(27 October 2008 – Australia) GE Money has announced that it will cease a number of its operations in Australia, including third party home loans, motor finance and small business finance.GE Money said in an announcement that specifically, it will cease offering home loans through third parties (brokers, mortgage managers and other originators except Wizard), motor finance and small business finance in Australia and New Zealand.
The reason given by GE Money was the extreme volatility and greatly increasing cost of funds on the global and local wholesale markets.
Of GE Money’s 4,500 employees, approximately 335 positions will become redundant at various times over the next 12 months. About 110 of these redundancies will be in four weeks, with the balance occurring over the following year.
There is no impact on GE Money’s retail store finance, credit cards, personal loans and insurance businesses.
Customer service roles will be retained to service existing loans whilst the existing book is in run off over a period of some years.
GE Money Australia & New Zealand, chief executive officer and president, Mike Cutter, said the unprecedented conditions meant that GE Money has to be more selective in its allocation of capital and needs to ensure it gets a reasonable return on investment.
Home lending and motor finance are capital-intensive businesses and we have had to accept that the returns at present no longer justify the cost of funding those products, Cutter added.