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'Smaller, simpler' GE Capital asks FSOC to lift SIFI tag

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'Smaller, simpler' GE Capital asks FSOC to lift SIFI tag

General ElectricCapital Corp. said March 31 that it has asked the FinancialStability Oversight Council to rescind its designation as a nonbanksystemically important financial institution as it now poses no threat to U.S.financial stability.

The company was designated as a SIFI in 2013.

GE Capital said the filing it submitted to the council inconnection with its rescission request shows it has substantially reduced itsrisk profile and is significantly less interconnected to the financial system.

GE Capital Chairman and CEO Keith Sherin touted thecompany's success in reducing its risk profile.

"We have completed over 80% of our projected assetreductions; exited leveraged lending and U.S. consumer lending; exited nearlyall middle market lending; reduced real estate debt by more than 75% and realestate equity by 100%; and reduced outstanding commercial paper almost90%," he said.

GE Capital provided a list of actions it took to cut itsrisk profile and said that it has become a "smaller, simpler" companyby selling or splitting off most of its legacy financial services businesses.

The company reduced its assets 52% to $265 billion from $549billion. It has also decreased its financing receivables 74% to $72 billionfrom $277 billion and loans to consumers 95% to $4 billion from $72 billion. Itincreased its cash and cash-like investments 35% to $77 billion from $57billion.

It cut its use of short-term and securitization funding,with commercial paper now down 88% to $5 billion outstanding from $43 billion,and securitization funding down 90% to $3 billion from $30 billion.

GE Capital said it will not issue any incremental debt forthe next four years. The company also disclosed that assumed orguaranteed all of GE Capital's unsecured debt, which limits the likelihood ofand reduces the impact if GE Capital were to experience financial distress.

GE Capital said it exited one of its U.S. bank chartersthrough the completed split-off of Synchrony Financial. GE Capital also secured regulatoryapproval for the saleof its U.S. deposit business to Goldman Sachs Group Inc. GE Capital said it will nolonger own any banks with deposits insured by the FDIC after the sale andsurrender of the second bank charter closes by April 30. In August 2015, GE that it is sellingGE Capital Bank'sU.S. online deposit platform, including all of its deposits, to .

The Synchrony Financial split-off and other dispositionshelped GE Capital exit all leveraged lending, all consumer lending in the U.S.,most consumer lending in the E.U., and nearly all middle-market lending andcommercial real estate financing globally.

GE Capital said it has reduced its complexity and enhancedits resolvability after its reorganization. The company disclosed that itsregulated operations are now centered in Europe. It consolidated its non-U.S.operations into GE Capital International Holdings Ltd., whose operations areand will be supervised by the U.K. Prudential Regulation Authority.

GE Capital now intends to focus on its vertical businesses,including GE Capital Aviation Services, GE Energy Financial Services and GE Capital IndustrialFinance, which includes Healthcare Equipment Finance and Working CapitalSolutions. The go-forward portfolio composition and risk structure will besimilar to that of other finance companies aligned with their industrialparents.