RBC Nears $4 Billion Deal for Ally’s Canada Unit: Sources
Ally Financial and Royal Bank of Canada are closing in on a deal that would value Ally Canada at more than $4 billion, according to people familiar with the matter.
Both RBC and Canadian rival Toronto Dominion had been locked in a bidding war over the weekend, one of these people said, with TD still involved in the auction process. It remains unclear whether TD will move to top RBC's late-stage bid.
An announcement could come as early as Monday, though talks remain fluid.
RBC declined to comment, and representatives for Ally were not immediately available for comment.
The former financing arm of General Motors, Ally had $15.2 billion in assets in Canada at the end of 2011, according to regulatory filings.The performance of the Canadian business has been lackluster since the crisis. For the six months ended June 30, Ally's $165 million net income for the Canadian business represented a 40 percent drop from the same period a year earlier, filings show.
Still, the move represents incremental progress for Ally, which in May announced it intended to sell its non-U.S. assets.
The proceeds would go toward buying back a 73.8 percent the Treasury Department still holds in Ally, following its $17 billion bailout at the height of the financial crisis. Because Ally's business lines converge in automotive and mortgage finance, the crisis left it doubly injured and hampered its ability to recover as quickly as pure-play businesses.
(Read More: Hedge Funds, Big Money Circle TARP's Weakest Banks.)
On Oct. 18, Ally announced a deal to sell its Mexico insurance business to Swiss insurer Ace Ltd. for $865 million. Goldman Sachs led the auction for that business, people familiar with the matter said, while Evercore Partners and Citigroup are leading the sales of the remaining international units.
Auctions for Ally's European and Latin American operations are still ongoing, these people said, with announcements expected in the next two weeks.
—By CNBC's Kayla Tausche