DaimlerChrysler Wants to Create U.S. Bank

[Guest Josh]

BERLIN - German-U.S. carmaker DaimlerChrysler AG intends to establish its own bank in the United States in an effort to lower refinancing costs for its Financial Services unit, the executive who heads the unit said. "We have applied for a license to found an industrial bank in the U.S. and hope to get the approval in the first quarter of 2006," DaimlerChrysler Financial Services Chief Executive Juergen Walker said late Tuesday, Dow Jones Newswires reported, in comments that were embargoed until Wednesday. He said the carmaker wants to transfer some 82 billion euros ($96 billion) in credit contracts to the new bank, which will then refinance itself on the interbanking market and function as a lender for the Financial Services unit. DaimlerChrysler hopes to get a better credit rating for the bank, thus lowering the refinancing costs for the unit, Walker said. He expects the bank to receive at least a better rating than the BBB+ given to the carmaker by Fitch Ratings. Walker said the better the rating, the better the refinancing conditions will be. Walker added that "we will make a solid earnings contribution to the results of DaimlerChrysler in 2005." DaimlerChrysler also aims to markedly expand its car refinancing business in China over the coming years. "In three to four years' time, we could have some 100,000 cars with a credit contract volume of 2 billion euros ($2.3 billion) in our Chinese portfolio," Walker said. DaimlerChrysler started its Financial Services business in China in October. It aims to conclude some 3,000 refinancing contracts in China in 2006.

[SoCalCTS]

Why sohould we let a company that is only 14% U.S. owned set up their own bank? Should the taxpayers and government really be lending money (throught the federal reserve) to a foreign bank so that they can cut U.S. banks out of making a profit on auto financing? I hope this is denied. Edited November 16, 2005 by SoCalCTS

[haypops]

I think there are many foreign owned banks already.

[SoCalCTS]

I think there are many foreign owned banks already.

[post="44090"]<{POST_SNAPBACK}>[/post]

Yes there are many foreign owned banks.

I think this is an opportunity for the US government to bring up the fact that the DCX merger was not a merger of equals. Daimler-Chrysler was somewhat dishonest about their merger. It only stands to reason that they might not be completely honest about their intentions in creating a bank. Its very rare that the government gets a real opportunity to put its nose into the private sector and I hope they give them hell.

[Croc]

Do you really think the Bush administration will do jack sh!t about this? C'mon...let's dream some more realistic dreams here, like GM dominating product segments with competitive vehicles for the rest of the decade.

[sciguy_0504]

Why should any administration doing something about this? It's capitalism! Any one of you could set up your own bank in this country if you had the money and like haypops mentioned, there are plenty of foreign-owned banks in this country. Go up to NYC and you'll see the N.A. headquarters for dozens of banks from around the globe. Plus, I don't think this type of bank is going to be one where you can walk up and set up an account or use its ATM. It's pretty much for DCX customers.

[Croc]

Dude, it may be capitalism, but it would come at the expense of some current banks that serve DCX customers already. Not a fan of letting offshore companies gain at the expense of domestic companies...

[sciguy_0504]

Dude, it may be capitalism, but it would come at the expense of some current banks that serve DCX customers already.  Not a fan of letting offshore companies gain at the expense of domestic companies...

[post="44164"]<{POST_SNAPBACK}>[/post]

According to the article, DCX is mainly doing it for itself:

German-U.S. carmaker DaimlerChrysler AG intends to establish its own bank in the United States in an effort to lower refinancing costs for its Financial Services unit, the executive who heads the unit said.

Plus, many companies have their own "banks" in order to keep everything in-house, like GMAC for example or Toyota Finanial Services.