GE Money cancels finance offerings

GE Money Australia, one of the nation’s biggest financiers, will no longer offer small business finance, motor finance and third-party mortgages.

GE Money Australia, one of the nation’s biggest financiers, will no longer offer small business finance, motor finance and third-party mortgages.

Last week the company said in a statement it will no longer offer certain services and will make 335 jobs redundant within 12 months. It will also scale back New Zealand operations.

“This is a result of the extreme volatility and greatly increasing cost of funds on the global and local wholesale markets,” the company says.

It claims there will be no impact on retail store finance, credit cards, insurance operations and personal loans.

But Ian Rogers, publisher and editor of banking newsletter The Sheet, says the company’s decision to cease small business lending won’t have that much of an impact.

“Their small lending initiative was pretty recent and it was largely secured on residential property anyway, so it was a puffed up version of ordinary residential lending.

“However GE had a mortgage book of about $19 billion, including Wizard, and that was equal to about 1.9% of the national mortgage market.”

Rogers says the move is to be expected as credit dries up, and is another symptom of what he says is a looming recession.

“There’s a whole lot less competition in residential lending now. There’s just a lot less availability of credit. Alternative sources of finance outside the classic banking system have been well and truly stuffed by the credit crunch.

“Australia is not going to avoid a recession. Because availability is being rationed and repayment of debt is what every household prioritises, demand is diminished.”

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