GE Consumer Finance has agreed to buy E-Trade Consumer Finance Corp., a boat and recreational vehicle lender, from E-Trade Financial Corp. for $60 million in cash.
Under a deal announced Tuesday, E-Trade would retain the unit's approximately $3.3 billion of receivables and all loans originated up to the closing, which the General Electric Co. unit estimated would occur in 60 to 90 days.
It said that it would keep E-Trade Consumer Finance's approximately 200 employees and its operations in Irvine, Calif., and Clearwater, Fla.
Glenn Marino, the president and chief executive of GE Consumer Finance's retail sales finance unit, said the purchase should roughly quadruple annual originations in its existing RV and marine lending business, to around $2 billion.
One reason GE bought the business was that "there are not many players in the RV and marine market," Mr. Marino said. "We are buying competency, expertise, and face-to-face relationships with over 2,000 RV and marine dealers in the United States."
Many of the customers are high-end; recreational vehicles can be luxurious homes on wheels and boats can cost as much as a house.
Mr. Marino said the business would also help GE expand its floor-plan business, which provides financing to dealers for their inventory.
The E-Trade business will also provide cross-selling opportunities for GE's revolving lending business, he said, because RV and marine buyers make secondary purchases, such as trailers and radar systems.
"We are able to bring to our distribution base of dealers … a whole host of products that E-Trade does not have today," Mr. Marino said. GE can link up its floor-planning businesses and consumer products "so they have one company they are doing business with and a deeper relationship," he said.
E-Trade's chief executive, Mitchell H. Caplan, said in a press release that it agreed to sell the unit so it could focus its capital on initiatives that "are core to the company's long-term vision."
A spokeswoman for the company, Connie Dotson, elaborated. "When we first bought this business we thought that maybe some of our 3.5 million customers would be interested in RV or marine loans," she said. "But we haven't sold very many RV or marine loans."
Richard Herr, an analyst at Keefe, Bruyette & Woods Inc., pointed out Tuesday that E-Trade bought the unit in 2002, a year before Mr. Caplan became chief executive.
At that time the company viewed the banking and brokerage operations separately, Mr. Herr said. But since Mr. Caplan arrived, he said, the focus has been on lending to brokerage customers and doing more cross-selling.
Mr. Herr said that the unit has been providing decent returns but that E-Trade had said price competition was intensifying.
Ms. Dotson said customers typically first encounter E-Trade through its trading unit. They may eventually obtain a mortgage, home equity loan, or occasionally a credit card through cross-marketing, she said.
