Sources
Help build the largest human-edited directory on the web.
Submit a site - Become an editor
Wikipedia. Licensed under the GNU Free Documentation License.
Are you an expert in this subject? Join the discussion and share your knowledge at Wikipedia.org.
Bank holding company
From Wikipedia, the free encyclopedia
 |
This article or section deals primarily with the United States and does not represent a worldwide view of the subject. Please improve this article or discuss the issue on the talk page. |
A bank holding company, under the laws of the United States, is any entity that directly or indirectly owns, controls or has the power to vote 25% or more of a class of securities of a U.S. bank. Bank holding companies are required to register with the Board of Governors of the Federal Reserve System. Actions of bank holding companies are covered under the Bank Holding Company Act of 1956 ( et seq.).
The Federal Reserve Board, under Regulation Y (12 C.F.R. Pt. 225) has responsibility for regulating and supervising bank holding company activities, such as approving mergers and acquisitions and inspecting the operations of such companies. This authority applies even though a bank owned by a holding company may be under the primary supervision of the Comptroller of the Currency or the Federal Deposit Insurance Corporation.
New or smaller banks often convert themselves into bank holding companies to take advantage of the greater financial flexibility this designation affords them.
Becoming a bank holding company makes it easier for the firm to raise capital than if it remained a traditional bank. It can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater ease. It also has a greater legal authority to repurchase its own stock once issued.
The downside includes greater levels of regulation, especially if there are more than 300 shareholders, at which point the bank holding company is forced to file with the Securities and Exchange Commission. There are also added expenses of operating with an extra layer of administration. This is usually offset by the fact that BHCs are often exempt from many of the state regulations and fees that a traditional bank would face.
Top 50 Bank Holding Companies from the Federal Reserve Website
 |
This economics or finance-related article is a stub. You can help Wikipedia by expanding it. |