CIT Group (CIT) Seeks Buyers for $1B Commercial Loan Portfolio
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CIT Group (NYSE: CIT) may be looking to shore-up its books further with the sale of a massive loan portfolio.
According to reports Friday, CIT is aiming to unload a $1 billion commercial loan portfolio. The portfolio consists mainly of senior secured loans and some junior secured loans, the WSJ notes, citing people familiar with the matter.
Loans in the portfolio are diversified amongst 72 companies, with some backed by private equity. Though the portfolio comes from a problem book, sources have said a number of companies are making payments on the loans. Value of the portfolio was about $2 billion in the same time last year, but it was reduced over the subsequent time period.
CIT has been working to downsize risk since emerging from bankruptcy in late 2009. Selling of the portfolio will probably be one of many from CIT, as it joins the ranks of a number of financial institutions looking to rid themselves of underperforming assets as the market rebounds. In selling the loans, CIT will be able to dedicate more resources to issuing new loans rather than servicing the existing portfolio.
Further, cleaning things up makes CIT more appealing as a takeover target. The financial institution, which makes loans to small- and medium-sized businesses, could be appealing to a number of larger banks such as Well Fargo (NYSE: WFC), US Bancorp (NYSE: USB), or TD Bank (NYSE: TD), among others.
Since early 2010, CIT has been able to sell $8 billion of loan and lease assets, reduce headcount by 19 percent, and divest itself of non-core operations.
CIT shares are about 1 percent lower Friday.
According to reports Friday, CIT is aiming to unload a $1 billion commercial loan portfolio. The portfolio consists mainly of senior secured loans and some junior secured loans, the WSJ notes, citing people familiar with the matter.
Loans in the portfolio are diversified amongst 72 companies, with some backed by private equity. Though the portfolio comes from a problem book, sources have said a number of companies are making payments on the loans. Value of the portfolio was about $2 billion in the same time last year, but it was reduced over the subsequent time period.
CIT has been working to downsize risk since emerging from bankruptcy in late 2009. Selling of the portfolio will probably be one of many from CIT, as it joins the ranks of a number of financial institutions looking to rid themselves of underperforming assets as the market rebounds. In selling the loans, CIT will be able to dedicate more resources to issuing new loans rather than servicing the existing portfolio.
Further, cleaning things up makes CIT more appealing as a takeover target. The financial institution, which makes loans to small- and medium-sized businesses, could be appealing to a number of larger banks such as Well Fargo (NYSE: WFC), US Bancorp (NYSE: USB), or TD Bank (NYSE: TD), among others.
Since early 2010, CIT has been able to sell $8 billion of loan and lease assets, reduce headcount by 19 percent, and divest itself of non-core operations.
CIT shares are about 1 percent lower Friday.
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