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RBC to acquire Ally's Canadian auto finance business

 Acquisition positions RBC as a leader in auto financing in Canada  TORONTO, Oct. 23, 2012 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today  announced a definitive agreement to acquire the Canadian auto finance and  deposit business of Ally Financial Inc. ("Ally Canada") for a $1.4 billion  investment net of excess capital. Subject to certain closing adjustments and  including the excess capital, this results in total consideration of $3.1 to  $3.8 billion, depending on the size of the dividend taken out by the seller  prior to closing. The acquisition aligns with RBC's key strategic priority to  be the leading provider of financial services in Canada.  "Ally Canada will add significant scale to our existing consumer and  commercial auto financing business and will strengthen RBC's position as a  leader in the Canadian auto finance industry," said Dave McKay, group head,  Personal & Commercial Banking, RBC. "This is a strong business with favourable  industry dynamics and the combination with RBC provides opportunities to  leverage our existing strengths and cross-sell capabilities."  RBC is acquiring a leading Canadian auto finance business that offers  inventory (or "floor plan") financing to more than 580 auto dealerships across  the country. Its consumer business offers retail financing to Canadian  consumers through approximately 1,600 dealerships and has approximately  450,000 consumer loans. The legal entities being acquired include Ally Credit  Canada Ltd. and ResMor Trust Company. The book value of the acquired business  as of September 30, 2012 was $3.4 billion, unadjusted for the pre-closing  dividend. The net investment of $1.4 billion includes a premium to book value  of $0.6 billion.  The combination of Ally Canada with RBC's existing business will create a  leading player in Canadian auto financing with approximately $24 billion in  receivables, offering floor plan financing to more than 890 dealerships. RBC's  consumer business will offer consumers financing through approximately 4,000  dealerships. The combined portfolio will have more than one million consumer  loans.  RBC expects the Ally Canada business to generate approximately $120 million in  net income on a standalone basis in the first 12 months after closing (before  integration costs, amortization of intangibles and transaction costs), based  on estimated average receivables of approximately $9 billion.  Today RBC also announced it has entered into an agreement with General Motors  of Canada to become a provider for its subvented business upon close of the  transaction. Subvented loans are low rate consumer auto loans subsidized by  the manufacturer.  The acquisition is expected to be modestly accretive to earnings per share in  the first year after closing. At closing it is expected to reduce RBC's July  31, 2012 Tier 1 capital ratio of 13.0 per cent on a pro forma basis by  approximately 60 bps. On an estimated Basel III basis, we expect our Common  Equity Tier 1 ratio to remain above eight per cent following the close, given  our strong capital position and internal capital generation.  The transaction is subject to customary closing conditions, including  regulatory and other approvals, and is expected to close in the first quarter  of calendar 2013.  RBC Capital Markets served as financial advisor to Royal Bank of Canada in  this transaction.  Conference Call  A conference call is scheduled to take place on October 23, 2012, from 8:30  a.m. to 9:00 a.m. (ET) and will feature speeches by RBC senior executives  followed by a brief question and answer period with analysts.  Interested parties can access this call live on a listen-only basis via  telephone using the following access numbers:  Local calls: 416-340-2217 North American toll-free: 866-696-5910 International toll-free: 800-8989-6336  The passcode for access on all numbers is 4139509#. Please call between 8:20  a.m. and 8:30 a.m. (ET).  The presentation material referenced during the call will be available on the  website at rbc.com/investorrelations.  A recording of the conference call will be available after 9:30 a.m. (ET) on  October 23, 2012 until January 22, 2013 via telephone at: 905-694-9451  (locally) or 800-408-3053 (North American toll-free), passcode 7862644#.  