GE Deals Card Business to American Express

General Electric(GE Quote) entered into a pair of deals totaling nearly $3 billion to shed several non-core businesses outside the U.S.

GE Money, a London-based subsidiary of General Electric, agreed to sell Corporate Payment Services, its commercial card and corporate purchasing business arm, to American Express(AXP Quote) for $1.1 billion in cash. The deal is expected to be completed by the end of the month.

General Electric also reached a separate agreement with Banco Santander(STD Quote) to sell its GE Money businesses in Germany, Finland and Austria as well as its card and auto businesses in the U.K. to the Spanish bank. In return, GE Commercial Finance will acquire Interbanca, the Italian bank that Santander bought as part of the three-way sale of ABN Amro. The transaction is valued at approximately $1.6 billion.

GE Money provides international banking and credit services to consumers, retailers and auto dealers by offering private label credit cards, personal loans, auto loans and leases, mortgages, corporate travel and purchasing cards, debt consolidation and home equity loans.

The corporate payment services business was created in 1992 to issue GE's corporate travel and entertainment cards, as well as purchasing cards to GE employees. While the unit has expanded to include more than 300 corporate clients, GE remains the largest client and has signed a multiyear agreement to become a client of American Express.

GE's corporate payment services is similar to American Express' commercial card business, which handles travel, entertainment and purchasing spending by employees of large corporations and mid-sized companies, where accounts are typically paid in full at the end of each month, rather than a revolving credit line.

"This transaction meets GE's strategy of redeploying assets in financial services and is a win for GE, our shareowners, and our customers, who will be well served by the combination of [corporate payment services] existing capabilities and American Express' strong market leadership," said Mark Begor, the president and CEO of GE Money-Americas.

For American Express, the deal is "part of an ongoing strategy to focus on the payments sector," the company said. It follows American Express' decision to sell its international banking subsidiary last month.

American Express expects the acquisition to be accretive to revenue growth, but have a "minor dilutive impact" to earnings and return on equity "in the early years" following the completion of the deal. American Express said that it would replace debt that supports the receivables of GE's corporate payment services business, which totals roughly $1 billion.

The acquisition comes at a time analysts and investors have become wary of credit card companies that issue debt like American Express and rivals Capital One Financial(COF Quote) and Discover Financial Services(DFS Quote). During the credit crunch, fears about consumers' ability to pay off debt have mounted.

MasterCard(MA Quote) and Visa(V Quote) have fared better, as they make money off the transactions they process, while leaving member banks to issue credit.