Home lenders and car dealers hurt by GE cuts

Home lenders and car dealers have been left scrambling for new funding sources after GE Money announced it is cutting its Kiwi business.

It said yesterday it would no longer provide funding to home lenders or car finance.

Christchurch car dealer Paul Kelly expected GE Money to ask dealers to repay business loans, but mum and dad car buyers should not be affected.

Car dealers had other sources of wholesale finance to provide car buyers with loans, he said.

Spokesman Geoff Lynch said GE's main business in New Zealand was financing retail purchases in chains such as Noel Leeming and Harvey Norman, and this would continue.

GE would also continue to offer personal loans and insurance through its branch network.

Subsidiary home lender Wizard Home Loans was also unaffected, but the future of that business was under review, Lynch said.

Other companies providing home loans, such as Christchurch's Global Home Loans and Auckland's General Finance, have been hit.

They were told yesterday by GE Money's director of New Zealand business, John Grant, that GE was downsizing its business.

The company has about 1000 staff in New Zealand, and the job losses would be in Auckland and Christchurch .

GE Money was also downsizing its business in Australia, and job losses in the two countries would total 335.

Global Home Loans managing director Louise Ledger said the company would be cramped by GE Money's decision.

Global sourced all its funds from GE and marketed the loan packages through about 1500 mortgage brokers around New Zealand. It would now look for alternative funding sources, Ledger said.

"The line of funding I have through Global Home Loans and GE wholesale is no longer available. The existing clients are fine; it's just the ability to do ongoing lending that has stopped," she said.

GE Money, which established a business in New Zealand in 1982, has said the measures would have no effect on its retail store finance, credit cards, personal loans and insurance businesses. GE will still offer home loans through its Wizard brand.

William Cairns, of Auckland-based non-bank lender General Finance, said his company sourced about 50 per cent of its funds from GE but would continue to operate through its other sources, including ANZ Bank-owned Origin and debentures.

Kelly said the GE decision would not affect existing retail customers who had bought a car from a New Zealand dealer, with those loans remaining in place.

While GE might not offer new retail loans, car dealers, including Paul Kelly Motors, would be able to use several other financiers, such as UDC or Marac, for customers buying a car. Paul Kelly Motors had other facilities in place to replace the GE loans.

- © Fairfax NZ News