GM Withdraws Bank Application for Deposit Insurance
By Robb M. Stewart
General Motors' lending arm has pulled an application for deposit insurance, a pillar in its efforts to move back into banking and expand its auto-finance business.
General Motors Financial, the automaker's financing subsidiary, said Monday it has withdrawn GM Financial Bank's Interagency Charter and Federal Deposit Insurance Application from further processing by the Federal Deposit Insurance Corporation. The application was submitted in late 2020 to both the FDIC and Utah Department of Financial Institutions.
The company said that during the more than three-year process GM Financial Bank worked to address all regulatory requests and developed a strong charter application that satisfies the statutory criteria for approval in the Federal Deposit Insurance Act. It said the business model is also already in use by several existing FDIC-insured industrial banks, including other auto manufacturers, though not currently by American automakers.
GM's Fort Worth, Tx, based financing arm said it remains confident in the viability of the bank application. It said the Utah Department of Financial Institutions, which regulates the bulk of the nation's industrial bank assets, earlier this month approved GM Financial Bank's application.
An industrial-loan charter allows companies to own both commercial firms and banks, a setup prohibited by a traditional banking license. GM used this type of charter to operate GMAC, its former lending arm that almost failed under the weight of soured subprime mortgages and was bailed out by the government during the 2008 financial crises.
In late 2020, The Wall Street Journal reported that GM was drawing up plans to apply for the banking charter that would be used to support auto-finance business, taking in deposits that would provide a stable, low-cost source of capital for GM Financial to grow its business of lending to GM car buyers and dealers.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
June 24, 2024 08:13 ET (12:13 GMT)
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