GM’s finance unit plans to open a bank, selling certificates of deposit to diversify assets after a series of rating downgrades made it more expensive to tap debt markets, officials with the unit said on Friday, according to a Reuters report.
The report said that the bank in Utah will not have retail branches for consumers, but will allow General Motors Acceptance Corp.’s auto finance arm to tap a new market, selling federally insured certificates of deposit to brokers.
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GMAC’s auto finance arm hopes that over the next three years, the bank will account for about 5 percent, or $8 billion of its assets, said Jerome Van Orman, the chief financial officer for GMAC’s North American operations, quoted by Reuters.
“We’ve had a series of ratings downgrades over the last couple of years. Because of that, we’ve concentrated on expanding on how we fund the GMAC balance sheet,” Van Orman told Reuters. “The common theme is funding diversification, expanding the investor base in different markets, and this is an element of it.”
