American Express 2015 Annual Report Download - page 89

FUNDING STRATEGY
Our principal funding objective is to maintain broad and well-diversified funding sources to allow us to meet our
maturing obligations, cost-effectively finance current and future asset growth in our global businesses as well as to
maintain a strong liquidity profile. The diversity of funding sources by type of instrument, by maturity and by investor
base, among other factors, provides additional insulation from the impact of disruptions in any one type of instrument,
maturity or investor. The mix of our funding in any period will seek to achieve cost efficiency consistent with both
maintaining diversified sources and achieving our liquidity objectives. Our funding strategy and activities are
integrated into our asset-liability management activities. We have in place a funding policy covering American Express
Company and all of our subsidiaries.
Our proprietary card businesses are the primary asset-generating businesses, with significant assets in both
domestic and international Card Member receivable and lending activities. Our financing needs are in large part a
consequence of our proprietary card-issuing businesses and the maintenance of a liquidity position to support all of
our business activities, such as merchant payments. We generally pay merchants for card transactions prior to
reimbursement by Card Members and therefore fund the merchant payments during the period Card Member loans
and receivables are outstanding. We also have additional financing needs associated with general corporate purposes,
including acquisition activities.
FUNDING PROGRAMS AND ACTIVITIES
We meet our funding needs through a variety of sources, including direct and third-party distributed deposits and
debt instruments, such as senior unsecured debentures, asset securitizations, borrowings through secured borrowing
facilities and long-term committed bank borrowing facilities in certain non-U.S. regions.
We had the following consolidated debt and customer deposits outstanding as of December 31:
TABLE 21: SUMMARY OF CONSOLIDATED DEBT AND CUSTOMER DEPOSITS
(Billions) 2015 2014
Short-term borrowings ................................................................... $ 4.8 $ 3.5
Long-term debt ......................................................................... 48.1 58.0
Total debt .............................................................................. 52.9 61.5
Customer deposits ...................................................................... 55.0 44.2
Total debt and customer deposits .......................................................... $107.9 $105.7
Management does not currently expect to make any significant changes to our funding programs in order to
satisfy Basel III’s liquidity coverage ratio (LCR) standard based upon our current understanding of the requirements,
which may be subject to change as we receive additional clarification and implementation guidance from regulators
relating to the requirements and as the interpretation of requirements evolves over time.
Our funding plan for the full year 2016 includes, among other sources, approximately $3 billion to $7 billion of
unsecured term debt issuance and up to $3 billion of secured term debt issuance. Our funding plans are subject to
various risks and uncertainties, such as future business growth, the impact of global economic, political and other
events on market capacity, demand for securities offered by us, regulatory changes, ability to securitize and sell
receivables, and the performance of receivables previously sold in securitization transactions. Many of these risks and
uncertainties are beyond our control.
Our equity capital and funding strategies are designed, among other things, to maintain appropriate and stable
unsecured debt ratings from the major credit rating agencies: Moody’s Investor Services (Moody’s), Standard &
Poor’s (S&P), Fitch Ratings (Fitch) and Dominion Bond Rating Services (DBRS). Such ratings help support our access
to cost-effective unsecured funding as part of our overall funding strategy. Our asset-backed securitization (ABS)
activities are rated separately.
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