The Bank Slate


Ally returning to credit cards with Fair Square purchase

Ally Financial in Detroit is getting back into credit cards with an agreement to buy Fair Square Financial in Wilmington, Del.

The $79 billion-asset Ally said in a press release Thursday that it will pay $750 million in cash for Fair Square. The deal is expected to close in the first quarter.

Ally said the deal provides it with “a scalable, digital-first credit card platform.”

Fair Square, founded in 2016, has focused on providing products that rely on proprietary, analytics-based underwriting. The company has 658,000 cardholders and $763 million in loan balances.

Fair Square uses web and mobile platforms, along with fully digital application process.

Ally ended a three-year credit card relationship with TD Bank in 2019 after deciding that the $100 million portfolio was falling short of expectations.

Ally had a deal in place to buy subprime credit-card lender CardWorks for $2.7 billion put the companies terminated the transaction during the early days of the coronavirus pandemic.

Citi, Goldman Sachs and Sullivan & Cromwell advised Ally. J.P. Morgan and Skadden, Arps, Slate, Meagher & Flom advised Fair Square.

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