UPDATE 1-GE plans to spin off credit card unit to shrink finance arm

Lewis Krauskopf and Ernest Scheyder
Friday, 15 Nov 2013 | 10:02 AM ET

NORWALK, Conn., Nov 15 (Reuters) - General Electric Co plans to spin off part of its North American retail finance business next year as a separately traded public company in a long-term attempt to generate less profit from the volatile financial sector and more from manufacturing.

As part of the move, which Chief Executive Jeff Immelt hinted at earlier this year, GE said on Friday it will float about 20 percent of the retail finance unit in the initial public offering.

The retail finance unit manages private-label credit cards, or loans for customers at Pep Boys, AGCO Corp's Massey Ferguson, La-Z-Boy Inc, Wal-Mart Stores Inc among others. It also makes personal loans to consumers to pay for such things as vacations.

GE plans to exit the retail finance business entirely by 2015 in a tax-free distribution of its remaining stake to GE stockholders in exchange for GE common shares.

More details were expected when executives brief Wall Street analysts and investors later Friday morning.

GE Capital, which contains all of the company's financial units, posted revenue of $46 billion last year. Its businesses include commercial loans, consumer finance including credit cards and auto loans, and real estate as well as financing in the aviation and energy sectors.

At one time, the unit contributed nearly one-half of GE's total profit, but its volatility during the 2008 recession nearly sank the entire company, prompting executives to begin to chart the unit's trimming.

GE shares rose 0.2 percent to $27.04.