Ally Financial said on Tuesday that it had agreed to sell its Canadian operations to the Royal Bank of Canada for about $4.1 billion, as the lender continues to work toward repaying its taxpayer-financed bailout.
RBC had its own math for the deal, valuing the transaction at between $3.1 billion and $3.8 billion, depending on certain financial adjustments.
As the federal government continues to dismantle the many rescue programs created during the financial crisis, its 74 percent stake in Ally remains one of the most prominent reminders of the market nadir.
While the lender, once known as GMAC, has yet to pursue an initial public offering, it has embarked on a series of sales that could raise money to reduce that stake. Its troubled mortgage unit, Residential Capital, has already put itself in bankruptcy in an important move that would help free its parent from some expensive legal obligations.
The company announced last week that it would sell its M exican insurance business, ABA Seguros, to the Ace Group for about $865 million.
Ally still plans to sell off its Latin American and European divisions, with former parent General Motors considered a potential buyer. The lender said that it plans to provide an update on any deal for those units next month.
“This transaction represents another significant step toward our plans to pursue strategic alternatives for our international operations and accelerate plans to repay the remaining U.S. Treasury investment,†Michael A. Carpenter, Ally's chief executive, said in a statement.
Through the deal, RBC will be gaining one of biggest auto lending operations in Canada. One of the sold operations, Ally Credit Canada, claims about $9.4 billion in assets and about 450,000 consumer auto loans, and provides floor-plan financing to about 580 auto dealerships.
Another unit, ResMor Trust, offers a number of consumer deposit products and had $3.8 billion in depos its and $4.2 billion in assets.
RBC said that it expects the newly acquired division to contribute about $120 million in profit in the first year after closing, before integration costs.
