Ge Personal LoansPersonal loans
GE Capital sells PE credit to PE syndicate for USD 6.3 billion
Ge Capital has committed to divest its Australian and New Zealand convenience loan businesses to a $6.3 billion syndicate of independent investors comprising Värde Partners, the world' largest mutual fund, KKR and Deutsche Bank. GeCapital is a premier diversified personal banking service company providing a broad array of personal loans, corporate loans, corporate loans, corporate loans, corporate loans, corporate loans, credit card and other financing solutions.
During the 2008-2009 sub-prime mortgage crunch, General Electric (GE) progressively reduced its GE Capital business with its device business, property portfolio and a shareholding in NBC Universal, all of which were sold. GE Capital's tightened financing business now focuses on the financing of the purchase of large machinery, loans to mid-sized businesses and investments in industrial property.
Upon completion of the deal, all such assets and liabilities will continue to be owned by GE Capital. GE Capital's advisors are Credit Suisse and Morgan Stanley. Advisors to the winning syndicate - KKR, Deutsche Bank and Värde Partners - are Bank of America Merrill Lynch, Moelis & Company and Citi.
Insight into the sector: Face-to-face loans - creditors put to the crisis to feel
However, the effects of the crisis on UK lending are already being felt. Looking ahead, all signs are pointing to the end of the period of low-cost and readily available loans. They also estimate that the value of uncollateralised personal loans fell to almost £52 billion last year, from a high of £60 billion in 2004.
Mintel's research shows that 27% of grown-ups have an unpaid debit amount on their cards, making them the most preferred type of loan, although transactions have declined in recent years. Larger commercial bankers are investing more in promoting their loans and benefiting from a stronger main road exposure, but it is often smaller players such as savings and loan associations or online banking that are offering the best prices.
Not everyone who borrows necessarily succeeds in keeping pace with their repayment. Consequently, private bankruptcies more than doubled between 2004 and 2006, from 47,000 to 107,000. Overall, men are more likely to take out loans, although females are more likely to use retail debit and debit card and distance selling loans.
Forecasts by Mintel suggest that the value will fall by 2% to £51 billion between 2007 and 2012. Estimates suggest that the entire uncollateralised wholesale debt markets are valued at £197. Indeed, the FRS's tough statistics show that 70% of us have some kind of consumer debt instrument, be it a debit note, an advance or an uncovered mortgage.
Mortgage exclusion figures focus exclusively on uncollateralised loans and show a 15% adult borrowing with an avarage loan of £7400. Since 2001 this figure has increased, but the proportion of borrowers has more or less stayed constant. There have been significant changes in the structure of the loans, however.
Although the 2008 sub-prime crisis is likely to have a significant impact, it is still to be seen how it will impact the uncollateralised loan markets in the coming year.