NEW YORK (Reuters) - GMAC LLC, stung by billions of dollars in losses at its auto finance and mortgage units, on Friday scrapped its own name from its banking unit, which it will now call Ally Bank in an effort to gain customers.
Sanjay Gupta, the bank’s chief marketing officer, said the company wanted a name that would help it shed the baggage that many Americans now associate with banks, which have taken hundreds of billions of dollars of taxpayer money after losses from bad loans and investments piled up.
“We fully expect more customers will use us,” Gupta said in an interview.
GMAC’s conversion to a bank holding company in December was a central part of the Detroit-based company’s survival plan, and allowed it to get access to new government funding.
While GMAC got a $6 billion bailout in December, including $5 billion from the Troubled Asset Relief Program, regulators ordered it last week to plug an $11.5 billion capital shortfall to protect itself in case of a severe recession.
Nineteen large banks underwent government “stress tests,” and of the 10 told to raise capital, GMAC had by far the biggest shortfall relative to its size.
Many analysts believe GMAC will need another bailout. Gupta declined to discuss specifics about efforts to raise capital.
GMAC Bank has long offered interest rates on deposits above the industry average. Many lenders that have done so since the global credit crisis began in 2007 had particularly large funding needs, including the now-vanished Countrywide Financial Corp, Wachovia Corp and Washington Mutual Inc.
Ally Bank offers a 2.8 percent annual rate on one-year certificates of deposit, while the industry’s average is 2.29 percent, according to Bankrate.com.
The bank’s deposits increased 16.5 percent in the first quarter to $22.5 billion, including $11.0 billion of retail deposits, $9.5 billion of brokered deposits, and $2.0 billion of other deposits.
GMAC’s owners include automaker General Motors Corp and private equity firm Cerberus Capital Management LP. The company is expected to get more federal funds to help support its new status as the preferred lender for buyers of vehicles made by Chrysler LLC.
Reporting by Juan Lagorio, additional reporting by Jonathan Stempel; Editing by Phil Berlowitz