GE announced the purchase of Citi’s consumer finance portfolios, surprising many observers as its private label card business had been rumored to be up for sale during the depths of the credit crunch.
GE Capital’s purchase of $1.6 billion in retail sales finance assets is an interesting play at a time when consumer lending could use a pick-me-up. Mark Begor, president and CEO of GE Capital Retail Finance said in a press release the transaction should be immediately accretive.
“It shows some movement in credit card portfolios. Citigroup had been trying to sell it for a while,” said Jones Day’s Chip MacDonald. “It is a good sign for the credit market and it is a good sign for retailers and consumers.”
Some analysts speculate GE might be looking for additional retail assets to further build scale now that the strategic direction is apparent.
GE spokesperson White affirms that both the retail credit card business and consumer lending business are, “performing well” and the retail credit card business now is part of GE’s core strategy. Over the past two years GE Capital has re-signed deals with Wal-Mart, JCPenny and several other retailers. He adds that GE Capital could make similar acquisitions to the Citi one in the future.
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