Ally Financial mulls raising cash to pass Fed annual stress test

Article by Anita Panait, on July 19, 2013

United States government-owned Ally Financial Inc. is considering raising less than $1 billion in stock in a private deal in order to pass the annual stress test of the US Federal Reserve, a person privy with the plans told Bloomberg. Ally failed the test earlier this year. Ally, which is the former finance arm of General Motors, needs to submit a new plan to the central bank before it can repay $17.2 billion in U.S. bailout money.

The lender said Tuesday in a regulatory filing that it is considering options to repay preferred shares held by the Treasury Department, like using cash on hand or issuing stock. The lender, however, has yet to make a decision, which may be subject to regulatory approval, according to the filing. Ally sold around $5.9 billion in convertible preferred shares paying 9 percent to the government as part of a bailout that saw the US taking a 74-percent stake in the lender.

According to a May 1 filing, Ally can redeem the preferred securities with consent from the Treasury or if the Fed compels a conversion.

Jeffrey Brown, vice president of finance and corporate planning, remarked that a redemption of the preferred securities would double Ally's repayment to the Troubled Asset Relief Program, to around 70 percent of what the lender owed.

Ally has also filed to sell stocks in an initial public offering. The company’s capital plan was rejected in March 2013 following discovery by regulators of "deficiencies" in its planning process. The lender’s capital ratios also failed to meet standards. [source: automotive news - sub. required]

Topics: ally financial

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Volkswagen Group’s dieselgate saga continues, but it appears the German company would be able to get out of trouble, but it would not be unscathed. This development comes as Volkswagen...
by - January 22, 2017
When a car has been in the market for nearly six years, it loses some of its luster and its customers tend to go for the all-new model with a...
by - January 22, 2017
Remember Zenos Cars, a British carmaker that specializes in designing and building lightweight and high-performance sports cars? If you are wondering how the company is faring with their E10 lightweight...
by - January 21, 2017
Mercedes-Benz has revealed that in 2017, its series 124 coupé will be celebrating its 30th anniversary. While this itself is a significant event, it will also mean that this model...
by - January 21, 2017
BMW’s 550i xDrive has long been considered as one of the most successful business sedans in the world. For the brand, this may not be enough as it has officially...
by - January 20, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries