WASHINGTON — The FDIC has approved deposit insurance applications from Ford Motor Company and General Motors Company, clearing the way for the creation of Ford Credit Bank and GM Financial Bank as Utah-chartered industrial banks, the agency announced.
The FDIC said both applications were evaluated under the statutory framework governing new insured institutions, including financial condition, capital adequacy, earnings prospects, management quality, risk to the Deposit Insurance Fund, community needs, and consistency with the Federal Deposit Insurance Act. FDIC staff determined that both banks met the required approval standards, subject to specific conditions and written agreements.
Ford Credit Bank will focus on automotive financing nationwide, primarily by purchasing retail installment sales contracts from independent Ford dealers. The bank plans to fund operations largely through retail savings accounts and time deposits, offered through its website and mobile application. As part of the approval conditions, the bank must maintain a minimum 15% Tier 1 leverage ratio, and Ford Motor Company will be required to support the bank’s capital and liquidity positions.
GM Financial Bank will pursue a similar model, concentrating on auto financing through GM Financial, with funding sourced from online savings accounts and time deposits. The FDIC imposed the same minimum 15% Tier 1 leverage ratio requirement, along with a commitment from General Motors Company to support capital and liquidity.
The FDIC said its approval orders will expire if the banks are not established within 12 months, unless the agency grants an extension.