General Motors faces ‘big task’ in building a bank: Ally CEO (2024)

Ally Financial has remained a major auto lender since being spun off from General Motors 14 years ago, but it now faces the prospect of greater competition from the Detroit automaker.

General Motors, which already offers consumer auto loans and leases through its GM Financial arm, is reportedly eyeing a charter for an industrial loan company. The move would allow General Motors to take deposits and grow its own auto-finance business.

General Motors faces ‘big task’ in building a bank: Ally CEO (1)

But Ally CEO Jeffrey Brown is shrugging off concern about the possibility that GM, which is still a key Ally partner, will get its own bank charter.

“I never want to criticize somebody else and what they’re going to do, but obviously building a bank is a big task,” Brown said Tuesday at an investor conference.

Ally, formerly known as GMAC, was chartered as industrial loan company in the run-up to the financial crisis of 2008 and 2009 but now operates a state-chartered commercial bank.

Last year, 46% of Ally’s new-vehicle dealer inventory financing involved GM-franchised dealers, as did 26% of the company’s consumer auto financing volume, according to a February regulatory filing. Those percentages were down from 2017, when GM-franchised dealers accounted for 56% of new vehicle dealer inventory financing and 32% of consumer auto financing volume.

Ally has sought to diversify its business in the wake of GM’s decision in 2015 to use its own auto-finance arm as its exclusive provider of subsidized leases. The Detroit-based lender has also moved into new business lines, including mortgages, investment products and unsecured consumer loans.

Brown said Tuesday that GM Financial’s expected application for a bank charter does not change how Ally sees the company as a competitor. “They do a lot of good business for GM. But for us, we’re focused on what we can control,” he said in remarks at the Goldman Sachs U.S. Financial Services Conference.

GM Financial emerged out of General Motors’ 2010 acquisition of AmeriCredit. Last year, GM Financial had 10,000 U.S. employees at 28 locations across the country, according to a regulatory filing. The unit reported revenue of $14.5 billion in 2019.

The Wall Street Journal reported last month that GM’s banking unit, if approved, would be supervised by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. Neither agency has received an application yet. GM has declined to comment.

FAQs

General Motors faces ‘big task’ in building a bank: Ally CEO? ›

But Ally CEO Jeffrey Brown is shrugging off concern about the possibility that GM, which is still a key Ally partner, will get its own bank charter. “I never want to criticize somebody else and what they're going to do, but obviously building a bank is a big task,” Brown said Tuesday at an investor conference.

Find Out More ›

Why did GMAC change to Ally? ›

We decided to make a stand on our commitment to customers and put our promise in our name. So we transformed our banking subsidiary into Ally Bank on 3 simple principles: do right, talk straight and be obviously better.

Discover More ›

Is Ally Bank owned by General Motors? ›

Ally Bank was formerly known as General Motors Acceptance Corporation (GMAC) Bank. It is owned by Ally Financial Inc and is a significant part of the financial world.

What are the strategic priorities of Ally Financial? ›

Despite a competitive landscape, Ally's strategic focus on customer well-being and diversified offerings provide a strong market presence. Opportunities for growth in digital financial services and partnerships highlight Ally's potential for expansion and customer base growth.

Tell Me More ›

Who is the indentured trustee for Ally Bank? ›

INDENTURE, dated as of July 19, 2023, between ALLY AUTO RECEIVABLES TRUST 2023-1, a Delaware statutory trust (the “Issuing Entity”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as trustee and not in its individual capacity (the “Indenture Trustee”).

Get More Info ›

What is the Ally Bank controversy? ›

Named plaintiff David De Medicis sued the bank in 2021, arguing that the security of his account and the proposed class members' accounts at Ally were compromised by a data breach in which a code error revealed Ally customers' names and passwords to third parties involved in business relationships with the bank.

What is the future of Ally Bank? ›

Ally is all-digital and has no physical branches. Instead, it offers an easy-to-use digital interface and is the top all-digital bank in the U.S. Mobile banking will likely keep growing, and digital banking users are expected to increase from 208 million in 2023 to 216.8 million in 2025, according to Statista.