Truist to sell unsecured lending platform assets to Carlyle Group
Truist Financial in Charlotte, N.C., has agreed to sell its unsecured lending platform.
The $554 billion-asset company said in a press release that it will sell $7.7 billion of unsecured consumer loans, representing substantially all of LightStream’s assets, to Carlyle Group. Truist called LightStream a “non-core, loan-only business” that earns a below-target return on tangible common equity.
Truist said it expects the sale to bring in $7.2 billion in net proceeds, add about $850 million (20 basis points) to its CET1 capital and cut net chargeoffs by about 7 basis points a year. The deal is expected to close in the fourth quarter.
Truist plans to use the proceeds to repay wholesale borrowings and may reposition its available-for-sale securities to offset the capital gain.
The LightStream deal follows an exit Truist has already completed. It sold its $5.5 billion Regional Acceptance Corp. auto loan portfolio for $5.2 billion, creating $990 million in capital. It also sold $8.6 billion of low-yielding securities, taking a $1.4 billion pretax loss, and reinvested $7.2 billion at a 5.60% yield.
Truist, which said the moves modestly add to earnings and tangible book value, added that its “broader strategic review” is ongoing, which leaves room for more portfolio sales.