In asset-based lending, a company submits assets -- such as inventory, real estate or receivables -- as collateral for a bank loan. In factoring, a bank purchases a company's receivables and manages them in return for extending a loan to the company.

GMAC already is the largest commercial lender in the U.S. While the bulk of its business remains auto finance, the company has been expanding in recent years into mortgage lending, insurance and commercial finance in search of faster growth rates.

William Muir, chief financial officer of GMAC, said the company hopes the BNY Finance acquisition willcomplement the GM unit's experience in auto lending. For instance, he said, GMAC might be able to offer clients who are GM suppliers better terms than a commercial bank because of GMAC's knowledge about GM's business. BNY Financial also will give GMAC a bigger presence in the U.K., which the company will use as a platform for expanding into Europe, Muir said.

For Bank of New York, the sale marks the latest step in its effort to focus on fee-based businesses that have higher growth potential. The sale to GMAC will result in a drop of 2% to 3% from analysts' original projections for the bank's 1999 earnings. But "the increased concentration on our fee-based businesses will enhance our overall earnings growth," said Thomas Renyi, the chairman of Bank of New York.

One immediate use for the proceeds upon completion of the sale was approved by the bank's board Tuesday: a program to buy back 30 million Bank of New York shares, probably before the end of the year. The bank said recently it had bought back almostall of the 18 million shares authorized for repurchase under a program approved in December. At the end of the first quarter, Bank of New York had 779 million shares outstanding.

In New York Stock Exchange composite trading Tuesday, Bank of New York shares jumped $2.375, or 6.8 per cent, to $37.0625, and GM shares fell $1.375 to $67.75.

Auto makers' strategies for their finance units have diverged in recent years. Ford Motor Co. spun off its Associates financial unit in late 1997 and early 1998, leaving a primarily automotive-finance operation. Daimler Chrysler AG, meanwhile, has merged Chrysler Corp.'s old finance unit with Daimler-Benz AG's much-larger Debis unit and is pushing for opportunities beond the auto sector.

GMAC's Muir said the company would consider further acquisitions once it has had a chance to absorb this one. "We're not into growth for growth's sake," he said.

Muir said the BNY Financial acquisition, which is expected to be completed in the second quarter, will add to GMAC earningsthis year. Late last year, GM set a "stretch" goal for 1999 net income at GMAC of $1.5 billion, up from $1.325 billion last year. "It's not out of the question, but it's definitely a stretch," Mr. Muir said, adding that earnings so far are on track to top 1998's figure.

--The Wall Street Journal