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6000 - Bank Holding Company Act
Subpart CNonbanking Activities and Acquisitions by Bank Holding
Companies
§ 225.21 Prohibited nonbanking activities and acquisitions;
exempt bank holding companies.
(a) Prohibited nonbanking activities and
acquisitions. Except as provided in § 225.22 of this subpart, a
bank holding company or a subsidiary may not engage in, or acquire
or
{{2-28-97 p.6103}}control, directly or
indirectly, voting securities or assets of a company engaged in, any
activity other than:
(1) Banking or managing or controlling banks and other
subsidiaries authorized under the BHC Act; and
(2) An activity that the Board determines to be so closely
related to banking, or managing or controlling banks as to be a proper
incident thereto, including any incidental activities that are
necessary to carry on such an activity, if the bank holding company has
obtained the prior approval of the Board for that activity in
accordance with the requirements of this regulation.
(b) Exempt bank holding companies. The following bank
holding companies are exempt from the provisions of this subpart:
(1) Family-owned companies. Any company that is a
"company covered in 1970," (as defined in section 2(b) of the BHC
Act), more than 85 percent of the voting securities of which was
collectively owned on June 30, 1968, and continuously thereafter, by
members of the same family (or their spouses) who are lineal
descendants of common ancestors.
(2) Labor, agricultural, and horticultural
organizations. Any company that was on January 4, 1977, both a
bank holding company and a labor, agricultural, or horticultural
organization exempt from taxation under section 501 of the Internal
Revenue Code (26 U.S.C. 501(c)).
(3) Companies granted hardship exemption. Any bank
holding company that has controlled only one bank since before July 1,
1968, and that has been granted an exemption by the Board under section
4(d) of the BHC Act, subject to any conditions inposed by the Board.
(4) Companies granted exemption on other grounds. Any
company that acquired control of a bank before December 10, 1982,
without the Board's prior approval under section 3 of the BHC Act, on
the basis of a narrow interpretation of the term demand deposit
or commercial loan, if the Board has determined that:
(i) Coverage of the company as a bank holding company under this
subpart would be unfair or represent an unreasonable hardship; and
(ii) Exclusion of the company from coverage under this part is
consistent with the purposes of the BHC Act and section 106 of the Bank
Holding Company Act Amendments of 1970
(12 U.S.C. 1971,
1972(1)). The provisions of
§ 225.4 of subpart A of
this part do not apply to a company exempt under this paragraph.
[Codified to 12 C.F.R. § 225.21]
[Section 225.21 amended at 62 Fed. Reg. 9329, February 28, 1997,
effective April 21. 1997]
§ 225.22 Exempt nonbanking activities and acquisitions.
(a) Certain de novo activities. A bank holding company
may, either directly or indirectly, engage de novo in any
nonbanking activity listed in § 225.28(b) (other than operation of an
insured depository institution) without obtaining the Board's prior
approval if the bank holding company:
(1) Meets the requirements of paragraphs (c)(1), (2), and (6) of
§ 225.23;
(2) Conducts the activity in compliance with all Board orders and
regulations governing the activity; and
(3) Within 10 business days after commencing the activity,
provides written notice to the appropriate Reserve Bank describing the
activity, identifying the company or companies engaged in the activity,
and certifying that the activity will be conducted in accordance with
the Board's orders and regulations and that the bank holding company
meets the requirements of paragraphs (c)(1), (2), and (6) of
§ 225.23.
