Summary
General Electric Company (GE) announced an agreement with Shinsei Bank to terminate GE's obligation to reimburse Shinsei Bank for certain customer interest refunds related to a Japanese consumer finance business previously sold by GE Capital Corporation (GECC) in 2008. This resolution stems from a loss-sharing arrangement established during the 2008 sale concerning potential 'Grey Zone' interest claims. The settlement requires GECC to pay Shinsei Bank ¥175 billion, equivalent to approximately US$1.7 billion. This payment will result in GE recording an additional $1.0 billion reserve in discontinued operations for the fiscal year 2013. Consequently, GE's net earnings and net earnings per diluted share for the fourth quarter and full year 2013 will be reduced by $1.0 billion and $0.09, respectively, as the agreement was finalized before the company's annual financial statements were filed.
Key Highlights
- 1GE resolves a reimbursement obligation to Shinsei Bank related to a 2008 sale of a Japanese consumer finance business.
- 2The agreement ends GE's liability for potential 'Grey Zone' interest claims.
- 3GE Capital Corporation (GECC) will pay Shinsei Bank ¥175 billion (approximately US$1.7 billion).
- 4GE will record an additional $1.0 billion reserve in discontinued operations for 2013.
- 5This settlement will reduce GE's reported net earnings by $1.0 billion for Q4 and full-year 2013.
- 6Net earnings per diluted share will be reduced by $0.09 for Q4 and full-year 2013.