FDIC Board Approves Deposit Insurance for Two Industrial Banks

The FDIC Board of Directors approved applications for Federal deposit insurance for Ford Credit Bank and GM Financial Bank, allowing them to establish new Utah-chartered industrial loan companies.

In their respective orders (here and here), the FDIC granted approval for the Salt Lake City-based institutions subject to prudential conditions. Ford Credit Bank, a subsidiary of Ford Motor Credit Company, is required to hold initial paid-in capital of at least $1.5 billion, while GM Financial Bank, a unit of General Motors Financial Company, must maintain $667 million. The FDIC mandated that both banks maintain a Tier 1 leverage ratio of at least 15% and enter into specific "Capital and Liquidity Maintenance" and "Parent Company" agreements to ensure the parent companies serve as a source of financial strength to the insured entities.

The FDIC stated the approvals were consistent with the statutory factors of the FDI Act, concluding that the banks’ capital and management were satisfactory and earnings prospects favorable. They noted that while the parent companies are not subject to consolidated Federal bank supervision, the imposed conditions—including requirements for independent board majorities and strict separation of business records—safeguard the Deposit Insurance Fund. Both banks plan to primarily support automotive financing operations while offering deposit products to a nationwide customer base.

The Orders grant the banks a 12-month window to commence operations. Insurance coverage will become effective once the institutions receive final chartering approval from the Utah Department of Financial Institutions and complete a satisfactory pre-opening visitation.