GM emerges lead bidder for Ally Financial's Europe, Latin assets: report

General Motors has emerged as the lead bidder for Ally Financial Inc' auto financing operations in Europe and Latin America, a sale that may  fetch the largest US auto lender around $4 billion, The Wall Street Journal yesterday reported, citing a person familiar with the talks.

Earlier known as GMAC, Ally is the former auto financing arm of GM. The Detroit-based car maker sold a majority stake in GMAC to Cerberus Capital Management and other investors in 2006.

The US government now holds a majority 73.8-per cent stake in Ally after it bailed out the company through a $17 billion loan as part of its bailout of the US auto industry during the 2009 global financial crisis.

GM continues to hold 9.9 per cent in Ally, while remaining is held by Cerberus Capital and other investors.

After its restructuring, Ally returned to profitability in 2010, posting a net profit of $1.075 billion for the fiscal year, and has repaid $5.8 billion, including dividend payments to the US government.

Last month, it also agreed to sell its Canadian auto finance and deposit business to Royal Bank of Canada for $4.1 billion and its Mexican insurance unit to Zurich-based insurer ACE Ltd for $865 million.

In 2010, GM acquired Texas-based AmeriCredit for approximately $3.5 billion and renamed it GM Financial. The deal provided GM with a new financial arm to replace GMAC, and a potential Ally deal would more than double the consolidated assets of GM Financial.