GMAC Becomes Latest Player in Factoring Business

Bobbin, Oct, 1999 by Jules Abend

Major financial institutions continue to show interest in the factoring business. Case in paint: General Motors Acceptance Corp. (GMAC) has agreed to buy BNY Financial Corp. (BNYFC) -- the second largest factor after CIT Commercial Services -- for $1.8 billion.

GMAC is the third financial powerhouse to enter the industry. Last year, General Electric Capital Services (GE) acquired First Factors, while Wells Fargo & Co., which already owned finance companies Norwest Corp. and Foothill Capital, acquired independent factor Century Business Credit. (See "Factors Execute New Strategies for Apparel Growth," Bobbin, May 1999.)

GMAC's chairman, John D. Finnegan, said the acquisition of BNYFC will enable his company to expand its existing asset-based lending business internationally and to enter the factoring business in a substantial way. "It will provide GMAC with a solid platform to become an industry leader in commercial finance."

Finnegan also noted that BNYFC, with 1998 volume of $26.7 billion and assets of $3.9 billion, has been proactive in international expansion activity, particularly in the United Kingdom, over the past few years.

Joseph A. Grimaldi, BNYFC's chairman and CED, was named president and CEO of a new subsidiary, GMAC Commercial Credit Corp., and will report to Finnegan. BNYFC employees are expected to retain their positions.