Ally Financial Exits Canadian Car Loan Market
Ally Financial, the former auto finance unit of General Motors (NYS: GM) , announced today that it will sell its Canadian business to Royal Bank of Canada (NYS: RY) for $4.1 billion. If completed, this will be the second big divestiture by the U.S. company, which last week announced it's selling its Mexican insurance business to Swiss insurer ACE Limited (NYS: ACE) for $865 million. Further divestitures in Europe and Latin America are reportedly under consideration.
The U.S. Treasury currently owns 74% of Ally Financial, plus an additional $5.9 billion in preferred stock, both legacies of the $17.2 billion bailout the U.S. government gave Ally as part of GM's 2009 rescue.
Proceeds from the sales will likely be used to buy back the government's preferred stock in Ally. Combined with the $5.8 billion it has already repaid, this could bring Ally up past 60% repayment of its debts.
The Canadian operations Ally is selling to Royal Bank of Canada consist of Ally Credit Canada Limited, with $9.4 billion in assets, and ResMor Trust, with $3.8 billion in deposits and $4.2 billion in assets.
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