Truist’s $5.5 Billion Near-Prime Auto Book Was Breaking Even, So the Bank Sold It and Is Shutting the Lender Down
Truist Financial sold its $5.5B near-prime auto loan portfolio, which earned about nothing before taxes, for $5.2B. The sale released $581M in loan-loss reserves and added $945M in core capital. Truist is shutting down Regional Acceptance Corp., the lender behind the loans, and plans to exit other non-core lending businesses. The buyer is reportedly Apollo Global Management, though Truist has not confirmed this.
How this was made
The 30-second read
Why it matters
The transaction improves Truist’s capital position and may lead to a short‑term stock rally, while reducing future interest‑income exposure.
Market read
A major asset divestiture by a US regional bank, affecting its capital ratios and the broader auto‑finance market.
What to watch
Potential downstream effects on dealer financing volumes and competitive dynamics among remaining auto‑loan providers.
Background
Truist’s Near‑Prime Auto (RAC) unit has been break‑even; the sale removes a capital‑intensive book and frees up risk‑weighted assets.
Ticker impact
Truist sold its $5.5 B near‑prime auto loan portfolio, generating about $1 B of capital and CET1 boost.
likely modest upside as the capital release strengthens CET1 and reduces risk weightings
The sale provides a $5.2 B net proceeds and a $945 M CET1 increase, which should be viewed favorably by investors despite a $125 M hit to net interest income.
Market effects
Highlights pressure on regional banks' auto‑loan exposure and may prompt other lenders to reassess near‑prime portfolios.
US banking sector sees a modest positive tilt as a large regional bank improves capital ratios.
Limited; primarily affects US regional banking and auto‑finance markets.
Counterpoint
The capital boost may be overstated if loan‑loss reserves were under‑estimated; the loss of $125 M net interest income could weigh on earnings.
Key entities
- companyTruist Financial Corp.
US regional bank that sold its near‑prime auto loan portfolio.
- companyRegional Acceptance Corp.
Subsidiary of Truist that owned the $5.5 B loan book.
