GE plans to provide banking services

The New Zealand finance arm of giant US corporation General Electric says it will look to follow its Australian counterpart and introduce bank-type services including deposit taking and credit cards.

Last week it was reported that GE Money planned to launch a retail banking operation in Australia within two years.

GE Money Australia's chief executive, Tom Gentile, said the company had begun applying for an Australian banking licence.

Gentile has in the past said banking was "a huge part"of GE Money's global strategy, "and it will be part of our global strategy here in Australia".

GE Money New Zealand managing director Jim Cock, who worked at GE Money Australia for five years before being moving across the Tasman, said GE Money Australia set the example for the New Zealand operation.

"The Australian growth story is a good one, now being mimicked by the New Zealand growth story."

In Australia GE Money is close to being the No 1 credit card offerer. Cock said that was because of the company's purchase of the Coles Myer in-house credit card business.

"None of the businesses we've bought here have had a credit card, but clearly it's something we would look to introduce into this market."

Moreover, GE Money "certainly would" look to take deposits in the future.

"There's certainly attractive things about taking deposits in the local market," he said.

"We think there's still a lot of interesting things we can do in the finance market here.

"I'm not saying we're interested in just competing against finance companies or just competing against banks, we just want have a broad range of financial offerings that we can distribute and offer to as many New Zealand customers as possible."

Last week GE Money got the Commerce Commission approval for its purchase of New Zealand's third-largest consumer finance firm Pacific Retail Finance, giving it a $500 million portfolio of personal loans and distribution deals with retail chains including Noel Leeming, BBQ Factory, Retravision and Freedom Furniture.

The deal was believed to be worth up to $145 million.

Pacific Retail Finance had financed much of its loans by issuing debentures but GE Money will draw on relatively cheap funding from its overseas parent in future.

US-based General Electric has a AAA credit rating which, Cock said, was "the envy of most banks".

Nevertheless, Cock said local deposits could be a useful alternative source of funds, "and you have a different relationship with customers through having a deposit base as well".

GE Money is being increasingly tipped as a potential threat to the dominance of Australia's big banks on both sides of the Tasman.

In New Zealand GE Money is a very new player in the market. It has around a 2 per cent share of the home mortgage lending through its Wizard retail mortgage chain and its AMS wholesale operation which backs the mortgages offered by Wizard and other brokers.

* Bloomberg reports that General Electric in the US reported a fourth- quarter profit from continuing operations of US$5.77 billion on Friday, up from US$5.72 billion a year earlier.

US heavyweight

General Electric
* The world's largest listed company.
* Diversified industrial, in sectors as different as jet engines to power generation, financial services to plastics, and medical imaging to news and information.

GE Money New Zealand
* A subsidiary of General Electric.
* Assets of about $3.5 billion.
* Nearly 500,000 customers.
* With the purchase of Eric Watson's Pacific Retail Finance now New Zealand's third-largest retail finance player.