Related Party Transactions

MUAH is a financial holding company, bank holding company and intermediate holding company whose principal subsidiaries are MUFG Union Bank, N.A. and MUFG Securities Americas, Inc. (formerly Mitsubishi UFJ Securities (USA), Inc.). It is owned by BTMU and MUFG. BTMU is a wholly-owned subsidiary of MUFG.

On July 1, 2016, in accordance with the requirements of the U.S. Federal Reserve Board’s final rules for Enhanced Prudential standards, MUAH was designated the U.S. Intermediate Holding Company of MUFG.

On July 1, 2014, BTMU integrated its U.S. branch banking operations under MUAH’s operations. The integration did not involve a legal entity combination, but rather an integration of personnel and certain business and support activities.

In conjunction with the integration on July 1, 2014, the Bank and BTMU entered into a master services agreement, which provides for employees of the Bank to perform and make available various business, banking, financial, and administrative and support services (the Services) and facilities for BTMU in connection with the operation and administration of BTMU's businesses in the U.S. (including BTMU's U.S. branches). In consideration for the Services, BTMU pays the Bank fee income, which reflects market-based pricing. This integration included the transfer of ownership of BTMU’s U.S. corporate customer list, available-for-sale securities of $70 million and employee-related liabilities to the Bank. Immediately after the transfer, the transferred liabilities were adjusted to conform to the Company's GAAP accounting policies resulting in a $9 million increase in retained earnings and a $9 million decrease in liabilities, resulting in total liabilities transferred of $30 million. The Company's additional paid-in capital increased by $31 million.

In addition to the above, the Company conducts transactions with affiliates which include BTMU, MUFG and other entities which are directly or indirectly owned by MUFG. The transactions include capital market transactions, facilitating securities transactions, secured financing transactions, advisory services, clearing and operational support. Under services level agreements the Company provides services to and receives services from various affiliates. The Company also has referral agreements with its affiliates and pays referral fees from investment banking revenue earned.

Related party transactions reflect market-based pricing. These transactions are subject to federal and state statutory and regulatory restrictions and limitations.

The tables and discussion below represent the more significant related party balances and income (expenses) generated by related party transactions.

As of December 31, 2016 and December 31, 2015, assets and liabilities with affiliates consisted of the following:



(Dollars in millions)	December 31, 2016		December 31, 2015
Assets:
Cash and cash equivalents	$	102	$	117
Securities borrowed or purchased under resale agreements	2,765		5,620
Trading account assets	—		—
Other assets	161		131
Liabilities:
Deposits	$	623	$	177
Securities loaned or sold under repurchase agreements	385		767
Commercial paper and other short-term borrowings	1,372		2,423
Long-term debt	6,042		5,391
Other liabilities	63		31

Revenues and expenses with affiliates for 2016, 2015, and 2014 were as follows:



	Years Ended December 31,
(Dollars in millions)	2016			2015		2014
Interest Income
Securities borrowed or purchased under resale agreements	$	26		$	22	12
Interest Expense
Commercial paper and other short-term borrowings	24			21		51
Long-term debt	69			27		32
Securities loaned or sold under repurchase agreements	2			1		1
Noninterest Income
Fees from affiliates	957			763		320
Other, net	(28		)	17		63
Noninterest Expense
Other	95			92		83

For additional information regarding the debt due to affiliates, see Note 10 and Note 11 to our Consolidated Financial Statements included in this Form 10-K.

At December 31, 2016, the Company had $1.9 billion in uncommitted, unsecured borrowing facilities with affiliates.

At December 31, 2016 and December 31, 2015, the Company had derivative contracts with affiliates totaling $1.6 billion and $1.3 billion, respectively, in notional balances, with $72 million and $8 million in net unrealized gains at December 31, 2016 and December 31, 2015, respectively.

An affiliate extends guarantees on liabilities arising out of or in connection with agreements with certain counterparties. There was no amount guaranteed at December 31, 2016. At December 31, 2015, the guaranteed balance was $3 million.

During 2014 assets under operating lease of $2.7 billion were sold to an affiliate, resulting in a loss on sale of $153 million, included in other, net noninterest income.