Banking

Report: Wells Fargo could be eyeing another deal with General Electric

The General Electric logo is displayed inside a test tunnel at the GE Aviation Test Operations facility in Peebles, Ohio, on April 14.
The General Electric logo is displayed inside a test tunnel at the GE Aviation Test Operations facility in Peebles, Ohio, on April 14. Bloomberg

Wells Fargo could be looking to do another deal with General Electric, as the San Francisco-based bank looks for ways to boost loans.

GE is in talks to sell a $74 billion unit that provides loans to midsize U.S. businesses, and Wells is one of the potential buyers, the Wall Street Journal reported Monday, citing unidentified people familiar with the matter.

GE is in discussions to sell all or part of the business to Wells, according to the Journal. Other bidders are involved, the paper reported, citing people familiar with the matter.

A deal with Wells would highlight the San Francisco-based bank’s willingness to make acquisitions, even as rivals such as Charlotte-based Bank of America and New York-based Citigroup have been selling off assets and business units to streamline operations. Wells acquired Charlotte’s Wachovia during the financial crisis in 2008 and emerged in better financial shape than most of its peers.

GE announced this month it would sell most of the assets in its GE Capital financial services subsidiary, the latest and most dramatic move by the company to transform itself into a more focused industrial conglomerate that makes large, complicated equipment for other businesses.

In one of the first steps of the plan, GE on April 10 said it was selling most of its GE Capital Real Estate assets to funds run by Blackstone and to Wells Fargo. Wells agreed to buy $9 billion of commercial real estate mortgages in good standing, mostly in the U.S., United Kingdom and Canada.

“This is an excellent example of how the combination of our balance sheet strength, the expertise of our team members and our relationship focus positions us to capture opportunities for growth, both organically and through acquisition,” Wells Chief Financial Officer John Shrewsberry said in a conference call with analysts last week.

Shrewsberry said that purchase, which is expected to close later this year, would add an “incremental” number of employees – in the dozens – to help manage the portfolio.

In the conference call, Shrewsberry noted that GE has said it planned to shed more operations.

“We’ll go through in any way that we can be helpful to them in ways that are good for our shareholders as well,” he said. “So there is opportunity there.”

A Wells Fargo spokesman on Monday declined to comment. A GE spokesman also declined to comment to Bloomberg News.

GE has held talks with “a broad geographic spectrum” of buyers, including sovereign wealth funds and banks, as part of the effort to sell the bulk of its lending business, Chief Financial Officer Jeff Bornstein told Bloomberg last week.

In recent years, Wells has made deals to buy loan portfolios from European banks forced to sell assets to meet higher capital requirements. At the end of March, Wells had $861.2 billion in total loans, about one-third of which were commercial and industrial. Total loans were up $34.8 billion, or 4 percent, from a year ago.

Wells Fargo has its biggest employee hub in Charlotte, with roughly 23,000 in the metro area.

GE is also in the process of selling its appliance business to Swedish-based Electrolux, which has its North American headquarters in Charlotte.

Bloomberg News contributed.

  Comments