Ally May Sell Auto Unit, Sources Say
As an initial public offering remains bleak and the U.S. government seeks to recoup some $17 billion in bailout money, Ally Financial is weighing the sale of all or part of its auto lending and banking businesses, according to sources familiar with the situation.
Reuters reports that internal discussions on whether to sell the auto lending operations or its online bank are at very early stages. With an IPO also remaining a possibility, no decisions have been made on what path to pursue.
Who would want a piece of Ally’s core operations? Perhaps banks looking to acquire assets to match their growing deposit base or those with already sizeable auto lending operations could make for ideal buyers, Reuters points out. Sources seem to believe big banks like JPMorgan Chase, TD Bank, and Wells Fargo, as well as automakers such as General Motors Co. could take an interest.
Though it is unclear if this is still the case, GM had been interested in buying some of Ally’s auto lending operations as it sought to boost its ability to provide financing as well as lease deals to lure new car buyers, the sources told Reuters. When GM bought AmeriCredit in July 2010 for $3.5 billion, it gave GM dealers a way to sell more cars and trucks by providing easier access to subprime loans.
“The allegations are complete speculation,” Gina Proia, spokeswoman for Ally told AutoFinanceNews.net. “We continue to be squarely focused on putting the legacy mortgage issues behind us and growing our leading auto finance and direct banking franchises.”
Ally, which is 73.8% owned by the U.S. government, is already in the process of selling its mortgage unit, Residential Capital, and sales of other assets could happen even as that continues, one of the sources said.
During the financial crisis, Ally, the former lending arm of General Motors, ran into trouble as its mortgage loans defaulted, forcing the government to inject more than $17 billion into it in 2008-2009 to keep the company afloat. Ally has since repaid the government $5.4 billion.
Ally put forward a plan to go public in June last year, but it had to postpone the IPO as problems mounted at the ResCap mortgage unit and market conditions deteriorated in the wake of the European sovereign debt crisis. Ally has already started talks to sell ResCap through a process that could involve a bankruptcy filing for the unit, the sources said.
As an initial public offering remains bleak and the U.S. government seeks to recoup some $17 billion in bailout money, Ally Financial is weighing the sale of all or part of its auto lending and banking businesses, according to sources familiar with the situation.
Reuters reports that internal discussions on whether to sell the auto lending operations or its online bank are at very early stages. With an IPO also remaining a possibility, no decisions have been made on what path to pursue.
Who would want a piece of Ally’s core operations? Perhaps banks looking to acquire assets to match their growing deposit base or those with already sizeable auto lending operations could make for ideal buyers, Reuters points out. Sources seem to believe big banks like JPMorgan Chase, TD Bank, and Wells Fargo, as well as automakers such as General Motors Co. could take an interest.
Though it is unclear if this is still the case, GM had been interested in buying some of Ally’s auto lending operations as it sought to boost its ability to provide financing as well as lease deals to lure new car buyers, the sources told Reuters. When GM bought AmeriCredit in July 2010 for $3.5 billion, it gave GM dealers a way to sell more cars and trucks by providing easier access to subprime loans.
“The allegations are complete speculation,” Gina Proia, spokeswoman for Ally told AutoFinanceNews.net. “We continue to be squarely focused on putting the legacy mortgage issues behind us and growing our leading auto finance and direct banking franchises.”
Ally, which is 73.8% owned by the U.S. government, is already in the process of selling its mortgage unit, Residential Capital, and sales of other assets could happen even as that continues, one of the sources said.
During the financial crisis, Ally, the former lending arm of General Motors, ran into trouble as its mortgage loans defaulted, forcing the government to inject more than $17 billion into it in 2008-2009 to keep the company afloat. Ally has since repaid the government $5.4 billion.
Ally put forward a plan to go public in June last year, but it had to postpone the IPO as problems mounted at the ResCap mortgage unit and market conditions deteriorated in the wake of the European sovereign debt crisis. Ally has already started talks to sell ResCap through a process that could involve a bankruptcy filing for the unit, the sources said.
