Transactions with Affiliates

12 Months Ended

Dec. 31, 2020

As described below, Credco executes material transactions with its affiliates. The agreements between Credco and its affiliates provide that the parties intend that the transactions thereunder be conducted on an arm’s-length basis and the price at which receivables are sold to Credco be at fair value.

In 2020, 2019 and 2018, Credco purchased Card Member receivables and loans without recourse from TRS and certain of its subsidiaries totaling approximately $165 billion, $316 billion, and $299 billion, respectively. In 2020, 2019 and 2018, Credco sold Card Member receivables and participating interests to affiliates totaling $12.7 billion, $1.1 billion, and $6.2 billion, respectively. The discount revenue on purchased Card Member receivables and loans totaled $0.6 billion, $1.2 billion, and $1.0 billion for the years ended December 31, 2020, 2019 and 2018, respectively. The receivables agreements require TRS and its subsidiaries to perform servicing, clerical and other services necessary to bill and collect all Card Member receivables and loans owned by Credco. Since settlements under the agreements occur monthly, an amount due from, or payable to, such affiliates may arise at the end of each month.

As of December 31, 2020, and 2019, CRC owned approximately $4.2 billion and $8.1 billion, respectively, of participation interests purchased from RFC VIII.

Transactions with affiliates as of or for the years ended December 31, were as follows:


(Millions, except percentages)	2020			2019			2018
Loans to affiliates and other	$	10,890		$	10,345		$	14,136
Average interest rate on loans to affiliates and other	1.52		%	2.89		%	2.79		%
Due from affiliates	$	6		$	652		$	210
Restricted cash with affiliates	120			116			93
Short-term debt to affiliates	8,569			6,225			5,899
Average interest rate on short-term debt to affiliates	0.62		%	2.33		%	2.09		%
Maximum month-end level of short-term debt during the year	$	8,622		$	7,087		$	14,216
Long-term debt to affiliates	822			9,292			7,523
Average interest rate on long-term debt to affiliates	1.65		%	3.17		%	2.69		%
Maximum month-end level of long-term debt during the year	$	3,276		$	13,391		$	8,725
Due to affiliates	4,344			2,133			2,869
Maximum month-end level of loans to affiliates during the year	13,959			14,264			14,136
Interest income from affiliates and other	166			332			383
Interest expense to affiliates	75			433			225
Other, net expense	2			2			2
Interest paid on short-term and long-term debt	$	112		$	421		$	198

Credco’s loans to affiliates and other represent interest-bearing borrowings by wholly owned subsidiaries of TRS and the joint ventures that issue American Express cards in certain countries. Revenue earned from loans to affiliates and other is recorded as interest income from affiliates and other in the Consolidated Statements of Income. As of December 31, 2020, and 2019, no amount of loss reserves has been recorded and no loans are 30 days or more past due.

The components of loans to affiliates and other as of December 31 were as follows:


(Millions)	2020		2019
American Express Services Europe Limited	$	2,881	$	4,206
American Express Company	2,772		—
American Express Australia Limited	1,745		2,052
Amex Global Holdings C.V.	1,430		888
Amex Bank of Canada	857		1,587
American Express Company (Mexico) S.A. de C.V.	540		534
American Express International, Inc., Singapore Branch	303		413
American Express Bank (Mexico) S.A.	257		404
American Express International (NZ), Inc.	56		70
Alpha Card S.C.R.L./C.V.B.A.	25		120
American Express Saudi Arabia (C) JSC	24		71
Total(a)	$	10,890	$	10,345

(a)As of December 31, 2020, and 2019, approximately $6.4 billion and $8.2 billion, respectively, were collateralized by the underlying Card Member receivables and loans transferred with recourse.

Due from/to affiliates relate primarily to timing differences from the purchase of Card Member receivables, net of remittances from TRS and its subsidiaries, as well as from operating activities. As of December 31, 2020, due to affiliates also includes an amount pertaining to tax liability on account of the Tax Cuts and Jobs Act enacted on December 22, 2017 (Tax Act). Refer to Note 10 to the “Consolidated Financial Statements” for additional information.

In the month of June 2020, Credco restructured a number of its intercompany loan arrangements to further enhance funding flexibility and effectiveness. Credco borrowed $7.1 billion from TRS to repay borrowings from AE Exposure Management Limited of $4.7 billion. The excess of $2.2 billion was deposited with AENB, which was reported as part of Cash and cash equivalents as of June 30, 2020. During the second half of the year, amounts were withdrawn from AENB to meet business funding requirements resulting in $0.5 billion in deposits remaining with AENB as of December 31, 2020.

As of December 31, 2020, and 2019, the amount of interest-bearing restricted cash was $120 million and $116 million, respectively, which represents cash deposited with Amex Bank of Canada relating to the purchase of Card Member receivables and the collateralized loan arrangement for transfer of Card Member loans. It is included under “Cash and cash equivalents” on the Consolidated Balance Sheets.

Short-term debt to affiliates consists primarily of interest-bearing master notes payable on demand. Credco does not expect any changes to its short-term funding strategies with affiliates. Components of short-term debt to affiliates as of December 31 were as follows:


(Millions)	2020		2019
American Express Travel Related Services Company, Inc.(a)	$	7,073	$	—
AE Exposure Management Limited (a)	1,193		5,731
American Express Holdings Netherlands CV	192		192
Accertify Inc.	107		82
American Express Swiss Holdings GmbH	4		1
American Express Europe LLC	—		219
Total	$	8,569	$	6,225

(a)Refer to Note 1 to the “Consolidated Financial Statements” for additional information.

Long-term debt to affiliates consists primarily of master note agreements with original contractual maturity dates of one year or greater and are not payable on demand. Components of long-term debt to affiliates as of December 31 were as follows:


	2020				2019
	Outstanding Balance		Year-End Stated Interest Rate on Debt		Outstanding Balance		Year-End Stated Interest Rate on Debt

(Millions, except percentages)
American Express Company(a)	$	454	0.91	%	$	8,959	2.85	%
Amex Funding Management (Europe) Limited(b)	368		0.28		333		0.28
Total	$	822	0.63	%	$	9,292	2.76	%

(a)Amounts payable by November 2023. Refer to Note 1 to the “Consolidated Financial Statements” for additional information.

(b)Amounts payable by September 2021.

Service Fees to Affiliates

Credco’s affiliates do not explicitly charge Credco a servicing fee for the servicing of receivables purchased. Instead Credco receives a lower discount rate on the receivables purchased than would be the case if servicing fees were charged. If a servicing fee had been charged by these affiliates from which Credco purchases receivables, fees to affiliates for servicing receivables would have been approximately $250 million, $328 million, and $305 million for the years ended December 31, 2020, 2019 and 2018, respectively. Correspondingly, discount revenue would have increased by approximately the same amounts in these periods.