GE Plans $2 Billion in Finance Arm Cutbacks Next Year

General Electric said on Tuesday it planned to cut costs by $2 billion next year at its finance arm, GE Capital, which has dragged lower the U.S. conglomerate's results as a result of the global credit crunch.

GE said it would reorganize the GE Capital arm—created in July when the company merged its commercial and consumer finance arms—to focus on three regional centers in Europe, Asia and the Americas. The changes will take effect Jan. 1.

"This is a 14 percent cost reduction for the business. It's a follow-up to the July announcement and was expected," a GE spokesperson told CNBC.

The company provided few details on how it would cut costs. A GE spokesman declined to say how many jobs would be eliminated at the unit, which employs 75,000 people worldwide.

"Over the last two months, we have acted decisively to improve our funding position," Michael Neal, chairman of GE Capital, said in a statement posted on one of Fairfield, Connecticut -based GE's Web sites. "We reduced our leverage, successfully raised capital, and accessed government programs that level the competitive playing field for us in financial services."

GE as a whole aimed to cut corporate costs this year by $3 billion, a target setin April after the company stunned Wall Street with an unexpected drop in first-quarter profit.

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—Reuters contributed to this report.

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