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 $96 billion (82 billion euros) in credit contracts to the new bank, which will then refinance itself on the inter-banking 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.