Ally Financial Inc. has received regulatory approval to change its holding-company status, enabling it to keep an insurance business and a vehicle-auction Web site. The Federal Reserve has granted Ally’s request to convert a bank holding company to a financial holding company, according to a statement from the lender. Ally had disclosed in a July filing that regulators might not allow the shift as an exemption ends this month, which could impose a “material adverse” effect on its earnings.
Ally chief executive Michael Carpenter is currently working to keep an insurance unit and the SmartAuction Web site for dealers, which are typically barred for bank holding companies. He has wound down mortgage operations that triggered losses at Ally and sold other assets, with an eye to exit a $17.2 billion bailout by United States taxpayers. Ally is majority owned by the US government.
“Crossing this threshold is a great achievement for Ally,” Carpenter said in a statement. He remarked that 2013 has been a “seminal year” for Ally, which is expecting further momentum over the next year as it aims to exit the US government’s Troubled Asset Relief Program.
The lender posted over $760 million in revenues from insurance premiums and other services in the first nine months of 2013. SmartAuction has sold over 4 million vehicles since 2000, Ally said. Ally received Fed approval to become a bank holding company on Dec. 24, 2008, allowing it to avail of tap US bailout funds that have reached $17.2 billion.