Two banks for auto manufacturers Ford and General Motors were both granted deposit insurance, on a conditional basis, by the federal bank deposit insurance agency Thursday; the banks have one year to be established, the agency said.
The banks — Ford Credit Bank and GM Financial Bank – will both be Utah-chartered industrial banks, the Federal Deposit Insurance Corp. (FDIC) said.
According to the FDIC, the banks have proposed similar business models. Both will focus on providing automotive financing products nationwide. In Ford Credit’s case, that will be primarily through the purchase of retail installment sales contracts from independent dealers. In GM Financial Bank’s case that will be through purchase of retail installment sales contracts from General Motors Financial (GMF).
Funding for Ford Credit will be primarily through retail savings accounts and time deposits obtained via the bank’s website and mobile application, the FDIC said. GM Financial Bank’s funding will primarily consist of savings accounts and time deposits via the bank’s website and a mobile application, according to the agency.
Among certain conditions for approval by FDIC, Ford Credit is required to maintain a minimum 15% tier 1 leverage ratio, and Ford Motor Co. will be required to support the bank’s capital and liquidity positions. GM Financial Bank will also be required to maintain a minimum 15% tier 1 leverage ratio, and General Motors Corp. (GMC) will be required to support the bank’s capital and liquidity position, the agency said.
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