GE Money to close around 170 branches in India

24 Nov 2008, 1252 hrs IST, Paramita Chatterjee, ET Bureau

NEW DELHI: GE Money India, the consumer finance company of General Electric (GE), has decided to shut down close to 50% of around 170 branches in India in the next
few months. The firm is into financial services business with a loan portfolio of around Rs 5,000 crore consisting of residential mortgages and home, personal and durable loans.

The company had last year announced that it is targeting to take the total number of branches to 250 by 2011. The move to cut the number of branches comes in the wake of the economic slowdown which has particularly hit retail lending business in the country.

It is not clear how many jobs will be cut due to the closure of these branches. A senior executive with GE Money who didn’t wish to be identified, confirmed the move and said the company has embarked on spending and cost reviews in the wake of global economic meltdown.

When contacted by ET, a GE India spokesperson replied through an email: "The entire industry in India is currently facing very challenging conditions due to an increasing interest rates and delinquencies. The current market realities have made it necessary for us to reassess our business model.

In the immediate term we are focusing on reducing operating expenditures and improving operating efficiencies, as well as building a more focused business in terms of product offerings and consolidating in cities where we have a competitive advantage and scale."

With the recent turmoil in the financial services sector, companies have initiated steps to keep their bottomlines intact. GE was earlier reportedly in talks with several finance companies in India and abroad for divesting a majority stake in GE Money. Morgan Stanley was given the mandate to find a strategic partner for the business.

But the negotiations did not fructify into a transaction and thereafter GE merged GE Money with GE Commercial Finance as part of an internal restructuring exercise. The merger was aimed at consolidating operations and synergising efficiencies of both the finance subsidiaries under the GE Capital umbrella.

GE Capital is one of four major units of GE and has sub units GE Aviation Financial Services, GE Energy Financial Services, GE Money (merged with GE Commercial Finance,) and GE Treasury. At one time, GE Capital was the financial services unit of GE and was headed by a single person. The unit, later split into various divisions.

via:E.T