NEW YORK: General Motors said Thursday it has sold its stake in Ally Financial, its government-rescued former vehicle lending arm.
GM said it had sold its 8.5 percent holding in the now-revived bank, controlled by the US Treasury, for roughly $900 million.
It did not identify who bought it.
The largest US automaker, which emerged from a US government bailout on Monday after the US Treasury sold its remaining stake, said it would book the equity sale as a special-item gain of $500 million in the current fourth quarter.
"This transaction releases capital from a non-core asset and further enhances our financial flexibility," Dan Ammann, GM executive vice president and chief financial officer, said in the statement.
"Ally continues to play an important role in financing our dealers and customers in the United States."
The announcement came the same day GM said it was selling its entire 7 percent stake in French automaker PSA Peugeot Citroen to institutional investors. It did not disclose the financial terms.
Shares in GM and Ally were flat in late-afternoon trade.
In 2006, GM sold a controlling 51 percent stake in its lending arm, then known as GMAC, to Cerberus Capital Management and other investors for $7.5 billion. Cerberus still owns a 8.7 percent holding in Ally.
But as the financial crisis raged in 2008, Ally became a bank holding company and was rescued in a $17 billion bailout under the government's Troubled Asset Relief Program.
The US Treasury remains the majority shareholder, with 65 percent ownership, after Ally repaid $1.3 billion to the Treasury on November 20. To date, the company has returned $5.9 billion, or more than 70 percent, of the taxpayer-funded investment.
Of the country's largest banks, Ally more than any has struggled to rebuild since the crisis.
It failed the Federal Reserve stress test on major US banks in March, forcing it to add to its capital buffers.
But it has also benefited from the rebound in housing prices that has improved the quality of assets of all banks.
Comments
Comments are closed.