TD Bank close to Chrysler Financial deal: source

Mon Dec 20, 2010 6:49pm EST
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NEW YORK/TORONTO (Reuters) - Toronto-Dominion Bank is close to an agreement to buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3 billion, a source familiar with the matter said on Monday.

A deal for the lender could be announced as soon as Tuesday, the source said.

A deal would help Cerberus recoup a big chunk of its disastrous $7.4 billion purchase of Chrysler Group, the automaker. It would also help TD, Canada's No. 2 bank, add to its extensive U.S. East Coast assets.

Cerberus, which is led by co-founder Stephen Feinberg, would retain about $1 billion in assets as part of the deal, the Wall Street Journal reported separately.

TD and Cerberus declined to comment.

Chrysler Financial, the former lending arm of the automaker, had its operations reduced as part of a U.S. government-sponsored restructuring of Chrysler and General Motors last year.

Cerberus, which bought Chrysler in 2007, lost control of the automaker during its restructuring. It held on to the financing company.

Ally Financial Inc, the auto and mortgage lender formerly known as GMAC, took over some of the unit's operations in connection with the restructuring.

The deal would be the latest in a series of foreign asset purchases by big Canadian banks, which exited the financial crisis in stronger shape than most rivals, and have been seeking to capitalize by buying up assets.   Continued...