Ally Financial will repay the U.S. Treasury for its bailout by 2014 on the strength of its auto-finance business, its CEO said.
The second-largest remaining investment by the U.S. Treasury’s bailout fund, Ally Financial can make a significant payment this year toward the $14.6 billion still outstanding from the Treasury’s Troubled Asset Relief Program. The announcement has been made by Ally’s CEO Michael Carpenter, who said the company last year financed the most new- and used-vehicle sales in the U.S. for the second consecutive year.
“We are 100 percent confident that we can repay the American taxpayer completely. Whether that’s this year or next year, I don’t know. But it’s in that time frame,” Carpenter was quoted as saying by Bloomberg.
Ally is selling assets outside the United States to concentrate on autos and its online retail bank while rejecting claims related to its Residential Capital unit, which went bankrupt because of losses on subprime home mortgages. Ally’s auto unit has expanded its used, leasing and subprime financing offerings ahead of expirations this year of agreements with General Motors and Chrysler Group.
GM Financial, the largest U.S. automaker’s credit arm, agreed in November to purchase Ally’s international auto-finance businesses in Europe, Latin America and China for $4.2 billion. In October, Ally also agreed to sell its Canadian operations to Royal Bank of Canada for $4.1 billion, and its Mexican insurance business to Ace Ltd. for $865 million.