(b) Servicing activities. A bank holding company may,
without the Board's prior approval under this subpart, furnish services
to or perform services for, or establish or acquire a company that
engages solely in servicing activities for:
(1) The bank holding company or its subsidiaries in connection
with their activities as authorized by law, including services that are
necessary to fulfill commitments entered
{{2-28-97 p.6104}}into by the subsidiaries with
third parties, if the bank holding company or servicing company
complies with the Board's published interpretations and does not act as
principal in dealing with third parties; and
(2) The internal operations of the bank holding company or its
subsidiaries. Services for the internal operations of the bank holding
company or its subsidiaries include, but are not limited to:
(i) Accounting, auditing, and appraising;
(ii) Advertising and public relations;
(iii) Data processing and data transmission services, data bases
or facilities;
(iv) Personnel services;
(v) Courier services;
(vi) Holding or operating property used wholly or substantially
by a subsidiary in its operations or for its future use;
(vii) Liquidating property acquired from a subsidiary;
(viii) Liquidating property acquired from any sources either
prior to May 9, 1956, or the date on which the company became a bank
holding company, whichever is later; and
(ix) Selling, purchasing, or underwriting insurance, such as
blanket bond insurance, group insurance for employees, and property and
casualty insurance.
(c) Safe deposit business. A bank holding company or
nonbank subsidiary may, without the Board's prior approval, conduct a
safe deposit business, or acquire voting securities of a company that
conducts such a business.
(d) Nonbanking acquisitions not requiring prior Board
approval. The Board's prior approval is not required under this
subpart for the following acquisitions:
(1) DPC acquisitions. (i) Voting securities or
assets, acquired by foreclosure or otherwise, in the ordinary course of
collecting a debt previously contracted (DPC property) in good faith,
if the DPC property is divested within two years of acquisition.
(ii) The Board may, upon request, extend this two-year period for
up to three additional years. The Board may permit additional
extensions for up to 5 years (for a total of 10 years), for shares,
real estate or other assets where the holding company demonstrates that
each extension would not be detrimental to the public interest and
either the bank holding company has made good faith attempts to dispose
of such shares, real estate or other assets or disposal of the shares,
real estate or other assets during the initial period would have been
detrimental to the company.
(iii) Transfers of DPC property within the bank holding company
system do not extend any period for divestiture of the property.
(2) Securities or assets required to be divested by
subsidiary. Voting securities or assets required to be divested
by a subsidiary at the request of an examining federal or state
authority (except by the Board under the BHC Act or this regulation),
if the bank holding company divests the securities or assets within two
years from the date acquired from the subsidiary.
(3) Fiduciary investments. Voting securities or
assets acquired by a bank or other company (other than a trust that is
a company) in good faith in a fiduciary capacity, if the voting
securities or assets are:
(i) Held in the ordinary course of business; and
(ii) Not acquired for the benefit of the company or its
shareholders, employees, or subsidiaries.
(4) Securities eligible for investment by a national
bank. Voting securities of the kinds and amounts explicitly
eligible by federal statute (other than section 4 of the Bank Service
Corporation Act, 12 U.S.C. 1864) for investment by a national bank, and
voting securities acquired prior to June 30, 1971, in reliance on
section 4(c)(5) of the BHC Act and interpretations of the Comptroller
of the Currency under section 5136 of the Revised Statutes (12 U.S.C.
24(7)).
(5) Securities or property representing 5 percent or less
of a company. Voting securities of a company or property that, in
the aggregate, represent 5 percent or less of the
{{10-31-07 p.6105}}outstanding shares of any class
of voting securities of a company or a 5 percent interest or less in
the property, subject to the provisions of 12 CFR 225.137.
(6) Securities of investment company. Voting
securities of an investment company that is solely engaged in investing
in securities and that does not own or control more than 5 percent of
the outstanding shares of any class of voting securities of any
company.
(7) Assets acquired in the ordinary course of
business. Assets of a company acquired in the ordinary course of
business, subject to the provisions of
12 CFR 225.132, if the
assets relate to activities in which the acquiring company has
previously received Board approval under this regulation to engage.
