Related Party Transactions

9 Months Ended

Sep. 30, 2017

MUAH is a financial holding company, bank holding company and intermediate holding company whose principal subsidiaries are MUFG Union Bank, N.A. and MUFG Securities Americas Inc. (formerly Mitsubishi UFJ Securities (USA), Inc.). It is owned by BTMU and MUFG. BTMU is a wholly-owned subsidiary of MUFG.

On July 1, 2016, MUFG designated MUAH as its IHC in accordance with the requirements of the U.S. Federal Reserve Board’s final rules for Enhanced Prudential Standards and transferred interests in substantially all its U.S. subsidiaries to the IHC. On July 1, 2017, MUFG transferred interests in its remaining U.S. subsidiaries to MUAH. The transferred subsidiaries had assets of $1.0 billion, including goodwill and intangibles of $196 million, and liabilities of $601 million, all of which were transferred at carrying value. In consideration for the transferred assets and liabilities, MUAH issued 3,267,433 shares to BTMU and MUFG.

The Company provides various business, banking, financial, administrative and support services, and facilities for BTMU in connection with the operation and administration of BTMU's business in the U.S. (including BTMU's U.S. branches). The Bank and BTMU participate in a master services agreement whereby the Bank earns fee income in exchange for services and facilities provided.

In addition to the above, the Company conducts transactions with affiliates which include BTMU, MUFG and other entities which are directly or indirectly owned by MUFG. The transactions include capital market transactions, facilitating securities transactions, secured financing transactions, advisory services, clearing and operational support. Under services level agreements the Company provides services to and receives services from various affiliates. The Company also has referral agreements with its affiliates and pays referral fees from investment banking revenue earned.

Related party transactions reflect market-based pricing. These transactions are subject to federal and state statutory and regulatory restrictions and limitations.

The tables and discussion below represent the more significant related party balances and income (expenses) generated by related party transactions.

As of September 30, 2017 and December 31, 2016, assets and liabilities with affiliates consisted of the following:



(Dollars in millions)	September 30, 2017		December 31, 2016
Assets:
Cash and cash equivalents	$	43	$	102
Securities borrowed or purchased under resale agreements	3,345		2,765
Other assets	118		161
Liabilities:
Deposits	$	379	$	623
Securities loaned or sold under repurchase agreements	1,144		385
Commercial paper and other short-term borrowings	909		1,372
Long-term debt	6,243		6,042
Other liabilities	47		63

Revenue and expenses with affiliates for the three and nine months ended September 30, 2017 were as follows:



	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
(Dollars in millions)	2017		2017
Interest Income
Securities borrowed or purchased under resale agreements	$	13	$	28
Interest Expense
Commercial paper and other short-term borrowings	2		5
Long-term debt	37		97
Securities loaned or sold under repurchase agreements	1		4
Noninterest Income
Fees from affiliates	209		639
Other, net	3		(9		)
Noninterest Expense
Other	34		79

At September 30, 2017, the Company had $1.4 billion in uncommitted, unsecured borrowing facilities with affiliates. See Note 6 and Note 7 to these consolidated financial statements for more information on debt due to affiliates.

At September 30, 2017 and December 31, 2016, the Company had derivative contracts with affiliates totaling $2.7 billion and $1.6 billion, respectively, in notional balances, with $2 million and $72 million in net unrealized gains at September 30, 2017 and December 31, 2016, respectively.