Ally Financial sells credit card business to CardWorks and Merrick Bank
US-based online bank, lender and trading platform Ally Financial has agreed to sell its credit card business to CardWorks and its wholly-owned bank subsidiary, Merrick Bank. The financial terms of the deal have not been disclosed.
Ally Financial sells credit card business
The deal, anticipated to close this year subject to customary closing conditions, will see CardWorks and Merrick Bank acquire Ally’s $2.3 billion credit card receivables portfolio, which includes 1.3 million active cardholders.
This news follows a Bloomberg report from November, which indicated that Ally had been seeking a buyer for its credit card division.
Michael Rhodes, Ally’s CEO, explains the firm’s decision to sell its credit card arm comes as “part of our broader strategy to pursue a more focused approach, enabling us to simplify and streamline our structure, prioritise our core businesses, and drive improved returns”.
Ally is also set to discontinue its home loan products, with a notice on its website stating that 31 January is the last day for new mortgage applications.
The company previously sold its point of sale (POS) financing business, Ally Leding, to US financial services firm Synchrony last year for an undisclosed sum.
Meanwhile, CardWorks, a “servicing partner to Ally’s platform since its inception”, will leverage the acquisition to expand its near-prime credit card business, says CEO Dan Pillemer.
Founded in 1987, CardWorks operates as a credit and payments company, offering servicing solutions to banks and non-bank lenders, payment processing services for merchants, and direct lending options for consumers.
