KeyBank Sells $ 3.2 Billion Indirect Auto Loan Portfolio

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Key bank left the indirect retail auto loan industry, selling its $ 3.2 billion portfolio to a subsidiary managed by Waterfall Asset Management.

Neither the name of the subsidiary nor the terms of the transaction were disclosed in an announcement last week. Waterfall did not respond to a request for comment.

“Although we have sold our remaining portfolio, we will continue to service the loans, which means the end customer will not experience any significant changes,” KeyBank spokesperson Jeff Kew wrote in an email. Tuesday.

Parent company KeyCorp announced in October 2020 that KeyBank would stop issuing new indirect auto loans, predicting that what was then a portfolio of about $ 4.6 billion “will flow over time.”

“This decision to leave the indirect retail auto loan business is meant to align with our relationship strategy,” Kew wrote on Tuesday.

Kew said KeyBank will remain a floor plan lender and Friday’s sale did not affect its dealer customers.

“This sale does not impact our commitment to dealer fundraising activities,” Kew wrote. “Our clients will continue to have access to our industry expertise, our tailored financial solutions and our dedicated team of sales, service and credit experts who will work hard for them.”

KeyCorp described Friday’s sale as a way to generate capital for a stock buyback. On the same day, the company bought $ 2.8 billion in debt using the auto loans as collateral and reached a deal to buy up to 2.5% of its common stock for up to $ 585 million. dollars.

“We are committed to returning capital to our shareholders, and our share buyback program is an important part of that commitment,” CFO Don Kimble said in a statement on Monday. “The ASR transaction, which was facilitated by the capital generated from the sale of the indirect retail auto loan portfolio, once again demonstrates our commitment to maximizing shareholder value.”


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