(8) Asset acquisitions by lending company or industrial
bank. Assets of an office(s) of a company, all or substantially
all of which relate to making, acquiring, or servicing loans if:
(i) The acquiring company has previously received Board approval
under this regulation or is not required to obtain prior Board approval
under this regulation to engage in lending activities or industrial
banking activities;
(ii) The assets acquired during any 12-month period do not
represent more than 50 percent of the risk-weighted assets (on a
consolidated basis) of the acquiring lending company or industrial
bank, or more than $100 million, whichever amount is less;
(iii) The assets acquired do not represent more than 50 percent
of the selling company's consolidated assets that are devoted to
lending activities or industrial banking business;
(iv) The acquiring company notifies the Reserve Bank of the
acquisition within 30 days after the acquisition; and
(v) The acquiring company, after giving effect to the
transaction, meets the Board's Capital Adequacy Guidelines (Appendix A
of this part), and the Board has not previously notified the acquiring
company that it may not acquire assets under the exemption in this
paragraph.
(e) Acquisition of securities by subsidiary
banks.--(1) National bank. A national bank or its
subsidiary may, without the Board's approval under this subpart,
acquire or retain securities on the basis of section 4(c)(5) of the BHC
Act in accordance with the regulations of the Comptroller of the
Currency.
(2) State bank. A state-chartered bank or its
subsidiary may, insofar as federal law is concerned, and without the
Board's prior approval under this subpart:
(i) Acquire or retain securities, on the basis of section 4(c)(5)
of the BHC Act, of the kinds and amounts explicitly eligible by federal
statute for investment by a national bank; or
(ii) Acquire or retain all (but, except for directors' qualifying
shares, not less than all) of the securities of a company that engages
solely in activities in which the parent bank may engage, at locations
at which the bank may engage in the activity, and subject to the same
limitations as if the bank were engaging in the activity
directly.
(f) Activities and securities of new bank holding
companies. A company that becomes a bank holding company
may, for a period of two years, engage in nonbanking activities and
control voting securities or assets of a nonbank subsidiary, if the
bank holding company engaged in such activities or controlled such
voting securities or assets on the date it became a bank holding
company. The Board may grant requests for up to three one-year
extensions of the two-year period.
(g) Grandfathered activities and securities. Unless the
Board orders divestiture or termination under section 4(a)(2) of the
BHC Act, a "company covered in 1970," as defined in section 2(b)
of the BHC Act, may:
(1) Retain voting securities or assets and engage in activities
that it has lawfully held or engaged in continuously since June 30,
1968; and
(2) Acquire voting securities of any newly formed company to
engage in such activities.
{{10-31-07 p.6106}}
(h) Securities or activities exempt under Regulation
K. A bank holding company may acquire voting securities or assets
and engage in activities as authorized in Regulation K
(12 CFR Part 211).
[Codified to 12 C.F.R. § 225.22]
[Section 225.22 amended at 62 Fed. Reg. 9331, February 28, 1997,
effective April 21, 1997]
§ 225.23 Expedited action for certain nonbanking proposals by
well-run bank holding companies.
(a) Filing of notice--(1) Information required.
