Banco Popular de Puerto Rico has agreed to acquire Wells Fargo & Company’s auto finance business in Puerto Rico, which operates as Reliable Financial Services Inc. and Reliable Finance Holding Company, for $1.7 billion, the financial institution announced.
As part of the transaction, Banco Popular will acquire approximately $1.5 billion in retail auto loans and $340 million in commercial loans. The acquired auto loan portfolio has credit characteristics that are similar to Banco Popular’s existing self-originated portfolio. Banco Popular will also acquire certain other assets and assume certain liabilities of Reliable.
The purchase price reflects an aggregate discount of 4.5 percent on the assets to be acquired. Banco Popular will fund the purchase price with existing liquidity. The transaction is not subject to the receipt by the parties of any further regulatory approvals.
Subject to satisfaction of customary closing conditions, Popular anticipates the transaction to close during the second quarter of 2018 and be accretive to earnings.
On or after closing, Reliable employees will become employees of Banco Popular. Reliable will continue operating independently as a division of Banco Popular for a period of time after closing to provide continuity of service to Reliable customers while allowing Popular to assess best practices before integrating Reliable’s operations with Popular Auto’s.
“Even in this period of significant uncertainty, Popular continues to believe and invest in the future of Puerto Rico. We are proud to welcome Reliable’s team to Popular, a seasoned team that strongly complements our own,” said Ignacio Alvarez, CEO of Popular Inc., Banco Popular’s parent company.
“Reliable shares many values that are important to Popular: excellent customer service, disciplined underwriting, best-in class employees and social commitment. Popular Auto and Reliable customers can rest assured that they will continue to receive the quality of service and customer experience to which they are accustomed,” he said.
Meanwhile, José Arbona, President of Reliable, said “We’re enthusiastic about this transaction since we are confident that it will be positive for Puerto Rico and particularly for the auto industry. Our customers can be certain that we will continue working with the same drive and dedication as we have done in the past.”