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GE realigns focus on manufacturing as it decides to let go GE Capital


Still reeling in the aftermath of the financial crisis engineered in 2008, GE has finally decided to hive off its banking division. G.E chief, Jeffrey Immelt was also under pressure from investors and analysts who wanted the CEO to step down. In order to replace faith and trust back in a transformed GE, the chief has now gone ahead with the decision to let go of their financial business which had been a money spinning venture for GE for decades.GELogo

Sensing that banking has become a less profitable and a riskier business, this extraordinary decision was taken. A proposal shaped out in 6 weeks time and the entire project has been codenamed internally as project Hubble. The first step in that direction resulted in the conglomerate deciding to sell $26.5 billion worth of real estate assets.

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The decision was also taken because of the increased scrutiny and regulation that has befallen big lenders that are designated as a ‘systematically important financial institution’. This term referred to big lenders deemed too big to fail by the U.S. Government. Being designated as one, a financial institution comes under deeper scrutiny and probity, which might spike up regulatory and compliance costs for a company. That is a costly proposition, especially for a company that seeks to prune its activities.

This is being described by analysts as a major strategic realignment in the history of the 123 year old company, because the company will go back to its main focus and core principles. By hiving off the financial arm of the business, GE will be able to invest managerial resources in its manufacturing division. Further, the company intends to bring back $36 billion in overseas cash once the de-allocation of its financial arm and assets is complete.

This news has been nicely received by the stock exchanges because the GE shares rose nearly 11 percent in the New York Stock Exchange composite trading. The company has not seen such a spike in the prices of its share in the past 6 years.


About Sara Rose

rose@thenextdigit.com'
She has spent the past 4 years playing the role of an IT consultant, and has now joined The Next Digit as a full time blogger. Her current profession is a result of her deep experience in computer gadgets, laptops, gaming accessories and other tech updates.

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