August 20, 2013 / 1:39 PM / 5 years ago

Ally Financial to sell $1 billion in stock to boost capital

An Ally Financial sign is seen on a building in Charlotte, North Carolina May 1, 2012. REUTERS/Chris Keane

(Reuters) - Auto lender Ally Financial Inc ALLY_pb.N said it will sell shares worth $1 billion to boost capital levels after failing the Federal Reserve’s stress test earlier this year.

The company has entered agreements with some investors for a private placement of 166,667 shares of the company’s common stock, Ally Financial said in a statement.

It agreed to pay $5.2 billion to repurchase all outstanding shares of the mandatorily convertible preferred securities held by the U.S. Treasury. It will also pay $725 million to terminate the Treasury’s share adjustment right.

Ally was singled out as the weakest of 18 major banks in the Fed’s stress test in March and has to resubmit its new capital plan by the end of September.

Reporting by Aman Shah in Bangalore; Editing by Saumyadeb Chakrabarty

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