GE to restructure but “committed to finance services”

GE Capital has announced job cuts as part of restructuring in preparation for a tougher market next year.

In its updated strategic framework the lender is preparing for job losses across its consumer finance arm in Q4 ‘08 but has yet to reveal in which divisions they will be.

The report also reveals that GE will reduce its exposure to mortgages taking into account that UK mortgage volumes are down 60% and that 4% of GE’s assets are in UK mortgages.

GE says it expects UK house prices to fall between 15% and 20% next year with a financial impact of $600-800m in 2009.

It has already seen $400m in losses so far this year but the report says that the restructuring and other actions will help the company to better perform in the economic environment and position it for profitable long-term growth.

Keith Sherin, vice chairman and chief financial officer of GE says: “GE Capital is an invaluable part of GE’s portfolio, and we are fully committed to financial services.

“We have averaged 15% earnings growth over the last 20 years in these businesses. We are operating in an extremely difficult environment, but we are outperforming our peers and we have strong franchises to build upon for long-term growth.”

He adds: “Even in a difficult economic environment, we expect the company to earn more than $18bn in 2008, including potential restructuring and other charges. We have leadership businesses that continue to generate strong margins and cash flow.”