GMAC Confirms It’s Going for Bank Status, Halts Auto Loans in Several Countries
NEW YORK — GMAC Financial Services confirmed today that it is in discussions with federal regulatory authorities seeking bank holding company status under the Bank Holding Company Act of 1956, among other things.
As a bank holding company, GMAC explained that it would obtain increased flexibility and stability to fulfill its core mission of providing auto and mortgage financing to consumers and businesses.
The lender indicated that it also expects to have expanded opportunities for funding and for access to capital as a bank holding company.
In connection with this initiative, GMAC said it is considering raising and maintaining significant amounts of additional capital to meet regulatory requirements related to bank holding company status.
In this regard, GMAC reported that it intends to commence a private offer to exchange a significant amount of its outstanding indebtedness for a reduced principal amount of new indebtedness.
Details of this offering will be disclosed in the near future.
Offering a cautionary statement, GMAC officials said they cannot assure that the company will become a bank holding company, that it will undertake the private exchange offer, or that if undertaken, that such private exchange offer will be completed or if completed, whether it will achieve a sufficient amount of capital to satisfy the applicable capital adequacy requirements.
"The benefits of this type of restructuring would allow us to put additional capital and liquidity resources immediately to work in financing consumers and automotive dealers," explained Alvaro de Molina, GMAC chief executive officer.
GMAC Halts Auto Originations in Some Countries
In other news this week, GMAC announced adjustments to its European auto finance business as part of a strategic approach to manage resources during this time of significant capital and credit market disruption.
The actions include ceasing retail originations in Czech Republic, Finland, Greece, Norway, Portugal, Slovak Republic and Spain, effective Nov. 1.
In these markets as well as in Hungary and Denmark, officials said they will assess the implications of this challenging environment with the aim of diversifying funding sources for dealers over time.
GMAC said it will also implement a more conservative pricing policy throughout its European markets to more closely align lending activity with the current capital markets.
Masterlease, GMAC's global full-service leasing business will not be affected by these changes, executives noted.