New York - Goldman Sachs will buy General Electric Capital Bank's online deposit platform and assume $16 billion worth of deposits from the industrial conglomerate, the companies announced on Thursday.
Financial terms of the deal were not disclosed.
The transaction will shift from GE Capital Bank to Goldman $8 billion in online deposit accounts and $8 billion in brokered certificates of deposits, Goldman said.
“This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel,” said Goldman treasurer Liz Beshel Robinson.
GE said the move was part of its strategy to vastly scale back its finance operations to focus more on industrial operations. The shift comes as large financial institutes face stiffening regulatory requirements.
“As we work to reduce the size and complexity of GE Capital, this transaction is another key step. It advances GE Capital's new strategic direction by facilitating closure of one of our two US bank charters, which we believe will help us become less systemically important,” said Keith Sherin, GE Capital chief executive.
The conglomerate, which produces a wide range of products, from aircraft engines and home appliances to power plants and smart meters, wants industrial activities to generate 90 percent of its profits in 2018, compared with 58 percent in 2014.
GE has already sold about $78 billion in financial assets and is aiming for $100 billion by year-end.
AFP