General Electric Co. outlined plans Tuesday to shrink its GE Capital finance unit, saying it would revamp the business to reduce its reliance on volatile short-term funding.
In a presentation to investors, Mike Neal, GE's vice chairman and the chief executive of GE Capital, reiterated that he sees no need for the unit to seek bank holding company status, which would give it access to additional government financial resources but subject it to more regulation.
However, the company said it plans to double the role of deposits in GE Capital's funding base, to about $20 billion, by yearend.
The presentation ended lingering speculation that GE may break up or spin off GE Capital, whose performance as a powerhouse of earnings growth had been reversed by funding problems and loan writeoffs.
The Fairfield, Conn., company said it will take charges of $1 billion to $1.4 billion in the fourth quarter to turn around a unit it said remains core, with an expected return to double-digit earnings growth in 2010.
GE said it is considering a $5 billion capital injection to the finance arm.