Ally Financial (ALLY, Financials) is exploring the sale of its credit card business, sources privy to the matter relayed, as the company reassesses its position in the competitive credit card market, Bloomberg said Friday. ALLY shares rose 1.8% in Friday's market open, a positive movement in response to the news.
According to the individuals, the Detroit-based car lender is reviewing possible purchasers for the unit with a financial consultant, Bloomberg reported. For $750 million, Ally bought the company in 2021 under the name Fair Square Financial.
Based on its most recent earnings statement, Ally indicated an average of $2.1 billion in credit card loans near the end of the third quarter. The corporation has not made the unit's current worth public.
Ally's decision to entertain a sale signals a possible departure from a fiercely competitive sector controlled by bigger companies like Capital One Financial Corp. (COF, Financials). Ally broke a $2.65 billion contract to purchase subprime credit card provider CardWorks amid the epidemic in 2020 and discontinued a cash-back card alliance with Toronto-Dominion Bank in 2019.
For $2.2 billion, Ally sold its point-of-sale lending company, Ally Lending, to Synchrony Financial (SYF, Financials) in January. This divestment was a component of a larger effort to commit funds to expanding scale companies and developing connections with dealer consumers and suppliers.
Ally may quit credit cards to concentrate on core activities, including auto lending and digital banking. The organization offers deposits, mortgages, and financial advising services to over 11 million users online.
