General Electric Co said on Tuesday it planned to cut costs by $2 billion next year at its finance arm, GE Capital, which has dragged lower the U.S. conglomerate's results as a result of the global credit crunch, Reuters reported.
GE said it would reorganize the GE Capital arm -- created in July when the company merged its commercial and consumer finance arms -- to focus on three regional centers in Europe, Asia and the Americas. The changes will take effect January 1.
News of GE's plans came at the end of a day when Chairman and Chief Executive Jeff Immelt acknowledged the year ahead would be "challenging."
"Everybody's getting prepared for a challenging 2009," Immelt said at a GE briefing in New York on its health-care business.
The company provided few details on how it would cut costs. A GE spokesman declined to say how many jobs would be eliminated at the unit that employs 75,000 people worldwide.
"Over the last two months, we have acted decisively to improve our funding position," Michael Neal, chairman of GE Capital, said in a statement posted on one of Fairfield, Connecticut-based GE's websites, GEReports.com. "We reduced our leverage, successfully raised capital, and accessed government programs that level the competitive playing field for us in financial services."
GE as a whole aimed to cut corporate costs by $3 billion this year, a target set in April after the company stunned Wall Street with an unexpected drop in first-quarter profit.
GE shares were closed down 5 cents at $16.06 on the New York Stock Exchange.
Businesses across corporate America -- but particularly in the finance sector -- have cut tens of thousands of jobs as they face a brutal credit crunch and prepare for what some economists fear could be a prolonged and deep recession.
Earlier this week, Citigroup Inc said it planned to lay off some 52,000 workers. Other companies in the finance sector to recently cut jobs include Fidelity Investments and American Express Co.