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  
-0- Oct/23/2012 12:10 GMT
 
 
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