Davis Polk advised GE Capital Global Holdings, LLC (GE Capital) on its successful request for rescission of its designation as a nonbank systemically important financial institution (SIFI) by the Financial Stability Oversight Council (FSOC). The case marks the first time the FSOC has removed the “systemically important” designation since it was created under the Dodd-Frank Act.
On June 29, 2016, the FSOC announced that it had unanimously voted and determined to remove GE Capital’s “systemically important” designation, as it concluded that GE Capital no longer posed a threat to U.S. financial stability. As a result, GE Capital will no longer be subject to supervision by the Board of Governors of the Federal Reserve System and enhanced prudential standards.
GE Capital, a division of GE, invests financial and intellectual capital to support GE’s industrial businesses and their customers. As announced in April 2015, GE is focusing on its high-value industrial businesses and is selling most GE Capital assets. Since the announcement, GE Capital has signed agreements for approximately $180 billion and has closed approximately $156 billion of those transactions. In total, GE plans to sell approximately $200 billion of GE Capital businesses worldwide and expects to be largely complete with the process by the end of 2016. Moving forward, GE Capital will consist of the financing verticals that relate directly to GE’s industrial businesses, including GE Capital Aviation Services, GE Energy Financial Services and Industrial Finance.
The Davis Polk Financial Institutions Group team included partners Luigi L. De Ghenghi and Randall D. Guynn and associates Eric McLaughlin, Reuben Grinberg, Jason P. Allegrante, Andrew B. Samuel, Andrew Rohrkemper and Rafeeq Khazin. Members of the Davis Polk team are based in the New York office.
Promontory Financial Group and Sullivan & Cromwell LLP also advised GE Capital.