Wells Fargo & Co. and Toronto-Dominion Bank are exploring offers for a batch of U.S. commercial-lending businesses General Electric Co. is selling as whittles down its finance arm.
Capital One Financial Corp. and U.S. Bancorp are also weighing bids for the businesses that together have about $40 billion in loans, said the people, who asked not to be identified because the process is private.
The lenders have signed non-disclosure agreements to review financial information about four business lines - direct corporate lending, inventory finance, equipment leasing and transportation finance - the people said. Those units make up the bulk of G.E.’s U.S. commercial-lending and leasing arm. Each business has $8 billion to $12 billion in assets, the people said.
GE will let bidders make offers for one or multiple businesses, one of the people said. It will tell potential buyers this week when initial bids are due, this person said.
While Wells Fargo and Toronto-Dominion are among the few banks in North America that have the capacity to buy all four businesses, neither wants all of them, the people said. Wells Fargo, which has already agreed to buy about $9 billion of GE’s commercial mortgages, is interested in the equipment leasing and transportation finance businesses, the people said.
GE, looking to return to its manufacturing roots, is breaking up its massive GE Capital lending arm because post-crisis banking rules have made it harder to make money in financial services.
Representatives for Wells Fargo, Toronto Dominion, GE, and U.S. Bancorp declined to comment, while a spokeswoman for Capital One didn’t immediately return calls seeking comment.
Canada Pension Plan Investment Board on Tuesday agreed to pay $12 billion for GE’s Antares Capital, a Chicago lender that helps private equity firms line up takeover financing. GE next wants to sell its foreign buyout lending arm and health-care finance arm, GE Capital Chief Executive Keith Sherin said in an interview this week.
GE has about $74 billion invested in its U.S. commercial loan and leasing arm, according to an investor presentation in April. Almost all of it is for sale now, with separate auctions under way for its rail car and franchise finance divisions.
It is selling the four commercial lending businesses with $40 billion in loans together to specifically cater to banks, one person said. They are the types of businesses that bank regulators are comfortable letting them own. Banks can’t buy some of GE Capital’s other lending businesses because they make loans that are too risky to be funded with deposits.