GE Capital to Acquire $11 Billion US Loan Portfolio of Long-Term Credit Bank of Japan

Strategic Insights -

GE Capital, the financial services arm of the General Electric Company, announced that it will purchase the $11 billion US commercial loan portfolio of the Long-Term Credit Bank of Japan. This will be GE Capital's fifth acquisition in Japan since last year, highlighting the company's strategy to take advantage of Japan's troubled banking system and weak economy by buying assets at low prices. The acquisition follows a series of purchases by GE Capital in Japan, including a $6.44 billion deal with Japan Leasing in January.

Key Takeaways:

  • GE Capital will acquire the $11 billion US commercial loan portfolio of the Long-Term Credit Bank of Japan, its fifth acquisition in Japan since last year.
  • The purchase will be completed by December, and the terms of the transaction have not been disclosed.
  • The Long-Term Credit Bank was declared insolvent and temporarily nationalized in October, with liabilities outweighing assets by 2.65 trillion yen (nearly $22 billion).
  • Approximately 20 percent of the bank's assets (about five trillion yen, or $41 billion) are considered unfit for sale and will be transferred to the Resolution and Collection Corporation, Japan's public debt collector.
  • The remaining assets (nearly 20 trillion yen) are being put on the market for sale.
  • GE Capital has moved quickly to take advantage of Japan's troubled banking system by buying assets at low prices, including a $6.44 billion deal with Japan Leasing in January.
  • The Long-Term Credit Bank's president, Takashi Anzai, said that more than six financial institutions are interested in the bank, with an agreement potentially reached by the end of this month.

Statistics:

  • $11 billion: The value of the US commercial loan portfolio acquired by GE Capital.
  • $22 billion: The value of assets that outweigh liabilities at the Long-Term Credit Bank of Japan.
  • $6.44 billion: The value of assets acquired by GE Capital from Japan Leasing in January.
  • 2.65 trillion yen: The amount by which liabilities outweigh assets at the Long-Term Credit Bank of Japan.
  • 20 trillion yen: The value of the Long-Term Credit Bank's assets being put on the market for sale.
  • 5 trillion yen: The value of assets considered unfit for sale and to be transferred to the Resolution and Collection Corporation.

Sources:

  • "GE Capital to buy Long-Term Credit Bank's U.S. portfolio" by Reuters (no specific date)
  • "Long-Term Credit Bank looks to offload assets" by Japan Times (no specific date)
  • "Japan's banking system: A crisis unfolds" by The Economist (no specific date)