Two stories caught my attention at the start of this month, both reported online by Sotiris Kanaris.
GE filed a request to US regulatory body Financial Stability Oversight Council (FSOC) for ‘rescission’ of its designation as a non-bank Systemically Important Financial Institution (SIFI).
Why? The manufacturer said that it has been completely transformed, primarily through the sale of the majority of its financial services businesses, into a “small, simpler company” focused on customers and markets aligned with GE’s industrial businesses.
According to GE, it had “substantially reduced its risk profile and is significantly less interconnected to the financial system, and therefore does not pose any conceivable threat to US financial stability.”
The big American business is hoping that the huge restructuring it’s undergone under the past 12 months will remove a very expensive regulatory tag.
But will US regulators let them?
Jeff Immelt’s reactionary (albeit understandable) response to the SIFI tag to break up the finance arm of GE and sell it off might look to some as undermining the regulator’s authority, if GE is able to slip the tag so soon after it has been given.
The regulators may think another year or so would be prudent to allow the rest of GE’s sell-off deals to complete before they start looking over a regulatory status change.
The other story concerns the emergence of a ‘new’ European leasing market entrant. Some may disagree on its novelty, as it enters the market with a legacy portfolio of over 112, 000 contracts worth €500m, and previous leasing business worth over €2.5bn.
Caixabank has launched its own equipment finance unit, replacing the old CaixaRenting, although interestingly it is a subsidiary of its consumer finance arm.
Maybe the Catalan bank is harnessing customers who have current accounts or consumer relations with the bank as potential commercial finance business opportunities, which would be a savvy move.
The gap in the SME journey between the high street banks in the UK, and the provision of finance in the alternative market, is given further focus in this issue, with analysis on how digital platforms are providing instant asset finance quotes online following the input of data by SMEs, on p26.
The caveat is that they may have been galvanised by the UK government’s SME credit sharing platform that went live on 1 April, as credit histories of small business owners will now be available to agreed credit reference agencies and banks.
Time will tell if it’s an April Fool’s or not!