GE Capital sells BAC-Credomatic to Columbia's Grupo Aval for $1.9 billion
16 Jul 2010
GE Capital's global banking group yesterday said that it had reached a definitive agreement to sell its 75 per cent stake in BAC-Credomatic, a Central American bank and consumer credit-card services provider, to Columbia's Grupo Aval for $1.9 billion.
Though the transaction is subject to regulatory approvals and other customary conditions, GE expects to close the deal by the end of 2010.
Bogota-based Grupo Aval, operates in Central America and Mexico and has about $10.6 billion in loan assets and deposits.
Founded in 1952, BAC has operations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Mexico, with approximately $5.1 billion in loan assets, and $5.5 billion in deposits.
Last year, Connecticut-based GE Capital hiked its stake BAC from 49.99 per cent, which it bought in 2005 for $500 million, to 75 per cent putting a drain on its balance sheet.
Like other lenders, GE Capital struggled during the global financial crisis as it was forced to write off bad loans from its books. Its parent, GE has been selling non-core assets of GE Capital to reduce its huge debt load.
"This is a good deal for GE, and furthers our objective of reducing the overall size of GE Capital," said Dmitri Stockton, president and CEO of GE Capital Global Banking.
"We have enjoyed working with BAC's shareholders and their world-class management team to successfully grow the franchise over the previous five years. We believe this transaction will be positive for BAC, and will allow the Bank to focus solely on its excellent prospects for future growth."