GE looks to move in on UK bank sector

US CONGLOMERATE General Electric (GE) is planning to launch an internet bank in the UK.

The financial arm of the firm, GE Capital, has already set up an internet bank in Germany, titled GE Direkt, and is hoping to join the ranks of the newcomers on the UK banking scene within 18 months.

US-backed Metro Bank opened its first branch in the UK last month and Lloyd’s of London chairman Lord Levene and City grandee Sir David Walker are to front another new High Street venture.

But GE’s plans, tentatively dubbed GE Direct, will be the first online bank launched in the UK since the financial crisis.

The Financial Services Authority (FSA) tightened the rules regulating internet banks two years ago, following the collapse of Icelandic internet banks such as Icesave, which had 300,000 customers in the UK with deposits of over £4bn.

The incident led to a diplomatic crisis between Britain, Holland and Iceland over attempts to reclaim deposited funds.

GE is thought to be looking at the possibility of rolling out similar operations across Europe as GE Capital looks to diversify its funding base.

The firm specialises in factoring, paying companies up front for contracts that will pay out over time, such as a recent deal which will see Jaguar Land Rover receive £170m through this structure.

GE Capital utilised the AAA credit rating of its parent company to borrow money at very low interest rates, but the financial crisis saw GE’s credit rating slip and factoring became a more expensive method of revenue for the division.

GE was unavailable for comment last night.