GE sheds mortgage business

by 18 Sep 2015
By Richa Naidu

(Reuters) -
General Electric Co said on Wednesday it had sold a $3.7 billion portfolio of loans from its British home lending business to private equity-backed Kensington Mortgage Co Ltd as it continues to shrink its financing arm, GE Capital.

The deal, GE's third loan portfolio sale this year, nearly halves the size of the company's UK home lending business to less than $7 billion, GE Capital Chief Executive Keith Sherin said in a statement.

GE Capital once accounted for almost half of GE's profit. However, the unit's rising funding costs nearly sank the entire company during the 2008 financial crisis.

Kensington Mortgage is controlled by
Blackstone Tactical Opportunities and TPG Special Situation Partners.

The sale comes even as other American players move to seize opportunities in the UK and elsewhere globally. It also comes as applications for U.S. home mortgages fell.

On Thursday, the
Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.0 percent in the week ended Sept 11.

The MBA's seasonally adjusted index of refinancing applications fell 9.1 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 4.2 percent.

The week's results were adjusted for the
Labor Day holiday.

Fixed 30-year mortgage rates averaged 4.09 percent in the week, down 1 basis point from the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting by Noel Randewich; Editing by Diane Craft)

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