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Monday, December 27, 2010

General Electric Sells Its Mexican Mortgage Business

Did you know that GE had a Mexican mortgage business?  Neither did we.

General Electric Co.'s finance division, GE Capital, has sold its $2 billion mortgage portfolio of Mexican real-estate assets to Spain's Grupo Santander for $162 million plus the assumption of debt. The deal, expected to close next year, involves Grupo Financiero Santander Mexico acquiring all of GE's consumer-mortgage business in Mexico, including its $2 billion consumer-mortgage portfolio.

The sale is part of GE Capital's strategy to exit businesses that do not help GE Capital's balance sheet while investing in core industrial businesses. GE Capital, which made a series of bad investment decisions leading up to the financial crisis, has been an active player in Mexico in recent years, dabbling in both commercial and residential real estate, as well as commercial leasing and lending.

One of GE Capital's Mexican initiatives was what it called a "Mexican Dream Mortgage" that hoped to sell Mexican retirement properties to U.S. baby boomers. In 2006, GE saw this as "a multibillion-dollar market" that could bring hundreds of millions to GE Capital.

GE Capital disposed of $14 billion worth of financial stakes and assets in 2010 and plans to dispose of another $17 billion in 2011 as the company aims to shrink its balance sheet. The goal is to expand its industrial business and shrink its financial division, so GE Capital would provide 30% of the company's earnings rather than 50%. (WSJ, 12/26/2010)

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