GE Unit to Buy U.S. Loans From Japanese Bank

General Electric Co.’s financial unit, taking another huge step toward becoming a financial-services leader in Japan, said Sunday that it will buy the $11-billion U.S. commercial loan portfolio of insolvent Long-Term Credit Bank of Japan. Terms weren’t disclosed.

GE Capital Services Inc., the world’s largest non-bank finance company, is buying assets of money-losing Japanese financial companies, and the LTCB transaction is the fifth since the start of 1998.

The transaction is also the latest attempt by a foreign firm to salvage a bargain from the wreck of Japan’s “bubble economy.” GE agreed in January to buy $6.47 billion in assets from bankrupt LTCB affiliate Japan Leasing Corp., the biggest acquisition ever involving a Japanese company. And just last week, U.S. investment bank Morgan Stanley announced that it would become a lender in the Japanese market.

“GE has a strategy of overwhelming Japan with acquisitions while prices are down,” said Robert Young, an analyst at Moody’s Investor Service Inc.

LTCB was declared insolvent and temporarily nationalized in October, when the bank’s liabilities outweighed its assets by $22 billion.

GE, the second-largest U.S. company in terms of market value, also bought Koei Credit, a consumer credit company, in January 1998 and the consumer-finance business of Lake Co., which makes high-interest-rate loans to consumers, in July of last year.

“GE has been very aggressive about making acquisitions, and I expect them to continue to be aggressive over the next year,” said Prudential Securities Inc. analyst Nicholas Heyman.

Goldman, Sachs & Co. arranged the sale of LTCB’s U.S. commercial loans to GE Capital, the Nihon Keizai newspaper reported without citing sources.

Officials from LTCB and Goldman were unavailable for comment. GE Capital spokesman John Oliver declined to comment on the details of the agreement.

GE Capital, based in Stamford, Conn., is expected to complete the acquisition of the LTCB commercial loan portfolio by December.

LTCB may be selling more assets. The bank’s president, Takashi Anzai, said last month that at least six financial institutions are interested in the bank, one of three long-term lenders that helped finance Japan’s postwar industrial resurrection.

The Japanese government said in March that about 20% of LTCB’s assets are “unfit” for sale. Those assets--about $45 billion--will be transferred to the Resolution & Collection Corp., Japan’s public debt collector. The rest of the bank’s $225 billion in assets have been put on the market.

GE Capital’s Fairfield, Conn.-based parent makes everything from lightbulbs to jet engines and owns top-rated U.S. television network NBC. Microsoft Corp. leads GE as the world’s largest company by market value.

On Friday, GE shares $3.38 to close at $105.94 on the New York Stock Exchange.