Harvey Norman To Self Finance As GE Money Struggles

As General Electric and GE Money struggle to fund their operations Gerry Harvey has said that he will set up a finance Company and Harvey Norman will fund consumer technology and IT purchases them via their own finance operation.

 Currently Harvey Norman’s “4 Years Interest Free” promotions are underwritten by GE Money however the CEO of Harvey Norman Gerry Harvey has told the Australian newspaper that if GE were to pare back its finance arm, “we would then escalate our own finance company backup”.

 “We’ve got money,” he said while emphasising that Harvey Norman was lowly geared at 26 per cent. “If (GE) were going to cut back, well that would affect us but would affect everybody. Everyone is doing interest-free.

“We’d be probably the biggest, but in terms of what they are going to do, I have no idea.”

Hours later, GE signalled it was tightening lending standards worldwide to help reduce risks amid the global credit crunch.
GE Capital — which is made up of GE Commercial Finance and GE Money — is now expected to be scaled back to 40 per cent of group earnings. The business contributed more than half of the group’s profit in 2007.

On Friday GE said that was curtailing the kinds of loans it wrote, “capping off” real estate and consumer areas as it shored up liquidity to cushion against seizing capital markets.

Mr Harvey said: “If they were going to do it, they would have had some chat to us, I would have thought, by now.”

He also pointed out that Harvey Norman’s situation was better than some other retailers’ because its customers were in the “middle to upper” class.

For more on this story see the AUSTRALIAN Newspaper