Sumitomo Mitsui Financial Group Inc is near an agreement to buy General Electric Co’s (GE) European buyout-lending unit for more than US$2 billion, a person with knowledge of the matter said.
Sumitomo Mitsui is among Japanese firms that are interested in GE’s assets as the US company accelerates the disposal of its finance operations.
Banks in the world’s third-largest economy are looking abroad for growth as a declining population and shrinking loan margins hamper profit prospects at home.
“This is an effective way to expand overseas business,” Deutsche Bank AG analyst Yoshinobu Yamada said in Tokyo.
“Sumitomo Mitsui can count on the spreads from lending to private equity. Moves to purchase these types of assets will increase among other megabanks,” Yamada said.
An agreement would extend GE’s pullback from lending to private-equity firms after a US$12 billion deal on June 9 to sell most of the US business to Canada Pension Plan Investment Board.
The Wall Street Journal earlier reported that Tokyo-based Sumitomo Mitsui Banking Corp beat Apollo Global Management LLC and Ares Management LP for the unit.
Sumito Koike, a spokesman for GE in Tokyo, declined to comment.
GE said in May that it expected to announce as much as US$30 billion of financial asset sales by yesterday as it worked toward a US$200 billion goal.
General Electric chief executive Jeffrey Immelt is refocusing on industrial operations, making products such as jet engines, gas turbines and medical scanners.
On Monday, the US company agreed to sell the bulk of its vehicle fleet-management business to Canada’s Element Financial Corp for US$6.9 billion.
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