By TOM MURPHY
AP Business Writer
INDIANAPOLIS — GE Capital will sell its $2 billion Mexican consumer mortgage portfolio to Grupo Financiero Santander Mexico, in the latest sale of real estate assets for a business that was stung badly during the recession.
The lending unit of Fairfield, Conn.-based General Electric Co. will receive about $170 million, according to a company official who wasn’t authorized to talk about the deal.
GE has provided consumer mortgages in Mexico since 2002. The sale of its Mexican consumer mortgage business is part of a push to shrink its balance sheet by dumping non-strategic businesses that lack scale.
GE said Friday it plans to continue investing in "core industrial and commercial finance platforms," including those in Mexico.
Santander said the deal will make it one of the biggest mortgage providers in Mexico.
Not so long ago, GE Capital generated more than half of General Electric’s profit, but it stumbled as the recession wreaked havoc in real estate markets. The unit booked billions in write-offs.
The losses convinced GE to focus its business on making products ranging from wind and natural gas turbines to sonogram machines and energy-efficient appliances.
In June, GE Capital said it planned to reduce its commercial real estate portfolio of office buildings and other commercial properties to about $40 billion from $80 billion.
Earlier this month, GE said it completed the $1.92 billion sale of its Central American lending subsidiary, BAC Credomatic GECF Inc., to the Colombian bank Grupo Aval. BAC Credomatic operates in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Mexico with about $5.1 billion in loan assets, and $5.5 billion in deposits.
The GE unit is not alone in trimming its real estate portfolio. The Wall Street Journal reported Friday that Credit Suisse Group is selling a $2.8 billion portfolio of European commercial property loans for $1.2 billion to Apollo Management LP.
Meanwhile, GE Capital has started to rebound. In the third quarter, it reported an $871 million profit, up from $141 million the year before, as credit costs fell and its margins increased.
The sale of the Mexican mortgage business is expected to close in the first half of next year.