Ally Financial Inc, the U.S. auto lender 74 percent owned by the U.S. Treasury, is near a deal to sell its Canadian operations to Royal Bank of Canada for more than $4 billion, according to a source familiar with the deal.
A deal could be announced as early as Monday, but talks are fluid, the source said. RBC has been competing with another Canadian bank, Toronto Dominion Bank, in the auction, the source said.
CNBC reported the deal talks Monday morning.
Ally, the former auto lending arm of General Motors Co., announced plans in May to sell its international operations in an effort to speed up repayment of government bailouts it received during the financial crisis.
The lender last week agreed to sell its Mexican insurance business to insurance and reinsurance company ACE Ltd for $865 million in cash.
Ally, RBC and Toronto Dominion declined to comment.
Ally's international operations in Europe, Canada, Latin America and Mexico have drawn interest from more than 30 bidders, including banks and GM, the source said. Bidders are interested both in regions as well as just buying individual country businesses, the source said. That process is "in the top of the ninth inning," and could be completed shortly, the source said.
GM expanded its lending capabilities in 2010 when it bought AmeriCredit Corp.
Ally is trying to turn around its business by focusing on U.S. auto lending and banking. Its Residential Capital mortgage unit filed for bankruptcy in May in a move aimed at protecting the parent company from lingering liabilities tied to home loans it sold to investors during the housing boom.
A consortium of Ocwen Financial Corp. and Walter Investment Management Corp. is vying with Nationstar Mortgage Holdings Inc. to buy ResCap's mortgage servicing and lending business in an auction this week, sources told Reuters last week.
Ally, once known as GMAC, received $17 billion in bailouts from the U.S. government during the financial crisis. Including dividend payments, it has paid back $5.8 billion.
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