San Juan, Puerto Rico-based Popular, Inc., the parent of Banco Popular, announced today it has agreed to sell a large part of Equity One, its U.S. consumer finance operation, for $1.5 billion to a unit of American International Group.
The announcement said that the agreement with American General Finance Inc, involves Equity One's mortgage loan and consumer loan portfolio.
Equity One, based in Marlton, N.J., offers real estate secured, home improvement and unsecured loan products.
"We are doing the things we have to do in the U.S. mainland as we focus on our core banking franchise," said Richard L. Carrion, Popular Inc. chairman and chief executive officer.
Under the agreement American General Finance, Inc., will consider hiring an unspecified number of Equity One's 512 consumer services employees and will consider retaining an unspecified number of Popular's 130branch locations in 15 states
Popular said Equity One will close all remaining consumer branches and job cuts at Equity One will mean loss of employment for employees at the consumer services branches not hired by American General Finance, Inc., as well as for other related support functions.
Workers who are laid off, Popular said, will receive a transitional severance package, professional counseling, outplacement and support during this process.
Popular, said it anticipates a $19.5 million charge mostly for severance, retention bonuses and lease terminations.
The company said that the transaction, subject to regulatory approval is expected to close in the first quarter of this year.
Last, year after a rise in losses from subprime mortgages, Mr. Carrion had said the corporation was looking at strategic alternatives for noncore businesses.
In Puerto Rico Popular has more than 300 banking offices.
American General Finance, based in Evansville, Ind., has assets of $27 billion and operates over 1,550 offices in 45 states, the United Kingdom, Puerto Rico and the U.S. Virgin Islands.
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