Key facts
- Truist Financial will sell $5.5 billion of auto loans.
- The sale is expected to generate $5.2 billion in net proceeds.
- The transaction marks Truist's exit from near-prime auto lending.
- Truist finance chief Mike Maguire stated a broad strategic review is ongoing with added urgency.
- Truist discontinued marine and recreational vehicle loans in the second quarter.
- The sale is expected to close this year.
Truist Financial announced on Tuesday that it has agreed to sell $5.5 billion of auto loans as part of a strategic overhaul led by CEO Mike Lyons. The deal is anticipated to yield $5.2 billion in net proceeds and signifies the bank's departure from the near-prime auto lending sector.
During the second quarter, Truist had already ceased offering marine and recreational vehicle loans and scaled back its activities in other less profitable consumer lending areas, including prime and non-prime auto loans. Finance chief Mike Maguire indicated that a comprehensive strategic review, initiated earlier in the year, is continuing with heightened focus and intensity, as he shared at the Barclays Global Financial Services Conference.
Analysts anticipate further divestitures as Lyons works to reposition Truist Financial (TFC) for improved growth and profitability over the next three years, according to RBC analyst Gerard Cassidy. Truist stated that it is also adjusting its securities portfolio to manage the capital generated from the loan sale, with the transaction expected to be finalized by the end of the year.