NationsBank, the acquisitive North Carolina banking company whose name reflects its ambitions, announced an agreement yesterday to buy almost all of Chrysler First, a consumer finance subsidiary of the Chrysler Financial Corp.
For Chrysler, the sale of its consumer finance subsidiary will provide an infusion of cash and reduce by about $4 billion its borrowings in financial markets and from banks.
John P. Tierney, chairman of Chrysler Financial, said the company wanted to get out of some of its non-automobile businesses to focus on financing car buyers and car dealers.
NationsBank bought $4 billion of Chrysler First's loans and paid Chrysler an additional premium of about $100 million.
Chrysler Financial, which bought the company in 1985 from the BankAmerica Corp., said it expects to receive more than $2 million in net proceeds from the sale, or about the carrying value of Chrysler First on its books. NationsBank said the purchase price reflects a premium of about $100 million for the business.
For NationsBank, the deal is a way to expand its consumer lending business quickly and to profitably deploy the surplus of deposits it has accumulated since the purchase of a failed Texas bank several years ago.
Hugh L. McColl, NationsBank's chairman, has often said he wants consumer lending to grow more rapidly, so that it will account for about half the company's loans, up from about 39 percent, or about $27 billion, currently.
The weak economy has slowed consumer lending at many banks. In the three months that ended on Sept. 30, for example, consumer loans at NationsBank grew by about $305 million, or less than half as much as business loans rose.
Of the $4 billion of loans NationsBank will buy from Chrysler, about half are to individuals and half are to retail stores to finance inventories.