After being hard hit by the US sub-prime crisis last month, CIT
Group Inc has accelerated its expansion into new markets, including
China, and plans to sell off parts of its home lending
business.
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The commercial and consumer lender, which manages US$81bn
(£40bn) worldwide, opened a new shared services centre in Shanghai
on September 20, which will service mainland China, Taiwan, Hong
Kong, Malaysia and Singapore.
CIT’s vice chairman, Thomas Hallam, said the expansion is part
of an effort to increase the company’s dominance outside of the US,
and capitalise on the potential of the Chinese leasing market,
which is currently growing at 30 per cent. Furthermore leasing only
accounts for 1 per cent of China’s $250bn (€177.4bn) equipment
market, compared with 30 per cent in the US.
But CIT has a quarter of its assets outside of the US, and $1bn
(£0.5bn) of leasing assets in China. Hallam views the US crisis as
an opportunity to increase CIT’s role in international markets. “It
will enhance our strategy to grow outside of the United States,” he
said.
In July CIT’s shares fell 37.5 per cent because of the shaky US
markets, and its debt protection costs surged by 100 basis points
to 350.
To reverse this damage CIT now plans to sell off its sub-prime
loan portfolio – approximately between $3.5bn (€2.4bn) and $4.2bn
(€2.9bn) of mortgage-backed securities – to home loan funder
Freddie Mac. As a result of the announcement on September 19, CIT’s
shares went up 2 per cent at US$41.63 (€29.5) on September 20.
