General Electric Co. will seek to undo designation as a systemically important financial institution after it completes the sale of its lending business GE Capital, which it announced April 10.
Brackett Denniston, senior vice president and general counsel, on an investor call to announce sale of the majority of its $26.5 billion real estate lending business to Blackstone Group and Wells Fargo, said the company will apply for the change “sometime in 2016, and it will depend on the pace.”
Mr. Denniston noted that at the time of the designation in July 2013, Financial Stability Oversight Council officials looked at $43 billion in commercial paper, which will drop to an estimated $5 billion once the sale is complete.
The FSOC reviews all designated companies annually, and will consider reclassification if there have been material changes to the company or in its markets to justify rescinding the designation. A Treasury Department spokeswoman said that the FSOC “welcomes the opportunity to consider any plans that, if implemented, address the potential risks to financial stability that resulted in a company's designation.” GE is one of four non-bank financial institutions designated systemically important and subject to oversight by the Federal Reserve, which can impose limits on capital, leverage and liquidity.
“We have a constructive relationship with our regulators and will continue to work with them as we go through this process,” GE Chairman and CEO Jeff Immelt said in a statement.
