Ally Financial Sets U.S. Auto/RV Bank Strategy
Editor’s Note: In a memo to its RV dealer clients distributed earlier today (May 14), Ally Financial outlined an array of strategic actions intended to “strengthen the company’s longer term financial profile, accelerate repayment of the U.S. Treasury’s investment and further grow our leading U.S.-based automotive/RV services and direct banking franchises.” Here’s the thrust of that memo:
“First, the mortgage subsidiary of Ally Financial Inc., Residential Capital LLC (ResCap), filed for Chapter 11. Be assured, Ally Financial, Ally Bank and all other Ally entities are not part of the ResCap Chapter 11 and there is no change or interruption to our business operations as a result.
“ResCap’s plan includes proposed settlements among Ally, ResCap and certain of ResCap’s creditors that provides for resolution of all existing and potential claims between Ally and ResCap, as well as a release of all existing or potential causes of action against Ally by third parties. The settlements are subject to court approval. Ally’s equity interest in ResCap will be written-down to zero. ResCap and its origination and servicing platform are expected to operate in the ordinary course during this process, preserving more than 3,500 jobs.
“Secondly, Ally Financial will launch a process to explore strategic alternatives for its international operations. Our international businesses represent strong franchises in each of their respective countries, and we aim to maximize shareholder value in a timely manner, while also protecting the interests of the dealers and automakers that the company serves.
“These actions will enable Ally to further invest in our leading U.S. automotive/RV services and direct banking franchises and be best positioned to return additional capital to the U.S. taxpayer. To date, Ally has paid approximately $5.5 billion to the U.S. Treasury, representing about one third of the investment. Upon successful completion of the announced strategic initiatives, Ally expects to return at least another third of the total investment by year-end.
“We believe that our U.S. Auto/RV platform and Ally Bank together provide a winning combination in serving the needs of dealers and their customers.”