G.E. to Retreat From Finance in Post-Crisis Reorganization
General Electric plans to sell off most of its finance arm over the next two years, redefining the multinational conglomerate as it seeks to complete a transformation begun amid the tumult of the financial crisis.
In addition to huge planned sales of assets outlined by the company on Friday, G.E. will take other significant steps, including bringing back about $36 billion in cash that now resides overseas.
.. For years, the financial tilt looked smart and relatively easy. In an interview in 2010, Mr. Immelt recalled, if a deal looked like a money spinner, it got the nod. “And you don’t have to build a factory,” he observed.
Yet the big bet on finance badly wounded G.E. in the wake of Lehman’s demise, when the market upheaval left the conglomerate hard-pressed to borrow debt for its day-to-day operations.
.. Perhaps one of the most notable potential consequences of the drastic move is that G.E. will be able to shed its designation as a “systemically important financial institution.” Such status comes with high requirements to keep capital on hand, potentially limiting its financial returns.