B of A Sells Car Leasing Unit to GE Credit
BankAmerica, continuing to jettison assets to bolster its weakened financial position, said Thursday that it has sold substantially all of the assets of its auto leasing subsidiary to General Electric Credit Corp. for a price estimated to be just over $215 million.
The sale of BancAmerica Acceptance Corp. will give BankAmerica a before-tax third-quarter gain of about $20 million, the companies said. The deal is part of BankAmerica’s effort to dispose of certain assets and businesses that it deems peripheral to its basic banking businesses.
In the past year or so, the beleaguered parent of Bank of America has sold its headquarters building in San Francisco, its downtown Los Angeles office complex, a consumer finance unit and several other smaller subsidiaries. Other sales are also planned to shore up the company’s finances, which have taken a beating amid losses of nearly $1 billion in the past 18 months due largely to bad loans in agriculture, real estate and the Third World.
‘Non-Strategic’ Businesses
“The sale of this business is another execution step in our program of disposing of non-strategic lines of business and redeploying the capital proceeds into the strategic lines of businesses,” Stephen T. McLin, BankAmerica’s executive vice president and director of corporate planning, said in a statement. “Nationwide auto leasing is not an integral part of our strategy.”
The deal also is part of a continuing expansion by General Electric Co., GE Credit’s parent, in auto leasing and other financial services. General Electric’s financial services unit, which includes GE Credit, has total assets of $44 billion, making it one of the nation’s largest financial services firms. The unit recently acquired 80% of the Kidder, Peabody & Co. securities firm for $600 million.
The auto leasing assets being sold include about 16,000 vehicles under lease to consumers in California and other states, said Edward D. Stewart, GE Credit’s vice president for automotive financial services. That will expand GE Credit’s auto leasing activities by about 10%, he said.
Neither party would disclose the purchase price, but an official close to the deal said it was slightly more than the $215-million book value of the assets sold. The deal closed Tuesday, they said.
BancAmerica Acceptance’s 70 employees and its office in Santa Clara, Calif., are included in the transfer. All employees are expected to become employees of GE Credit, the firms said.
