Ally to pay IPO banks less than 1 percent: sources

NEW YORK (Reuters) - Ally Financial will pay banks less than 1 percent in fees to underwrite an initial public offering in which the U.S. government is expected to sell a part of its 73.8 percent stake in the lender, two sources familiar with the situation said.

The banks will split a fee of 0.875 percent on the IPO, the sources said, declining to be named because these details are not public.

Previously, sources have said the share sale and the sale of convertible securities could top $5 billion.

Ally has also added Barclays Capital (BARC.L) and Deutsche Bank (DBKGn.DE) as bookrunners on the offering, one of the sources said on Thursday.

Citi (C.N), Goldman Sachs (GS.N), JPMorgan (JPM.N) and Morgan Stanley (MS.N) have been selected as lead underwriters on the offering, sources have previously told Reuters.

Deutsche Bank, Barclays and the U.S. Treasury Department declined to comment. Ally also declined to comment.

The offering by Ally, formerly known as GMAC, is one of a spate of recent offerings by government-rescued companies.

U.S. automaker General Motors Co (GM.N) went public in November in a record-setting $23.1 billion IPO. American International Group Inc (AIG.N) is preparing for a $15 billion-plus share sale in the first half of this year.

The Ally offering could include $1 billion to $1.5 billion of mandatory convertible securities, one source said.

But the sources said this week that a decision on the size of Ally's IPO has not been made yet and warned the numbers could change.

A combination of the prestige of selling shares for the government, the potential for future business and the size of the offerings has meant that the fees on the GM, AIG and Ally share sales have been less than the fees on other similarly sized deals.

GM paid banks a fee of 0.75 percent and AIG will likely be closer to 0.5 percent, sources have said.

(Reporting by Clare Baldwin and Paritosh Bansal; Editing by Tim Dobbyn)