Updated from 12:57 p.m. EDT
General Motors Acceptance
, the financial services unit of
, plans to sell up to $55 billion worth of retail automotive contracts to
Bank of America
over a five-year period.
The purchases by Bank of America will begin this month and conclude in June 2010. Bank of America will make an initial purchase of $5 billion. In each of the agreement's five fiscal years, which run July 1 to June 30, the Charlotte, N.C.-based financial services giant will buy up to $10 billion of GMAC's active U.S. retail auto finance contracts.
GMAC will continue to service the auto finance contracts.
In a statement Tuesday, Bank of America said the pact will allow the company "to leverage our low cost of funding, risk management expertise and strong lending base to the benefit of an important client. Our strategic investment in systems, data, people and processes over the past several years has positioned us to capitalize on this opportunity and significantly expand our share of the auto financing market."
GMAC was inspired by the size and scope of the agreement, saying it was "pleased to enter into this landmark agreement with Bank of America, our long-time partner in so many innovative transactions. This agreement leverages GMAC's world-class origination and servicing capabilities with Bank of America's world-class funding capabilities."
GMAC said the deal will help it meet its goal of financing more GM vehicles, without unduly straining the balance sheet.
Shares of Bank of America were down 24 cents to $44.42, and Detroit-based GM was adding 15 cents to $36.02.