Talks are in an advanced stage, said the people, who requested anonymity because the discussions are private. Ally’s Canadian business, which includes auto finance, insurance and deposits, held $15.3 billion in assets as of March 31, according to a May 15 presentation.
Royal Bank Chief Executive Officer Gordon Nixon, 55, has said the lender would explore “strategic acquisitions” amid a slowdown in Canadian consumer lending. Ally put its non-U.S. operations up for sale in May to help repay a $17.2 billion bailout that left taxpayers with a 74 percent stake.
RBC may pay more than $4 billion, CNBC reported earlier today, citing unidentified people familiar with the matter. That would make the deal the largest takeover ever for Royal Bank, eclipsing a $2.16 billion purchase of Centura Banks in 2001. Toronto-Dominion Bank (TD) also is bidding, CNBC said.
Katherine Gay, a spokeswoman for Toronto-based RBC, said she couldn’t comment, as did Gina Proia at Detroit-based Ally and Toronto-Dominion’s Stephen Knight.
Royal Bank posted a record C$1.13 billion ($1.14 billion) profit at its domestic-banking unit in the fiscal third quarter, fueled by increasing deposits, mortgages and loans.
Second-quarter net income at Ally’s Canadian operations fell 18 percent to $80 million from a year earlier, the company said in a regulatory filing. Revenue for the three months ended June 30 slid 27 percent to $179 million. Royal Bank said profit for the third quarter ended July 31 rose 73 percent to C$2.24 billion from a year earlier as total revenue climbed 12 percent to C$7.76 billion.
Royal Bank and Toronto-Dominion had shown interest in Ally’s Canadian operations, a person with knowledge of the matter told Bloomberg News last month.
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