Feeling the GE force
GE Money was established in the 1930s to finance home appliances during the Great Depression. Although the company expanded its consumer finance product range over succeeding decades, it was not until the 1990s that it began to build its international operations.
Since then it has shown a strong commitment to emerging markets, with operations in countries ranging from El Salvador to China; from Latvia to Indonesia. Only Africa is underrepresented.
Dave Nissen, chief executive and president, says that emerging markets are a natural staging post for GE Money, especially given General Electric’s involvement in developing infrastructure in these countries.
The US industrial conglomerate is increasingly shifting its focus to these high-growth economies.
"This is the era of the developing world, and of emerging markets," said Jeffrey Immelt, General Electric’s chairman and chief executive, in May.
For GE Money, the emerging markets account for about 25% of the firm’s overall income, although as Nissen points out: "The growth rate on that 25% is much higher than the other 75%."
Nissen reckons that the firm has struck the right balance between aggression and caution. "I believe we have the right risk management and infrastructure in place to go into these markets, many of which have limited credit bureaux information, but we do so without risking our shareholders’ money." After all, GE Money has a triple-A rating to protect.
Despite the stresses in the global credit markets, Nissen reckons that the emerging markets will weather any storm. "They are not 100% shielded from what’s happening in the US but they are still better shielded than they used to be."
When it comes to its subsidiaries, GE Money operates a federal structure in that all the units are part of one group but each has some autonomy. In central and eastern Europe, for example, the various institutions within GE Money share risk management systems. Most carry the GE Money name but in Turkey, for instance, Garanti Bank retains its brand.
It’s not clear what branding strategy the firm will adopt in Poland, following its acquisition of part of Bank BPH. Management is at regional and country levels. "We have a lot of flexibility in our structure," says Dmitri Stockton, head of GE Money’s central and eastern Europe business.