As banks pull back in credit crunch, GE steps up

By Scott Malone and Michael Flaherty - Analysis

BOSTON/NEW YORK (Reuters) - GE's commercial finance operations stand to benefit from the credit crunch, with private equity firms looking to rely more on General Electric Co (GE.N) for funding as banks pull back on lending.

Investment banks are stuck with more than $300 billion of leveraged buyout debt, which has severely limited their ability to lend money to private equity buyers.

It's a tough situation for Wall Street, but presents an opportunity for GE.

The commercial finance arms of GE lend large sums of money but are comfortable keeping the loans on their balance sheets. The world's second-largest company by market capitalization behind Exxon Mobil Corp (XOM.N), GE had more than $730 billion in assets at the end of the second quarter.

While GE does syndicate loans, in some instances it holds them alongside its many other assets.

That's a difference from investment banks, which for several reasons seek to quickly syndicate the loans, hoping to free up their balance sheets for more lending.

With Wall Street stuck in a logjam of debt, GE lenders can focus on pulling in more business.

"We've executed on a couple of deals in the last couple of weeks where other institutions have not fulfilled commitments that they've made and we've been able to step in and do that," Alex Urquhart, president and chief executive of GE Energy Financial Services, told investors this week.