GMAC Needs to Raise $11.5 Billion in Capital
GMAC Financial Services confirmed Thursday the $11.5 billion in capital requirements for the company resulting from the Federal Reserve's Supervisory Capital Assessment Program (S-CAP).
NEW YORK — GMAC Financial Services confirmed Thursday the $11.5 billion in capital requirements for the company resulting from the Federal Reserve's Supervisory Capital Assessment Program (S-CAP).
In connection with this program, GMAC has committed that no later than Nov. 9, 2009, the company will have increased the common shareholder equity component of Tier 1 capital by $11.5 billion, of which $9.1 billion must be new Tier 1 capital.
Methods to increase capital could include issuance of new common equity or issuance of mandatory convertible preferred shares or conversion of existing equity into a form of Tier 1 common equity. GMAC is required to provide the Federal Reserve Bank of Chicago with a plan to attain the capital requirements by June 8, 2009.
"Ensuring the availability of credit to consumers and businesses is a key component in stabilizing the economy and a top priority at GMAC," said GMAC chief executive officer Alvaro G. de Molina. "We support the government's efforts to shore-up the banking system and expect that the additional capital raised will further strengthen GMAC and aid in achieving our strategic objectives."
These capital requirements do not include the additional capital required to finance Chrysler dealers and customers related to GMAC's previously announced agreement with the automaker. In connection with this agreement, the U.S. government has indicated that it intends to support GMAC by providing the capital required to support the financing of Chrysler dealers and customers.
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