General Electric announced today that the planned spinoff of its GE Capital retail financing unit will happen later this year, and that the new company will have an initial public stock offering under its new name, Synchrony Financial.
While GE will continue to own part of the new company in the short term, it expects to completely exit any interest in Synchrony Financial in 2015.
General Electric had announced previously that this move would be coming, as the company sought to remove a profitable yet volatile financing unit from impacting its overall business and stock performance. GE Capital has at times accounted for almost half of GE’s profits, yet the recent financial crisis highlighted how the banking operation could also be a drag on the company overall, in particular its stock price.
GE Capital is the largest provider of private label credit cards, issuing cards for major retailers including Wal-Mart, JCPenney, GAP, TJ Maxx, Lowe’s, eBay, PayPal, and more.