Toronto-Dominion Bank has agreed to pay $6.3 billion to buy the auto-lender Chrysler Financial from the private equity firm Cerberus Capital Management.
The price includes $5.9 billion of assets and $400 million in goodwill.
Toronto-Dominion, which controls a 1,250-branch retail bank on the East Coast of the U.S., said the deal will create one of the five-largest bank-owned auto lenders in North America.
Toronto-Dominion expects Chrysler Financial, of Farmington Hills, Mich., to be a consumer loan engine as the economy recovers and more people start buying cars after putting off big purchases through the downturn.
Chrysler Financial would more than double Toronto-Dominion's auto loans in the United States, with more than $7.5 billion in outstanding loans and leases and relationships with more than 2,000 auto dealers. Toronto-Dominion has $3.3 billion auto loans and relationships with 1,100 dealers.
Toronto-Dominion, which has stayed healthier than most U.S. banks, said it intends to use its financial muscle and $93 billion in low-cost U.S. personal and business deposits to aggressively go after bigger share of $700 billion U.S. auto lending business, which it predicted would grow by $200 billion over the next several years.
By 2013, Toronto-Dominion said it plans to do business with more than 5,000 dealers and to be originating at least $1 billion in auto loans per month.
Toronto-Dominion is one of at least two Canadian banks that have been taking advantage of disruption in the U.S. banking market to extend its reach across the border. Bank of Montreal last week agreed to purchase Milwaukee's Marshall & Ilsley Corp. and merge it with its Chicago Subsidiary, Harris Bank.
Earlier this year, Toronto-Dominion bought three failed Florida banks and South Financial Group Inc. of Greenville, S.C.