Credit crunch hits GE Money

Last updated 19:13 24/10/2008

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GE Money is withdrawing from the home loan, car finance and small business market in New Zealand, with 80 Kiwi jobs lost.

The finance company is stopping new mortgage lending and lending on vehicles and will lay off 80 staff, TV3 reported. Existing customers will continue to be serviced.

The company will cease offering home loans through third parties such as brokers and end its motor finance and small business finance in Australia and New Zealand, The Age newspaper reported on its website.

The company has 500 staff in New Zealand, according to its website. GE Money was first established in New Zealand in 1982.

The move is a response to the global financial market meltdown, which has increased funding costs for financial institutions.

GE Money is downsizing its business in both Australia and New Zealand and 335 staff are expected to be axed, The Age reported.

Victoria, where GE Money has its head office, will bear the brunt of the lay-offs.

"This is a result of the extreme volatility and greatly increasing cost of funds on the global and local wholesale markets," GE Money said.

The measures will have no effect on its retail store finance, credit cards, personal loans and insurance businesses.

"This was a very difficult decision to take. However, we will now be able to better focus on those parts of the business that are our core strengths and in which we have scale," GE Money's Australia and New Zealand chief executive, Mike Cutter said.

GE's Australian motor finance business is one of the biggest in the country, with Holden, Ford, Toyota, Mazda and Audi among the many brands financed.

GE Money is part of giant GE, which reported earnings of US$4.5 billion (NZ$7.84 billion) in the third quarter. It is in the non-bank sector, which has been struggling.  

- NZPA

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