General Electric Company (NYSE:GE) is holding initial discussions to formulate the terms of their contract for handing over to Wells Fargo & Co (NYSE:WFC).
The company is planning on selling its leasing and lending operation to the Wells Fargo. GE’s portfolio is worth over $70 billion. It offers loans to mid-sized firms whose annual incomes average between $1 billion to $10 billion. In 2014, over half of Wells Fargo sales was collected from loans that the bank offers. The sales value amounted to $21.3 billion. The banks have been focusing on its commercial lending strategies, and this has clearly paid o as one of its strong suits.
The decision to buy General Electric’s leasing and lending operation was a strategic move made with consideration of the company’s successful commercial lending policy. The banking company expects to have a wider base for its lending business through the acquisition of GE’s portfolio.
The announcement for the plans to sell came about a week ago and speculation has it that the deal might push through faster than expected. Wells Fargo Officials reported that the company has had a lot of interest in the acquisition since General Electric announced that their plans to sell their banking portfolio.
GE initiated the sale of its banking venture with the announcement that the company was also selling its Real Estate assets inclusive of loans. The real estate is currently valued at about $26 billion. Wells Fargo will willingly purchase GE mortgages that are located in Canada, USA, and the UK.
Unnamed sources reported that General Electric wants to sell the banking part of the company so as to rid itself of the fiscal, regulatory burdens that the company has been experiencing. The company revealed that it wants to keep its focus on the manufacturing aspect of the business.
These recent announcements resulted in significant changes in the stock market performance for the two companies. On Monday, GE’s shares went down to $27.07 with a 0.7% decrease. Wells Fargo shares were valued at $54.33 per share after a 0.5% increase.