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GATX is the leading bidder for the unit and negotiations are ongoing, the body said.

A GE spokesman declined to comment. GATX was not immediately reachable for make notes.

CIT Group Inc (CIT.N), a commercial lender hit constrained by the credit crunch, is also looking to sell its rail car leasing unit.

Lease financing company GATX, which controls one of the largest rail car fleets in the world, was also seen as a contender for CIT's transaction, not the same source familiar with the matter told Reuters highest week.

GE's rail assets had a without deductions carrying value of about $2.8 billion as of the end of last year on its balance sheet. The accounting value of CIT's rail portfolio was over $4.4 billion.

For buyers, these assets could be winning. Returns on investment for rail car leases are often over 15 percent a year and by the price of scrap metal rising, the value of rail cars is also rising.

CIT Rail owns and manages a fleet of more than 100,000 rail cars. GE Rail Services' assets include 165,000 rail cars and 120,000 intermodal trailers, containers and chassis.

As the two units compete for buyers, GE could have a slight vantageground over CIT because it may be dexterous to finance at least a participation of the deal if it wanted.

GE, what one. has been retooling its finance business over the last year, may also be favored with greater degree of leeway to take a hit on price because it be able to better afford to. It had about $850 billion of assets of the same kind with of June 30 and earned $22 billion last year, while CIT had surrounding $87 billion of estate at the end of June and posted a $111 million pure loss in 2007.

Last month, GE reached a deal to take a bribe for its Japanese consumer lending business and is in addition looking to part with its $30 billion portfolio of private-label credit-card operations, notwithstanding it has acknowledged that deal will be tricky to earn done in the midst of a credit crunch.

(Editing by Richard Chang)


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