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Report: Wells Fargo in talks to buy GE commercial lending unit

Kaja Whitehouse
USA TODAY

Wells Fargo bank is in talks to buy General Electric Co.'s $74 billion U.S. commercial lending and leasing operation, according to reports.

Wells Fargo, which reported $415 billion of commercial loan holdings last quarter, could beef up its commercial loan holdings with the purchase of all or part of GE's U.S. commercial lending and leasing business, according to reports from Reuters and The Wall Street Journal, citing anonymous sources.

The $74 billion GE unit provides loans to mid-sized companies, or those with between $10 million to $1 billion in annual revenues, such as restaurant franchises.

More than half, or 52%, of Wells Fargo's $21.3 billion in sales last quarter came from loans. And its commercial lending business was one of the San Francisco bank's faster growing loan segments, up 13% over the same quarter in 2014.

Wells Fargo spokeswoman Jen Hibbard declined to comment, as did Seth Martin, a spokesman for GE.

A sale of the GE commercial lending unit was expected as part of GE's plan, announced on April 10th, to significantly reduce its banking operations, a division known as GE Capital, by selling off $200 billion worth of assets in that division over the next two years.

The U.S. commercial lending and leasing unit, valued at $74 billion, marks the largest of the banking assets GE had tagged for sale when it made the announcement two weeks ago.

But reports of GE's talks with Wells Fargo suggest the sale of its biggest planned divestiture could come quicker than expected.

In a conference call with analysts last week, executives said interest in the banking assets have been strong since GE announced plans to dispose of its banking assets, which include U.S. commercial lending as well as a $31 billion international commercial lending and leasing operation, which is separate from the U.S. business.

"The amount of inbound interest has been incredible, in both non-banks and banks, both domestic and international," said GE's CFO, Jeff Bornstein, on a recent earnings call. "So I think that we're buoyed by the demand that we see so far," he said.

Shares of GE declined Monday, down 0.7% to $27.07 a share. Wells Fargo's stock traded up 0.5% to $54.33 a share.

GE kicked off the announcement to whittle down its banking business with the sale of more than $26 billion in real estate assets, including loans.

As part of the real estate sale, also announced on April 10, Wells Fargo agreed to purchase $9 billion worth of mortgages and commercial real estate loans based in the U.S., U.K. and Canada.

Wells Fargo in Woodbury, Minn.
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