Financial Accounting

Ally Expects to Double Loan Loss Reserves Under New Accounting

Oct. 16, 2019, 4:59 PM

Ally Financial Inc. warned analysts it will have to more than double the reserves it sets aside to cover losses on failing loans once major new accounting rules go live in 2020.

The bank will have to increase its loan loss reserve by about 105% to 115% once it calculates its losses under the current expected credit losses (CECL) standard, CFO Jennifer LaClair told analysts in an Oct. 16 earnings call.

The expected losses are driven by the bank’s large portfolio of auto loans, LaClair said.

  • When banks have to boost reserves, they tie up more money...

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