GE Capital's Sale Price for Truck Finance Business; To Bitcoin, or Not to Bitcoin?

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Keep On Truckin': General Electric will earn a pretty penny from the sale of its U.S. transportation finance business. Bank of Montreal's purchase price for the Irving, Texas-based GE unit will be based on the net earning assets balance at the deal's closing, plus a premium, according to Canada's Financial Post. All told, the price will be about $13 billion. Those terms were disclosed during a Thursday afternoon conference call with analysts. Financial terms had not previously been disclosed. The deal will immediately add to Bank of Montreal's earnings and will boost its returns on equity, CEO Bill Downe said during the call.

BMO Harris Bank CEO David Casper said GE's transportation-finance business is “an excellent organization, one that is operated by the premier management team in the transportation finance industry.” GE 's transportation-finance business is the largest financier to the commercial truck and trailer industry in North America, according to the Globe and Mail. Bank of Montreal will use its balance sheet to fund the deal and won't issue new stock to finance it, the WSJ said.

Wall Street Journal

The latest General Electric financial-services business unit to be sold could be GE Asset Management. GE is exploring a sale of the unit, unnamed sources said. GE Asset Management is separate from GE Capital, which General Electric has been aggressively exiting through a series of sales. But the move to sell GE Asset Management fits with the strategy to exit GE Capital. GE's ultimate goal is to escape designation as a systemically important financial institution.

Visa recently set a goal to hire 2,000 technology professionals by 2017 as a way to improve and expand digital financial services. Visa told the paper it's about halfway toward meeting that goal. Visa wants to handle in-house the software development for wearables, mobile apps and blockchain, rather than hiring contractors to do that work, said Rajat Taneja, Visa's executive vice president of technology. Visa runs at least six technology labs worldwide, in Austin, Texas; Denver; Silicon Valley in California; Ashburn, Va.; Singapore and India.

A WSJ correction appended to the bottom of the aforementioned item on Visa's hiring casts light on the tightrope traditional financial-services institutions are walking when it comes to Bitcoin. On the one hand, credit-card issuers, banks, payment processors and other traditional players in the financial-services space want to be seen as innovative and on the cutting-edge. Virtual currencies satisfy that desire. On the other hand, that same group of old-line companies doesn't want to have anything to do with Bitcoin, or at least not publicly. A Visa spokeswoman made a point of telling the Journal that its article on Visa's recruitment of tech personnel incorrectly described the company vis-à-vis the “emerging forms of digital payments [it's] working to support.”

Visa has not “publicly” stated that it's going to support Bitcoin. What Visa has stated in public is that it will explore the blockchain technology that underlines Bitcoin. News from earlier this week offers an example of the distinction that Visa and other financial-services companies want to make with blockchain versus Bitcoin. Visa is one of several financial-services companies that has invested in a company called Chain, which “designs and operates private blockchain networks for more efficient digital asset transfer amongst companies,” American Banker reported this week. Notice American Banker's article doesn't use the word Bitcoin.

“It's not that we were interested in Bitcoin, we're more interested in blockchain,” Suresh Kumar, chief information officer at Bank of New York Mellon, told American Banker in June.

Financial Times

Whether traditional banks want to acknowledge their interest in Bitcoin or not, Blythe Masters, chief executive at Digital Asset Holdings, said the U.S. is likely to trail in the development of blockchain technologies because of problems related to market integration. “There are jurisdictions outside the U.S. where it will happen quicker and that’s because there are markets where there is a vertical integration all the way from the exchange through to the custodian’s custodian if you will,” Masters said at an industry conference on Thursday.

“There the decision-making process is contained within a smaller number of bodies and there are a couple of jurisdictions with very supportive governments that are driving that,” she said. In a news analysis piece that's somewhat rambling and lacks focus, the FT posits that disruptors are really just banks using another name but without the regulatory burden of traditional banks.

Simple, the online bank owned (but not operated) by BBVA Compass Bancshares, “is essentially a superior bank website,” the paper said. Simple has said, “You may not have heard a lot about us. And that's by design.” To which the FT responds, “Then Simple was sold to BBVA, the large Spanish lender, and any pretence was over.”

Lending Club and Prosper aren't the “marketplace lenders” they make themselves out to be. Instead, “they find potential borrowers, use another secretive bank, Utah-based WebBank, to write the loans, and then sell them on to investors. The bank is critical,” the paper argues. The FT also claims that Social Finance, also known as SoFi, is somehow different, because it has branched out from its original base of student lending into mortgages and personal loans.

New York Times

The paper looks at the Justice Department's announcement that it will target individual executives at banks that are being investigated for wrongdoing. American Banker posted an article along the same lines on Thursday, showing that while it seems the Justice Department is about to get tougher on executives, it's easier said than done.

The Times quotes one lawyer who said it's difficult to prosecute white-collar criminals and that direct evidence of fraud is hard to come by. “White-collar cases are hard to prove, because they’re very complex and if you don’t have direct evidence of fraud, there’s room for argument on both sides,” said white-collar criminal defense attorney David O'Neil of Debevoise & Plimpton.

The paper scored an interview with deputy attorney general Sally Q. Yates, who said it's going to take time before individual executives are brought to justice. But the goal is, in fact, to jail those executives responsible for fraud. “I’m not trying to tell you that this means that tomorrow, all of a sudden, corporate heads are going to be rolling,” Yates said.