The current financial crisis has forced many financial institutions to prioritize their core competencies and shed some weaknesses. As a result of this juggling of portfolios and assets, a lot of businesses have been hived off. General Electric (GE) became the latest finance major to join this list yesterday when it announced the sale of its Japanese consumer finance arm to the country's Shinsei Bank for 580 billion yen ($5.4 billion).

Shinsei will buy GE's Tokyo-based Lake unit and its mortgage-loan and credit-card businesses, the bank said in a statement yesterday. The deal will add 779 billion yen to Shinsei's balance of outstanding loans to individuals in Japan, which stood at 1.2 trillion yen as of 31 March, the company said.

Shinsei Bank's forerunner, the Long Term Credit Bank, collapsed under a pile of bad debts in the late 1990s and was put under state control. It emerged from bankruptcy and was sold to a consortium of investors led by Ripplewood Holdings of the US in March 2000 for $1.1 billion.

Shinsei, whose name means "new life," said in November last year that the US private equity fund JC Flowers & Co. would pay up to 202 billion yen to become its top shareholder with a 32.6 per cent stake.

GE is not the only foreign group exiting the troubled sector. Citigroup, reeling from the sub-prime mortgage crisis, said last month it was closing down its remaining consumer lending outlets in Japan. (See: Citigroup shuts down consumer finance operations in Japan)

It also announced similar plans for Germany earlier this week. (See: Citigroup sells German unit to France's Credit Mutuel for $7.8 billion)

With this acquisition, the largest by a Japanese bank this year, Shinsei said it was aiming to benefit from having both traditional banking services and consumer loan operations.

"This acquisition is a critical next step in our pioneering approach to redefine consumer finance in Japan," Shinsei president Thierry Porte said in a statement. "We're acquiring a high-quality portfolio with a great management team, solid consumer base built on a strong brand while also providing value to our shareholders."

''Shinsei is uniquely positioned to be a game-changer in this industry,'' he added. Shinsei will acquire a lending business with 2,000 employees, 2.2 million customers and 1,138 branches, the statement revealed.

GE Money head William Cary said in a statement on the sale of the Japanese unit that the firm had decided to exit "an extremely challenging environment" and to put its capital to work in areas offering strong long-term growth.

The group, which was set to report its second-quarter results later in the day, said Thursday it was likely to spin off its industrial unit including its appliance division as part of a planned reorganization. GE CEO Jeffrey Immelt, trying to revive shares after announcing a surprise first-quarter profit drop in April, is disposing of as much as $100 billion of financial assets.

Shinsei fell 3 per cent to close at 358 yen in Tokyo trading before the announcement, after people familiar with the negotiations said the Tokyo-based bank and GE were in final talks.

The company, down 25 per cent in the last one year, failed to meet a government-mandated profit goal in the year ended 31 March and posted a loss the previous year. However, its existing consumer-finance units Shinki Co. and Aplus Co. returned to profit after both posted losses the previous year.