GE 2014 Annual Report Download - page 103

GE 2014 FORM 10-K 83
MD&A EXPOSURES
EXPOSURES
GECC SELECTED EUROPEAN EXPOSURES
At December 31, 2014, we had $65.4 billion in financing receivables to consumer and commercial customers in Europe. The
GECC financing receivables portfolio in Europe is well diversified across European geographies and customers.
Approximately 92% of the portfolio is secured by collateral and represents approximately 500,000 commercial customers.
Several European countries, including Spain, Portugal, Ireland, Italy, Greece and Hungary (focus countries), have been
subject to credit deterioration due to weaknesses in their economic and fiscal situations. The carrying value of GECC funded
exposures in these focus countries and in the rest of Europe comprised the following at December 31, 2014.
Rest of Total
December 31, 2014 (In millions) Spain Portugal Ireland Italy Greece Hungary Europe Europe
Financing receivables, before allowance
for losses on financing receivables $ 1,290 $ 206 $ 401 $ 6,089 $ 3 $ 491 $ 57,800 $ 66,280
Allowance for losses on
financing receivables (72) (16) (41) (149) - - (616) (894)
Financing receivables, net of allowance
for losses on financing receivables(a)(b) 1,218 190 360 5,940 3 491 57,184 65,386
Investments(c)(d) 3 - - 411 - - 1,707 2,121
Cost and equity method investments(e) - - 478 56 32 - 1,579 2,145
Derivatives, net of collateral(c)(f) 2 - - 49 - - 220 271
Equipment leased to others (ELTO)(g) 493 210 62 665 230 231 9,840 11,731
Real estate held for investment(g) 539 - - 385 - - 3,138 4,062
Total funded exposures(h)(i)(j) $ 2,255 $ 400 $ 900 $ 7,506 $ 265 $ 722 $ 73,668 $ 85,716
Unfunded commitments(j)(k) $ 19 $ 8 $ 100 $ 234 $ 3 $ - $ 4,450 $ 4,814
(a) Financing receivable amounts are classified based on the location or nature of the related obligor.
(b) Substantially all relates to non-sovereign obligors. Included residential mortgage loans of approximately $24.7 billion before consideration of purchased credit protection.
We have third-party mortgage insurance for less than 10% of these residential mortgage loans, which were primarily originated in France and the U.K.
(c) Investments and derivatives are classified based on the location of the parent of the obligor or issuer.
(d) Included $0.6 billion related to financial institutions, $0.2 billion related to non-financial institutions and $1.3 billion related to sovereign issuers. Sovereign issuances
totaled $0.1 billion related to Italy. We held no investments issued by sovereign entities in the other focus countries.
(e) Substantially all is non-sovereign.
(f) Net of cash collateral; entire amount is non-sovereign.
(g) These assets are held under long-term investment and operating strategies, and our ELTO strategies contemplate an ability to redeploy assets under lease should
default by the lessee occur. The values of these assets could be subject to decline or impairment in the current environment.
(h) Excluded $33.7 billion of cash and equivalents, which is composed of $25.3 billion of cash on short-term placement with highly rated global financial institutions based in
Europe, sovereign central banks and agencies or supranational entities, of which $1.1 billion is in focus countries, and $8.4 billion of cash and equivalents placed with
highly rated European financial institutions on a short-term basis, secured by U.S. Treasury securities ($4.1 billion) and sovereign bonds of non-focus countries ($4.3
billion), where the value of our collateral exceeds the amount of our cash exposure.
(i) Rest of Europe included $1.9 billion and $0.1 billion of exposure for Russia and Ukraine, respectively, substantially all ELTO and financing receivables related to
commercial aircraft in our GECAS portfolio.
(j) Excludes assets held for sale and unfunded commitments related to Budapest Bank for Hungary.
(k) Includes ordinary course of business lending commitments, commercial and consumer unused revolving credit lines, inventory financing arrangements and investment
commitments.