General Electric has announced a plan to close its banking division and in doing so, the conglomerate intends on selling $26.5 billion worth of real estate assets in a post financial crisis move which is sure to alleviate some of the increased scrutiny and regulation which accompanies the company’s designation as a “systemically important financial institution” — the official name for lenders deemed too big to fail by the U.S. federal government.
In the move which which was announced Friday, The New York Times reported that the company will likely shed GE Capital, a lender with hundreds of billions of dollars in assets.
The aforementioned NY Times report quoted an analyst at Bernstein Research, Steven Winoker, as having explained that the move “is a massive strategic reallocation of capital and investment” and that it’s sure to quiet some investors and analysts who want GE’s present CEO, Jeffrey Immelt, to step down. Not only that, it should give Immelt time to execute the plan which is scheduled to run through 2018.
Jeffrey Immelt will have truly remade the company […] This is a massive strategic reallocation of capital and investment.
In addition to returning the company’s focus to manufacturing while shedding its financial arm, the expansive conglomerate intends on bringing back $36 billion in overseas cash; a move which will cost the company $6 billion taxes.
A Wall Street Journal referred to the company’s move as “one of the biggest strategic shifts in its 123-year history” in a report published on NASDAQ which indicated that GE shares rose nearly 11 percent in the New York Stock Exchange composite trading, which marks the company’s largest single-day percentage gain in roughly six-years.
What are your thoughts on General Electric cashing out its banking division and bolstering its far-reaching industrial operations?