Lending arm of GM shifts assets to an industrial bank

0 Comments | Deseret News (Salt Lake City), Nov 29, 2006

DETROIT (Dow Jones/AP) -- GMAC Financial Services, the lending arm of General Motors Corp., on Monday said it has transferred assets from a thrift bank belonging to the automaker to an industrial bank that GMAC will retain when it becomes controlled by a group of investors.

The move was one of the key steps left for GM in its effort to close the sale of a majority GMAC stake by Nov. 30.

The $1.16 billion transfer represents a shifting of nearly all the assets of GM's thrift bank, known as GMAC Bank, to the industrial bank, known as GMAC Automotive Bank. It is a previously agreed upon procedure that would be necessary for GM to close the sale of 51 percent of GMAC to a consortium led by Cerberus Capital Management. The transfer was outlined in a filing with the U.S. Securities and Exchange Commission.

"This is a bank restructuring that needs to take place prior to closing," GMAC spokeswoman Toni Simonetti said. "It was previously comprehended in the initial agreement."

Simonetti declined to discuss the specific details of the closing of GM's GMAC sale, but the SEC filing reiterated the Nov. 30 target date that GMAC previously disclosed in other internal paperwork.

The filing said GM and Cerberus must close the deal by Thursday or the transfer of the assets will be undone. GMAC's industrial bank is essentially taking control of mortgages held by the GM thrift bank. While GM is handing over control of its GMAC operation to Cerberus in exchange for $14 billion, it will hang onto the thrift bank because industrial companies -- such as GM -- can no longer gain charters for such banks.

Following the transaction, GMAC Bank now consists of approximately $105 million in assets.