GE Capital Prepared for Fed’s Funding Requirement, CFO Says

General Electric Co. (GE) said its finance units are well prepared for Federal Reserve oversight starting in July and are still discussing exact capital requirements with the regulator.

GE Capital Services, and its main lending entity, GE Capital Corp., should both have so-called Tier-1 common capital ratios above 9 percent in the second quarter, Chief Financial Officer Keith Sherin said at the JPMorgan Chase & Co. industrials conference in New York today. GE Capital has said it expects specific requirements by year-end.

“We don’t have anything definitively agreed to or completed,” Sherin said. “We’re not a bank, yet we believe we are going to be systemically important.”

Whether the finance unit will be required to reach the standard ratio of total capital to lending assets of about 10 percent for banks the U.S. deems “well capitalized” is unclear, Sherin said. The unit, which is shrinking its balance sheet and contribution to the Fairfield, Connecticut-based parent company’s profit while bolstering capital ratios, would be able to meet that standard if required, he said.

GE Capital’s funding requirements will be a consideration in determining when to resume its payout to the parent company, known as the GE Capital dividend, Sherin said. The company still expects to be able to do that in 2012, he said. Tier 1 Capital is a measurement used by regulators to gauge financial strength.

“We’re going to be well capitalized out of the chute for whatever the targets,” Sherin said. “I think we can handle what’s being discussed today, and maybe it’s not going to be quite that level when we get everything said and done.”

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.