The board of the Federal Deposit Insurance Corp., or FDIC, approved deposit insurance applications submitted by Ford Motor (F) to establish Ford Credit Bank and by General Motors (GM) to establish GM Financial Bank, the agency said Thursday.
Both will be Utah-chartered industrial banks.
Ford Credit Bank’s and GM Financial Bank’s proposed business models will focus on providing automotive financing products nationwide. Ford Credit intends to purchase retail installment sales contracts from independent Ford dealers. GM Financial Bank’s plans to purchase retail installment sales contracts from GMF.
In both cases, funding will primarily consist of retail savings accounts and time deposits obtained through the banks’ websites and mobile apps, the FDIC said.
They’ll both be required to maintain a minimum 15% tier 1 leverage ratio. Each parent company will be required to support its respective bank’s capital and liquidity positions.