General Electric Co. reportedly held talks with Citigroup Inc. about combining their credit card operations.
The two companies held informal conversations about a joint venture or outright sale of Citi's "branded and private-label credit cards" to GE, the New York Post reported Thursday, citing unnamed sources.
The talks, which were held earlier this year, broke off because Citi wanted a higher price than GE would offer, the newspaper said.
Neither Citi nor GE would discuss the report.
Citi and GE have attempted to get rid of their private-label card portfolios, which generally rack up higher losses than other types of cards. GE, which put its private-label portfolio up for sale in December 2007, gave up its search for a buyer in September.
This year Citigroup put its private-label card business into Citi Holdings, a repository for noncore assets the company is seeking to sell or wind down.
Now that the Obama administration has proposed reforms that would ban nonfinancial companies from banking, GE has another reason to avoid buying credit card assets.
Under the Obama plan, released in June, GE would have to divest itself of GE Money Bank, which issues its credit cards, unless the parent company converted to a bank holding company and became subject to restrictions on nonfinancial activities. The administration also proposed what it called "a new, more robust supervisory regime for any firm" that poses systemic risk, and said such companies should also be subject to the same restrictions.
Analysts have speculated that, as a result, GE would be forced to unload its sprawling GE Capital arm, which includes GE Money Bank as well as businesses ranging from equipment leasing to aircraft financing.
"One proposal in particular, pertaining to the separation of banking and commerce, has led to some media speculation that, if enacted, could require the separation of GE and GE Capital," Jeffery R. Immelt, GE's chief executive, said in a memo to employees, according to a Reuters report last month. "We are certainly opposed to it, since this issue had nothing to do with the financial crisis."
On Thursday, Russell Wilkerson, a spokesman for GE Capital, reiterated: "It's early in the process. … Overall we support reform and we are in support of a systemic regulator, but some of the provisions we have our concerns with."
When asked about the proposal's impact on GE Capital, he said, "we're opposed to that … separation … which is defined in the proposal as the separation of companies doing banking and commerce."