A bank holding company that meets the requirements of paragraph
(c) of this section may satisfy the notice requirement of this subpart
in connection with the acquisition of voting securities or assets of a
company engaged in nonbanking activities that the Board has permitted
by order or regulation (other than an insured depository
institution), 1
or a proposal to engage de novo, either directly or
indirectly, in a nonbanking activity that the Board has permitted by
order or by regulation, by providing the appropriate Reserve Bank with
a written notice containing the following:
(i) A certification that all of the criteria in paragraph (c) of
this section are met;
(ii) A description of the transaction that includes
identification of the companies involved in the transaction, the
activities to be conducted, and a commitment to conduct the proposed
activities in conformity with the Board's regulations and orders
governing the conduct of the proposed activity;
(iii) If the proposal involves an acquisition of a going concern:
(A) If the bank holding company has consolidated assets of $500
million or more, an abbreviated consolidated pro forma
balance sheet for the acquiring bank holding company as of the
most recent quarter showing credit and debit adjustments that reflect
the proposed transaction, consolidated pro forma risk-based
capital ratios for the acquiring bank holding company as of the most
recent quarter, a description of the purchase price and the terms and
sources of funding for the transaction, and the total revenue and net
income of the company to be acquired;
(B) If the bank holding company has consolidated assets of less
than $500 million, a pro forma parent-only balance sheet as
of the most recent quarter showing credit and debit adjustments that
reflect the proposed transaction, a description of the purchase price
and the terms and sources of funding for the transaction and the
sources and schedule for retiring any debt incurred in the transaction,
and the total assets, off-balance sheet items, revenue and net income
of the company to be acquired;
(C) For each insured depository institution whose Tier 1 capital,
total capital, total assets or risk-weighted assets change as a result
of the transaction, the total risk-weighted assets, total assets, Tier
1 capital and total capital of the institution on a pro forma
basis;
(iv) Identification of the geographic markets in which
competition would be affected by the proposal, a description of the
effect of the proposal on competition in the relevant markets, a list
of the major competitors in that market in the proposed activity if the
affected market is local in nature, and, if requested, the market
indexes for the relevant market; and
(v) A description of the public benefits that can reasonably be
expected to result from the transaction.
(2) Waiver of unnecessary information. The Reserve
Bank may reduce the information requirements in paragraphs (a)(1)(iii)
and (iv) of this section as appropriate.
(b)(1) Action on proposals under this section. The Board
or the appropriate Reserve Bank shall act on a proposal submitted under
this section, or notify the bank holding
{{10-31-07 p.6107}}company that the transaction is
subject to the procedure in § 225.24, within 12 business days
following the filing of all of the information required in paragraph
(a) of this section.
(2) Acceptance of notice if expedited procedure not
available. If the Board or the Reserve Bank determines, after the
filing of a notice under this section, that a bank holding company may
not use the procedure in this section and must file a notice under
§ 225.24, the notice shall be deemed accepted for purposes of
§ 225.24 as of the date that the notice was filed under this section.
(c) Criteria for use of expedited procedure. The
procedure in this section is available only if:
(1) Well-capitalized organization--(i) Bank
holding company. Both at the time of and immediately after the
proposed transaction, the acquiring bank holding company is
well-capitalized;
(ii) Insured depository institutions. Both at the time
of and immediately after the transaction:
(A) The lead insured depository institution of the acquiring bank
holding company is well-capitalized;
(B) Well-capitalized insured depository institutions control at
least 80 percent of the total risk-weighted assets of insured
depository institutions controlled by the acquiring bank holding
company; and
(C) No insured depository institution controlled by the acquiring
bank holding company is undercapitalized;
(2) Well-managed organization--(i) Satisfactory
examination ratings. At the time of the transaction, the acquiring
bank holding company, its lead insured depository institution, and
insured depository institutions that control at least 80 percent of the
total risk-weighted assets of insured depository institutions
controlled by the holding company are well-managed and have received at
least a satisfactory rating for compliance at their most recent
examination if such rating was given;
(ii) No poorly managed institutions. No insured
depository institution controlled by the acquiring bank holding company
has received 1 of the 2 lowest composite ratings at the later of the
institution's most recent examination or subsequent review by the
appropriate federal banking agency for the institution.
