UPDATE 4-Royal Bank of Canada to buy Ally auto finance unit
* Deal positions RBC as a leading auto lender in Canada
* Ally to receive proceeds of about $4.1 bln
* RBC seeks revenue to augment slower mortgage growth
* RBC shares fall 1.7 pct
By Euan Rocha and Cameron French
TORONTO, Oct 23 (Reuters) - Royal Bank of Canada has agreed to buy the Canadian auto finance and deposit arm of Ally Financial Inc in a $4.1 billion deal to expand its auto-lending business at a time when its mortgage-lending business is facing slower loan growth.
RBC, Canada's largest bank, said on Tuesday the deal will nearly double its commercial auto lending business, making it a leader in the Canadian segment with about C$24 billion ($24.18 billion) in receivables.
It will also expose RBC to a relatively low-risk business that lends at wider margins than does its consumer mortgage business, which provides the bank's main revenue stream and one that has begun slowing as Canadian borrowers try to cut debt.
"It's a stable business with a low loan-loss profile, and that's always what you're looking for in an acquisition," Dave McKay, RBC's group head of personal & commercial banking, told Reuters in an interview. "Canadians pay off their car loans." Continued...