Italy's Banca IFIS to buy Interbanca from GE Capital for 2 billion euros

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The deal, which will see IFIS take on Interbanca's debt of around 1.8 billion euros, is part of a broader strategy by General Electric to divest most of GE Capital's business around the world.

The maker of power plants, aircraft engines, locomotives and other industrial equipment this year shed its designation as a non-bank systemically important financial institution after selling the bulk of its financial activities.

Interbanca, which last year posted a 45 million euro loss, specializes in medium-term financing to Italian companies, leasing and factoring.

The acquisition will allow Venice-based Banca IFIS, which specializes in managing non-performing loans, to enter the business of medium-term lending, while strengthening its factoring and leasing businesses.

"This is an important step for Banca IFIS, whose employees will jump to 1,300 from current 820 headcounts," Banca IFIS CEO Giovanni Bossi said while presenting the deal to analysts.

Banca IFIS will fund the acquisition using its own liquidity and bank lending backed by its own and Interbanca's assets.

"We will not need a capital increase to fund the deal," Bossi said, adding regulatory approval was expected in November.

($1 = 0.9024 euros)

(Reporting by Francesca Landini; Editing by Alexandra Hudson)