(iii) Recently acquired institutions excluded. Any
insured depository institution that has been acquired by the bank
holding company during the 12-month period preceding the date on which
written notice is filed under paragraph (a) of this section may be
excluded for purposes of paragraph (c)(2)(ii) of this section if:
(A) The bank holding company has developed a plan acceptable to
the appropriate federal banking agency for the institution to restore
the capital and management of the institution; and
(B) All insured depository institutions excluded under this
paragraph represent, in the aggregate, less than 10 percent of the
aggregate total risk-weighted assets of all insured depository
institutions controlled by the bank holding company;
(3) Permissible activity. (i) The Board has
determined by regulation or order that each activity proposed to be
conducted is so closely related to banking, or managing or controlling
banks, as to be a proper incident thereto; and
(ii) The Board has not indicated that proposals to engage in the
activity are subject to the notice procedure provided in § 225.24;
(4) Competitive criteria--(i) Competitive
screen. In the case of the acquisition of a going concern, the
acquisition, without regard to any divestitures proposed by the
acquiring bank holding company, does not cause:
(A) The acquiring bank holding company to control in excess of 35
percent of the market share in any relevant market; or
(B) The Herfindahl-Hirschman index to increase by more than 200
points in any relevant market with a post-acquisition index of at least
1800; and
(ii) Other competitive factors. The Board has not
indicated that the transaction is subject to close scrutiny on
competitive grounds;
{{10-31-07 p.6108}}
(5) Size of acquisition--(i) In
general--(A) Limited growth. Except as provided in
paragraph (c)(5)(ii) of this section, the sum of aggregate
risk-weighted assets to be acquired in the proposal and the aggregate
risk-weighted assets acquired by the acquiring bank holding company in
all other qualifying transactions does not exceed 35 percent of the
consolidated risk-weighted assets of the acquiring bank holding
company. For purposes of this paragraph, "other qualifying
transactions" means any transaction approved under this section or
§ 225.14 during the 12
months prior to filing the notice under this section;
(B) Consideration paid. The gross consideration to be
paid by the acquiring bank holding company in the proposal does not
exceed 15 percent of the consolidated Tier 1 capital of the acquiring
bank holding company; and
(C) Individual size limitation. The total
risk-weighted assets to be acquired do not exceed $7.5 billion;
(ii) Small bank holding companies. Paragraph
(c)(5)(i)(A) of this section shall not apply if, immediately following
consummation of the proposed transaction, the consolidated
risk-weighted assets of the acquiring bank holding company are less
than $300 million.
(6) Supervisory actions. During the 12-month period
ending on the date on which the bank holding company proposes to
consummate the proposed transaction, no formal administrative order,
including a written agreement, cease and desist order, capital
directive, prompt corrective action directive, asset maintenance
agreement, or other formal enforcement order is or was outstanding
against the bank holding company or any insured depository institution
subsidiary of the holding company, and no formal administrative
enforcement proceeding involving any such enforcement action, order, or
directive is or was pending; and
(7) Notification. The bank holding company has not
been notified by the Board, in its discretion, prior to the expiration
of the period in paragraph (b) of this section that a notice under
§ 225.24 is required in order to permit closer review of any
potential adverse effect or other matter related to the factors that
must be considered under this part.
(d) Branches and agencies of foreign banking organizations.
For purposes of this section, a U.S. branch or agency of a foreign
banking organization shall be considered to be an insured depository
institution.
[Codified to 12 C.F.R. § 225.23]
[Section 225.23 amended at 57 Fed. Reg. 28779, June 29, 1992; 59
Fed. Reg. 54803, November 2, 1994; 62 Fed. Reg. 9331, February 28,
1997, effective April 21, 1997; 66 Fed. Reg. 415, January 3, 2001,
effective February 2, 2001; 71 Fed. Reg. 9902, February 28, 2006,
effective March 30, 2006]
§ 225.24 Procedures for other nonbanking proposals.
(a) Notice required for nonbanking activities. Except as
provided in § 225.22 and § 225.23, a notice for the Board's prior
approval under § 225.21(a) to engage in or acquire a company engaged
in a nonbanking activity shall be filed by a bank holding company
(including a company seeking to become a bank holding company) with the
appropriate Reserve Bank in accordance with this section and the
Board's Rules of Procedure (12 CFR 262.3).
(1) Engaging de novo in listed activities. A bank
holding company seeking to commence or to engage de novo,
either directly or through a subsidiary, in a nonbanking activity
listed in § 225.28 shall file a notice containing a description of
the activities to be conducted and the identity of the company that
will conduct the activity.
