Ally Financial and CardWorks have agreed to terminate Ally's $2.7 billion deal to buy the lender.
The companies said in a press release Wednesday that they considered “the meaningful impacts of COVID-19 on global markets and the economy” when they made the decision. There will be no termination fees.
The companies "believe it is in the best interests of our customers and stakeholders to terminate the agreement," Ally CEO Jeffrey Brown said in the release.
"This was a difficult decision to make following a long process to bring two strong companies together," he added.
The $183 billion-asset Ally, which is based in Detroit, agreed to buy CardWorks, a subprime credit card and consumer finance lender based in Woodbury, N.Y., in February. CardWorks is also the parent of the $4.1 billion-asset Merrick Bank.
The deal was the second-biggest bank acquisition announced in 2020.
CardWorks, founded in 1987, specializes in unsecured servicing and merchant services, though it also offers recreational and marine consumer finance loans. It has deposits of $2.9 billion and has offices in Florida, Utah and Pennsylvania.
The announcement came seven months after Ally ended a three-year-old credit card partnership with TD Bank.
Several bank deals have been scuttled because of the coronavirus pandemic, including the planned merger of Independent Bank and Texas Capital and the proposed combination of Nicolet Bankshares and Commerce Financial Holdings in Wisconsin.