In an effort to revamp their portfolios,
General Electric Co. will purchase the majority of Citigroup’s
North American commercial lending and leasing business,
CitiCapital, in an all-cash transaction by the third quarter of
2008.
Citi is casting off most of CitiCapital to create room for
liquidity, following the group’s $22bn (£11) in write downs last
year and billions more expected for the first quarter of
2008.
Meanwhile, GE, the energy and financial services giant has been
buying and selling assets to shake up its portfolio, particularly
via its consumer finance business, GE Money.

Although financial terms for the deal have not yet been
disclosed, GE Capital should receive about $13.4bn (£7bn) in assets
from CitiCapital’s equipment finance business lines; Healthcare
Finance, Private Label Equipment Finance, Material Handling
Finance, Franchise Finance, Construction Equipment Finance, Bankers
Leasing, and CitiCapital Canada. CitiCapital’s Tax Exempt Finance
business is not part of the transaction and will remain with
Citi.

GE Capital and Citi are also exploring strategic cross-selling
relationships with commercial clients.

Mike Neal, GE vice chairman said: “This acquisition represents
another significant growth opportunity for GE—one that helps us
offer more to customers.”
The transaction should also allow Citigroup to direct capital to
core businesses and drive operational efficiency.
Peter Knitzer, chairman and CEO of Citibank North America said:
“This transaction allows Citigroup to release capital from non-core
areas and redistribute that capital to areas with the greatest
opportunities for profitable growth.”