(2) Acquiring company engaged in listed activities. A
bank holding company seeking to acquire or control voting securities or
assets of a company engaged in a nonbanking activity listed in
§ 225.28 shall file a notice containing the following:
(i) A description of the proposal, including a description of
each proposed activity, and the effect of the proposal on competition
among entities engaging in each proposed activity in each relevant
market with relevant market indexes;
{{4-28-00 p.6109}}
(ii) The identity of any entity involved in the proposal, and, if
the notificant proposes to conduct the activity through an existing
subsidiary, a description of the existing activities of the subsidiary;
(iii) A statement of the public benefits that can reasonably be
expected to result from the proposal;
(iv) If the bank holding company has consolidated assets of $150
million or more:
(A) Parent company and consolidated pro forma balance
sheets for the acquiring bank holding company as of the most recent
quarter showing credit and debt adjustments that reflect the proposed
transaction;
(B) Consolidated pro forma risk-based capital and
leverage ratio calculations for the acquiring bank holding company as
of the most recent quarter; and
(C) A description of the purchase price and the terms and sources
of funding for the transaction;
(v) If the bank holding company has consolidated assets of less
than $150 million:
(A) A pro forma parent-only balance sheet as of the
most recent quarter showing credit and debit adjustments that reflect
the proposed transaction; and
(B) A description of the purchase price and the terms and sources
of funding for the transaction and, if the transaction is debt funded,
one-year income statement and cash flow projections for the parent
company, and the sources and schedule for retiring any debt incurred in
the transaction;
(vi) For each insured depository institution whose Tier
1 capital, total capital, total assets or risk-weighted assets change
as a result of the transaction, the total risk-weighted assets,
total assets, Tier 1 capital and total capital of the institution on a
pro forma basis; and
(vii) A description of the management expertise, internal
controls and risk management systems that will be utilized in the
conduct of the proposed activities; and
(viii) A copy of the purchase agreements, and balance sheet and
income statements for the most recent quarter and year-end for any
company to be acquired.
(b) Notice provided to Board. The Reserve Bank shall
immediately send to the Board a copy of any notice received under
paragraphs (a)(2) or (a)(3) of this section.
(c) Notice to public--(1) Listed activities and
activities approved by order--(i) In a case involving an
activity listed in § 225.28 or previously approved by the Board by
order, the Reserve Bank shall notify the Board for publication in the
Federal Register immediately upon receipt by the Reserve
Bank of:
(A) A notice under this section; or
(B) A written request that notice of a proposal under this
section or § 225.23 be published in the Federal Register.
Such a request may request that Federal Register publication
occur up to 15 calendar days prior to submission of a notice under this
subpart.
(ii) The Federal Register notice published under this
paragraph shall invite public comment on the proposal, generally for a
period of 15 days.
(2) New activities--(i) In general. In the
case of a notice under this subpart involving an activity that is not
listed in § 225.28 and that has not been previously approved by the
Board by order, the Board shall send notice of the proposal to the
Federal Register for publication, unless the Board
determines that the notificant has not demonstrated that the activity
is so closely related to banking or to managing or
controlling
{{4-28-00 p.6110}}banks as to be a proper incident
thereto. The Federal Register notice shall invite public
comment on the proposal for a reasonable period of time, generally for
30 days.
(ii) Time for publication. The Board shall send the
notice required under this paragraph to the Federal Register
within 10 business days of acceptance by the Reserve Bank. The Board
may extend the 10-day period for an additional 30 calendar days upon
notice to the notificant. In the event notice of a proposal is not
published for comment, the Board shall inform the notificant of the
reasons for the decision.
(d) Action on notices--(1) Reserve Bank
action--(i) In general. Within 30 calendar days after
receipt by the Reserve Bank of a notice filed pursuant to paragraphs
(a)(1) or (a)(2) of this section, the Reserve Banks shall:
(A) Approve the notice; or
(B) Refer the notice to the Board for decision because action
under delegated authority is not appropriate.
