General Electrics has announced the sale of most of its GE Capital assets and a return to its industrial roots, while retaining its trade finance business.

The move is suspected to be largely related to US regulators’ crackdown on non-bank financial institutions, with the creation in 2010 of the ‘systemically important financial institutions’ (SIFI) designation for financial companies to be closely supervised, including GE Capital.

Indeed, in a letter sent in February 2015 to the Federal Reserve, GE Capital chairman and CEO Keith Serin wrote: “[GE Capital] recognises that its status as a non-bank financial company designated by the Financial Stability Oversight Council [FSOC] to be supervised by the Federal Reserve (a “non-bank SIFI”) requires the application of enhanced prudential standards, but we respectfully submit that the overall approach is not sufficiently tailored to [GE Capital] as is required.”

Now getting rid of the majority of is financial services businesses, the firm is hoping to be de-designated.

GE will work closely with regulatory bodies to de-designate GE Capital as a systemically important financial institutions (SIFI).

“GE has discussed this plan, aspects of which are subject to regulatory review and approval, with its regulators and staff of the FSOC. GE will work closely with these bodies to take the actions necessary to de-designate GE Capital as a SIFI,” the company said in a statement.

While GE Capital Real Estates assets are being sold to buyers including funds managed by Blackstone for approximately US$26.5bn, with Wells Fargo acquiring a portion of the performing loans, the trade finance and factoring business will remain part of the company’s financial services.

“It is not being sold. We are fully committed to serving and growing with our customers and nothing changes in our relationship with them. It will be business as usual and all customer agreements will remain in place,” a GE spokesperson tells GTR.

Other “vertical” financial businesses retained include GE Capital aviation services, energy financial services and healthcare equipment finance, while most of the commercial lending and leasing segment and all US and international consumer platforms will be disposed of.

Our financial services assets can be more valuable to others. Keith Sherin, GE Capital

Under the plan, GE expects the proportion of its earnings generated by its industrial businesses to jump from 58% in 2014 to 90%.

The GE Capital businesses that will remain with the company will account for about US$90bn – from the current US$363bn – in ending net investments, with expected returns in excess of their cost of capital.

“The successful IPO of GE’s retail finance business, Synchrony Financial, and other recent business exits have demonstrated that our financial services assets can be more valuable to others,” said Sherin in the statement announcing the sale. “GE Capital’s businesses are excellent, and this is a great market for selling financial assets.”