About RBC  Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under  the master brand name RBC. We are Canada's largest bank as measured by assets  and market capitalization, and are among the largest banks in the world, based  on market capitalization. We are one of North America's leading diversified  financial services companies, and provide personal and commercial banking,  wealth management services, insurance, corporate and investment banking and  investor services on a global basis. We employ approximately 80,000 full- and  part-time employees who serve more than 15 million personal, business, public  sector and institutional clients through offices in Canada, the U.S. and 51  other countries. For more information, please visit rbc.com.  CAUTION REGARDING FORWARD-LOOKING STATEMENTS  Certain statements contained in this press release may be deemed to be  forward-looking statements under certain securities laws, including the "safe  harbor" provisions of the United States Private Securities Litigation Reform  Act of 1995 and any applicable Canadian securities legislation. These  forward-looking statements include, but are not limited to, statements about  the expected effects of the acquisition of Ally Financial Inc.'s Canadian auto  finance operations, the expected timing and scope of the acquisition and other  statements other than in relation to historical facts. Forward-looking  statements are typically identified by words such as "believe", "expect",  "foresee", "forecast", "anticipate", "intend", "estimate", "goal", "plan" and  "project" and similar expressions of future or conditional verbs such as  "will", "may", "should", "could", or "would".  By their very nature, forward-looking statements require us to make  assumptions and are subject to inherent risks and uncertainties, which give  rise to the possibility that our predictions, forecasts, projections,  expectations or conclusions and other forward-looking information, including  statements about the acquisition of Ally Financial Inc.'s Canadian auto  finance operations by Royal Bank of Canada will not be achieved. We caution  readers not to place undue reliance on these statements as a number of  important factors could cause our actual results to differ materially from the  expectations expressed in such forward-looking statements. These factors  include, but are not limited to the possibility that the proposed transaction  does not close when expected or at all because required regulatory or other  approvals are not received or other conditions to the closing are not  satisfied on a timely basis or at all, that Royal Bank of Canada and Ally  Financial Inc. may be required to modify the terms and conditions of the  proposed transaction to achieve regulatory approval, or that the anticipated  benefits of the transaction are not realized as a result of such things as the  strength of the economy and competitive factors in the areas where Royal Bank  of Canada and Ally Financial Inc. do business; the impact of changes in the  laws and regulations regulating financial services and enforcement thereof;  the effects of competition in the markets in which Royal Bank of Canada and  Ally Financial Inc. operate; judicial or regulatory judgments and legal  proceedings; Royal Bank of Canada's ability to complete the acquisition and  integration of Ally Financial Inc.'s Canadian auto finance operations  successfully; and other factors that may affect future results of Royal Bank  of Canada and Ally Financial Inc.'s Canadian auto finance operations including  timely development and introduction of new products and services, Royal Bank  of Canada's ability to cross-sell more products to customers and technological  changes.  We caution that the foregoing list of important factors is not exhaustive.  Additional information about these and other factors can be found in our Q3  2012 Report to Shareholders and 2011 Annual Report to Shareholders. Our  material general economic assumptions underlying the forward-looking  statements in this press release are set out in our 2011 Annual Report under  the heading "Overview and Outlook" and for each business segment under the  heading "Outlook and priorities" as updated under the heading "Economic,  market and regulatory review and outlook" in our Q3 2012 Report to  Shareholders. Except as required by law, Royal Bank of Canada assumes no  obligation to update the forward-looking statements contained in this press  release.  Media Contacts: Kerry Gaetano, Head, Corporate Communications, Personal &  Commercial  Banking and Insurance,kerry.gaetano@rbc.com, 905-816-5583 or  647-281-2931 Matt Gierasimczuk,matthew.gierasimczuk@rbc.com, Senior  Communications Manager, 416-974-2124  Analyst Contacts: Amy Cairncross, VP & Head, Investor  Relations,amy.cairncross@rbc.com, 416-955-7803 Robert Colangelo, Associate  Director, Investor Relations,robert.colangelo@rbc.com, 416-955-2049  SOURCE: RBC  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/October2012/23/c9219.html  CO: RBC Royal Bank ST: Ontario NI: FIN MNA CONF