RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS

3 Months Ended

Mar. 31, 2016

On November 3, 2015, RBS completed the sale of all of its remaining shares of CFG’s common stock. The parenthetical disclosures related to long-term borrowed funds on the Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows as well as the tables and discussions below include significant related party transactions with RBS prior to the Company’s separation from RBS and significant transactions subsequent to the separation.

In September 2014, the Company entered into certain agreements that established a framework for its ongoing relationship with RBS. Specifically, the Company entered into the following agreements with RBS: Separation and Shareholder Agreement, Registration Rights Agreement, Trade Mark License Agreement, Amended and Restated Master Services Agreement, and Transitional Services Agreements. In connection with RBS’s exit of its ownership in our common stock in 2015, the Separation and Shareholder Agreement and the Registration Rights Agreement were terminated and the Trademark License Agreement was partially terminated.

The following is a summary of borrowed funds from RBS:



	Interest Rate			Maturity Date	March 31, 2016	December 31, 2015
(dollars in millions)	Interest Rate			Maturity Date	March 31, 2016	December 31, 2015
Subordinated debt	5.158	%		June 2023	$333		$333
	3.750	%	⁽¹⁾	July 2024	250	250
	4.023	%	⁽²⁾	October 2024	208	333
	4.082	%		January 2025	334	334

⁽¹⁾Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽²⁾On March 7, 2016, the Company repurchased $125 million of these securities from RBS.

The following table presents total interest expense recorded on subordinated debt with RBS:



	Three Months Ended March 31,
(in millions)	2016		2015
Interest expense on subordinated debt		$11		$20

On March 7, 2016, the Company repurchased $125 million of its subordinated notes held by RBS. On December 3, 2015, the Company repurchased $750 million of outstanding subordinated debt instruments held by RBS. The $3 million difference between the reacquisition price and the net carrying amount of the repurchased debt was recognized as a gain on extinguishment of the debt and is presented in other income in the Consolidated Statement of Operations. In November 2015, the Company entered into an agreement with RBS to purchase an additional $500 million of its subordinated notes held by RBS by July 30, 2016, subject to regulatory approval and ratings agency considerations.

The Company paid no dividends to RBS for the three months ended March 31, 2016. For the three months ended March 31, 2015, the Company paid $39 million in regular common stock dividends to RBS.

Additionally, during 2015 the Company engaged in repurchases of its common stock directly from RBS. Refer to Note 8 “Stockholders’ Equity” for further information.

The Company, as a matter of policy and during the ordinary course of business with underwriting terms similar to those offered to the public, has entered into credit facilities with directors and executive officers and their immediate families, as well as their affiliated companies. Extensions of credit amounted to $126 million and $136 million at March 31, 2016 and December 31, 2015, respectively.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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