinced to concentrate more on the business and products varying from wind and turbine natural gas to energy-efficient appliances and sonogram machines.
Recently, GE Capital declared that it has undergone the sale of $1.92 billion on the BAC Credomatic GECF Inc., the lending subsidiary in Central America, to the Colombian bank Grupo Aval. GECF Inc. operates in Mexico, Panama, Nicaragua, Honduras, Guatemala, El Salvador and Costa Rica with $5.5 billion in deposit unit and $5.1 billion in loan assets.
GE Unit has plans to minimize its real estate commercial portfolio of commercial properties and office buildings, from $80 billion to $40 billion.
Apart from GE Capital, Credit Suisse Group is also planning to trim their real estate portfolio by selling it for $2.8 billion of European property loans to Apollo Management LP for $1.2 billion, reports The Wall Street Journal.
The Mexican mortgage business deal is estimated to happen in few months. Recently, GE Capital has rebounded in the real estate market with a profit of $871 million in the third quarter of 2010, rising up from $141 million in 2009.
