Ally Financial announced Thursday a regulator’s decision that brings it closer to paying its first dividend on common shares, the lender’s latest turning point in its recovery from the financial crisis.
Detroit-based Ally said the Federal Reserve has given it permission to buy back the last of preferred shares whose terms have restricted it from paying the dividends. Ally, which went public last year, employs roughly 800 in Charlotte, where its CEO works.
Ally said the redeeming of the roughly 1.2 million in remaining Series G shares in December will remove the dividend barrier. The former financing arm of General Motors Corp. issued the shares to generate capital during the crisis as it suffered from large mortgage losses and lower demand for automobiles.
Before paying a dividend, Ally would still need Fed approvals. Since the crisis, the regulator must approve plans by large U.S. banks before returning capital to shareholders through dividends or stock buybacks.
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CEO Jeffrey Brown, former Bank of America treasurer, said in a statement Thursday that the lender is now positioned “to meet its objective of initiating a dividend and share repurchase program in 2016.”
Ally Financial, among the largest U.S. auto lenders, is the parent company of Ally Bank, an online-only bank that has no branches.
Ally previously went by the name General Motors Acceptance Corp., which was spun off from GM in 2006. In 2010, the company renamed itself Ally Financial.
GMAC accepted $17.2 billion in a financial crisis bailout, which Ally exited last year after the U.S. Treasury Department sold its remaining Ally common stock.
Brown was promoted to CEO earlier this year, succeeding retiring chief executive Michael Carpenter.