Related Party Transactions

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

We offer loan and lease finance products through GM-franchised dealers to customers purchasing new and certain used vehicles manufactured by GM and make commercial loans directly to GM-franchised dealers and their affiliates. We also offer commercial loans to dealers that are consolidated by GM and those balances are included in our finance receivables, net.

Under subvention programs, GM makes cash payments to us for offering incentivized rates and structures on retail loan and lease finance products. In addition, GM makes payments to us to cover certain interest payments on commercial loans. We also provide funding under lines of credit to GM. During the three months ended March 31, 2016, we advanced $456 million under a new line of credit to GM subsidiary Adam Opel AG.

We have related party payables due to GM, primarily for commercial finance receivables originated but not yet funded. These payables typically settle within 30 days.

The following tables present related party transactions (in millions):

Balance Sheet Data	March 31, 2016		December 31, 2015
Commercial finance receivables, net due from dealers consolidated by GM(a)	$	288	$	229
Advances drawn on lines of credit due from GM(b)	$	640	$	190
Subvention receivable(c)	$	436	$	383
Commercial loan funding payable(d)	$	435	$	351

Income Statement Data	Three Months Ended March 31,
	2016			2015
Interest subvention earned(e)	$	103		$	78
Leased vehicle subvention earned(f)	$	(459	)	$	(136	)

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(a) Included in commercial finance receivables.

(b) Included in related party receivables.

(c) Included in related party receivables. For the three months ended March 31, 2016 and 2015, we received $1.2 billion and $0.5 billion in subvention payments from GM, primarily related to lease originations.

(d) Included in related party payables.

(e) Included in finance charge income.

(f) Included as a reduction to leased vehicle expenses.

Under our support agreement with GM (the “Support Agreement”), if our earning assets leverage ratio at the end of any calendar quarter exceeds the applicable threshold set in the Support Agreement, we may require GM to provide funding sufficient to bring our earning assets leverage ratio to within the applicable threshold. In determining our earning assets leverage ratio (net earning assets divided by adjusted equity) under the Support Agreement, net earning assets means our finance receivables, net, plus leased vehicles, net, and adjusted equity means our equity, net of goodwill and inclusive of outstanding junior subordinated debt, as each may be adjusted for derivative accounting from time to time. 

Additionally, the Support Agreement provides that GM will own all of our outstanding voting shares as long as we have any unsecured debt securities outstanding and that GM will use its commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower of up to $4.0 billion under GM’s corporate revolving credit facilities. GM also agreed to certain provisions intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provided us with a $1.0 billion junior subordinated unsecured intercompany revolving credit facility (the "Junior Subordinated Revolving Credit Facility"). There were no advances outstanding under the Junior Subordinated Revolving Credit Facility at March 31, 2016.

Since October 1, 2010, we have been included in GM's consolidated U.S. federal income tax returns. For taxable income we recognize in any period beginning on or after October 1, 2010, we are obligated to pay GM for our share of the consolidated U.S. federal and certain state tax liabilities. Amounts owed to GM for income taxes are accrued and recorded as a related party payable.  At March 31, 2016, there are no related party taxes payable to GM due to our taxable loss position.