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More GE Molting: Credit Card Spinoff Nigh!

Immelt takes another step to lighten the GE Capital load


General Electric (GE) CEO Jeffrey Immelt’s plan to pare down the conglomerate’s balance sheet apparently is taking another step forward, with The Wall Street Journal reporting that GE plans to spin off its credit card business sometime in early 2014.

Immelt has been under pressure to shrink GE’s financial services arm ever since the credit crisis of 2008, when the unit represented roughly 50% of the company’s balance sheet. After losing roughly $30 billion on the unit between 2008-10, Immelt started an effort to wean the company off GE Capital and work toward bolstering the industrial side of the business. Immelt’s goal is for the industrial side of the business to generate 65% of company earnings by 2015, up from 55% today.

Immelt has been very busy pushing toward that goal. In 2013 alone, GE has shed a number of businesses across GE Capital divisions:

  • GE Capital Real Estate sold 471 net-lease properties, primarily restaurants, for $807 million to American Realty (ARCP).
  • GE Capital Real Estate sold off roughly 30,000 apartment rental units to Blackstone (BX) for $2.7 billion.
  • GE Capital Real Estate sold its entire holdings in Toronto to Slate Properties for an undisclosed amount.
  • GE Capital sold its Canadian fleet portfolio for $552 million to Toronto-based Element Financial.
  • GE Financial sold off its trailer leasing and rental business to China-based HNA Group for an undisclosed amount.

The proposed spinoff of the credit card operation would represent a huge step for Immelt; the division provides credit cards for Walmart (WMT) customers, among other companies, and its private-label business held more than $32 billion in balances, or 65% of the total private-label and credit card business balances, according to the WSJ.

It’s yet another move Immelt must make to satisfy both Street and investor demand to shrink the GE Capital division.

Since Immelt took over in September 2001, GE’s share price is down nearly 40%, and the company still is recovering from a two-thirds dividend cut in early 2009 — GE has brought it up from a low of 10 cents quarterly to 19 cents, though that’s still well off the pre-cut 31 cents.

GE shares were trading up fractionally Friday morning.

Marc Bastow is an Assistant Editor at As of this writing, he was long GE.

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