FAIRFIELD, Conn.--(BUSINESS WIRE)--GE [NYSE:GE] announced today an agreement with Shinsei Bank to end GE’s obligation to reimburse Shinsei Bank for refunds of interest paid in excess of the statutory interest rate by customers of the Japanese consumer finance business that General Electric Capital Corporation (GECC) sold to Shinsei in 2008.
As part of that transaction, GECC and Shinsei agreed to a loss-sharing arrangement for potential “Grey Zone” interest claims, with a buyout option to end the obligation in the first quarter of 2014. This agreement resolves such obligations assumed in connection with the 2008 sale.
The agreement provides for GECC to pay Shinsei ¥175 billion (US$1.7 billion). GECC will record an addition to reserves in discontinued operations of $1.0 billion for 2013. This will reduce GE fourth-quarter and full-year 2013 net earnings by $1.0 billion and net earnings per diluted share by $0.09, as the agreement was reached prior to the filing of annual financial statements. Operating earnings for the quarter and the year remain unchanged, and this agreement will not impact first-quarter or full-year results for 2014.
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