The Federal Deposit Insurance Corp. approved deposit insurance applications from Ford Motor Co. and General Motors Co. on Thursday, paving the way for the automakers to establish their own industrial banks.

Ford Credit Bank and GM Financial Bank, which will both be chartered in Utah, will each focus on auto lending, with Ford lending through indirect retail installment and lease contracts originated by auto dealers and GM funding through retail installment contracts from GM Financial.

Ford Credit Bank’s funding will mainly come from retail savings accounts and time deposits obtained via the bank’s website and mobile app; and GM Financial Bank’s will mainly come from savings accounts and time deposits via the bank’s website and a mobile app.

Both automakers must stand up their respective banks within 12 months. After that, they must maintain a minimum 15% tier 1 leverage ratio.

“This is a long-term strategic initiative that will expand our capabilities, enabling us to offer additional savings options to customers, which will over time help lower our cost of funding as well as broaden our financing offerings,” Ford Credit CEO and President Cathy O’Callaghan said in a company blog post.

Ford’s ILC charter is long-awaited. The automaker submitted its application in 2022, facing pushback from trade groups that called the ILC a “dangerous mix of commerce and banking.”

GM Financial’s process was even longer. It first applied for its ILC charter in 2020 and gained conditional approval from the Utah regulator in 2024, but it pulled its application shortly after to address regulator feedback. The company reapplied for the charter in February 2025.

“We are thrilled to have earned both the FDIC’s and UDFI’s approval, which both marks the successful completion of a rigorous review process and demonstrates our commitment to compliance and responsible banking,” GM Financial President and CEO Susan Sheffield said in a press announcement.

“GM Financial Bank will directly support the American auto industry by enhancing our services for dealers, customers, and the many communities that GM Financial and General Motors serve. The bank will also deepen our relationships with current customers as well as establish connections with consumers beyond the General Motors brand,” she said.

Bank trade groups such as the Independent Community Bankers of America are “concerned” by ILCs due to what’s dubbed as a “regulatory loophole”: ILC charters allow banks to receive deposit insurance, but do not require oversight from the Federal Reserve.

“When massive commercial-financial conglomerates exploit the ILC loophole, they inject unnecessary systemic risk into the banking system,” ICBA President and CEO Rebeca Romero Rainey said in a prepared statement.

“The FDIC has a statutory duty to reject applications that pose undue risk, and the ILC model is not the innovation proponents claim — it’s a relic of a loophole dating to the 1980s that blurs the line between banking and commerce,” Rainey said. “If a company wants to own a bank, it must play by the same rules as everyone else, and anything less is regulatory arbitrage at taxpayer risk.”

Few ILC charters have been granted in recent years.

Thrivent Financial for Lutherans received an industrial loan company charter in 2024, finalizing its yearslong quest for deposit insurance to create Thrivent Bank. The most recent ILC charter approvals before that were Block (née Square) and Nelnet.

The same can be said, however, about bank charters overall – at least during the Biden era. But 2025 proved to be fertile ground for bank formation, given the six de novo charters approved by the Office of the Comptroller of the Currency last year. At least 14 other applications await an OCC decision.

At least three ILC applications – Nissan and PayPal and, as of this week, buy now, pay later company Affirm – await decisions from the FDIC.

Valerie Song, senior director at regulatory consultancy Klaros Group, called the approvals “encouraging.” ILC charters enable companies to offer financial services to customers, she said, thus increasing consumer options.

“Moreover, the FDIC is clearly committed to maintaining appropriately high standards for safety and soundness, as evidenced by the initial paid-in capital requirements and capital ratios, among other requirements," she said.