RBC to buy Canadian auto finance unit of Ally Financial

TORONTO - Royal Bank of Canada (TSX:RY) has confirmed it will acquire the Canadian auto finance and deposit business of Ally Financial Inc.

RBC says the deal will strengthen its position as a consumer and commercial lender and significantly increase its presence in auto-related financing.

The bank says its net cost for the deal will be about $1.4 billion.

That’s after excluding excess capital to be acquired in the deal.

Including excess capital, RBC will pay between $3.1 billion and $3.8 billion.

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Ally Financial’s Canadian unit provides financing to nearly 600 auto dealerships across the country.

The finance company’s consumer business has about 450,000 loans outstanding.