Ally Bank

Well today or recently depending on when you are reading this article, GMAC Financial services changed it’s name to Ally Bank in hopes that the name change would help instill confidence with people who do business with the bank. Before the recession, GMAC was one of the largest iternational banks on earth.

Recently, GMAC had some major cuts when it came to loaning out money to people buying cars due to the credit crunch of late. GM has completely stopped leasing in a desperate attempt to encourage the public to buy their cars. In case car sales were not doing so well, GMAC was supposed to be there to support GM and that is what it was founded for. In 2006, GM had sold the majority stake of GMACFS to Cerberus Capital Management which was led by investors from major banks such as Citigroup. GM was no longer in control of GMAC.

Changing GMAC’s name from GMACFS to Ally Bank is an attempt to convince people to loan money from them, The name change might help customers understand that GMAC is no longer a part of GM. Since GM is expected to go bankrupt, it should help boost the confidence of future customers. Even though many major banks are still not doing very well the owners of Ally Bank remain hopeful that soon business will pick up.

GMAC loans the majority of it’s cash for three different purposes. The first purpose being a basic car loan. The second being a long-term mortgage that is expected to consistently bring income into the bank except during times of economic uncertainty. Another major field is insurance. Although, arguably it’s not a loan it brings in a lot equity for the company.

It seems that seperating itself from the GM brand is a good thing for the company. It may not be considered the most intelligent move that the bank could made but none the less it shows that the world’s strongest banks are not going down without a fight.