The Royal Bank of Canada expanded the capability of its existing consumer and commercial auto financing business with its $4.1 billion purchase of Ally Financial’s Canadian auto finance business, the bank announced today.
The Ally Canada team joins the existing RBC team to form RBC Automotive Finance. It provides financial services, including floor plan financing, directly to auto dealers and also offers financing for consumers through dealerships.
Ally received $4.1 billion USD for the business in the form of a $3.7 billion payment at closing and $400 million of dividends paid following the announcement of the transaction. The acquisition positions RBC as a leader in the Canadian automotive financing business.
"Ally Canada significantly expands the scope and capability of our existing consumer and commercial auto financing business and we're encouraged by the positive response from dealers who want to continue building their business with RBC," said Dave McKay, group head, personal & commercial banking, RBC in a press release today.
RBC said that as a result of the purchase, the bank replaces Ally Credit Canada as seller and servicer of all securitized receivables under Canadian Capital Auto Receivables Asset Trust. The move, said RBC, will not result in a downgrade or withdrawal of any of the ratings on these securitizations.