(ii) Return of incomplete notice. Within 7 calendar
days of receipt, the Reserve Bank may return any notice as
informationally incomplete that does not contain all of the information
required by this subpart. The return of such a notice shall be deemed
action on the notice.
(iii) Notice of action. The Reserve Bank shall
promptly notify the bank holding company of any action or referral
under this paragraph.
(iv) Close of public comment period. The Reserve Bank
shall not approve any notice under this paragraph (d)(1) of this
section prior to the third business day after the close of the public
comment period, unless an emergency exists that requires expedited or
immediate action.
(2) Board action; internal schedule. The Board seeks
to act on every notice referred to it for decision within 60 days of
the date that the notice is filed with the Reserve Bank. If the Board
is unable to act within this period, the Board shall notify the
notificant and explain the reasons and the date by which the Board
expects to act.
(3)(i) Required time limit for System action. The
Board or the Reserve Bank shall act on any notice under this section
within 60 days after the submission of a complete notice.
(ii) Extension of required period for action (A)
In general.--The Board may extend the 60-day period required
for Board action under paragraph (d)(3)(i) of this section for an
additional 30 days upon notice to the notificant.
(B) Unlisted activities. If a notice involves a
proposal to engage in an activity that is not listed in § 225.28, the
Board may extend the period required for Board action under paragraph
(d)(3)(i) of this section for an additional 90 days. This 90-day
extension is in addition to the 30-day extension period provided in
paragraph (d)(3)(ii)(A) of this section. The Board shall notify the
notificant that the notice period has been extended and explain the
reasons for the extension.
(4) Requests for additional information. The Board or
the Reserve Bank may modify the information requirements under this
section or at any time request any additional information that either
believes is needed for a decision on any notice under this section.
(5) Tolling of period. The Board or the Reserve Bank
may at any time extend or toll the time period for action on a notice
for any period with the consent of the notificant.
[Codified to 12 C.F.R. § 225.24]
[Section 225.24 amended at 59 Fed. Reg. 54805, November 2, 1994; 62
Fed. Reg. 9332, February 28, 1997, effective April 21, 1997; 62 Fed.
Reg. 60640, November 12, 1997; 65 Fed. Reg. 14438, March 17, 2000,
effective March 11, 2000]
§ 225.25 Hearings, alteration of activities, and other matters.
(a) Hearings--(1) Procedure to request
hearing. Any request for a hearing on a notice under this subpart
shall comply with the provisions of 12 CFR 262.3(e).
(2) Determination to hold hearing. The Board may order
a formal or informal hearing or other proceeding on a notice as
provided in 12 CFR 262.3(i)(2). The Board shall order a hearing only if
there are disputed issues of material fact that cannot be resolved in
some other manner.
{{12-31-97 p.6110.01}}
(3) Extension of period for hearing. The Board may
extend the time for action on any notice for such time as is reasonably
necessary to conduct a hearing and evaluate the hearing record. Such
extension shall not exceed 91 calendar days after the date of
submission to the Board of the complete record on the notice. The
procedures for computation of the 91-day rule as set forth in
§ 225.16(f) apply to notices under this subpart that involve
hearings.
(b) Approval through failure to act. (1) Except as
provided in paragraph (a) of this section or § 225.24(d)(5), a notice
under this subpart shall be deemed to be approved at the conclusion of
the period that begins on the date the complete notice is received by
the Reserve Bank or the Board and that ends 60 calendar days plus any
applicable extension and tolling period thereafter.
(2) Complete notice. For purposes of paragraph (b)(1)
of this section, a notice shall be deemed complete at such time as it
contains all information required by this subpart and all other
information requested by the Board or the Reserve Bank.
(c) Notice to expand or alter nonbanking
activities--(1) De novo expansion. A notice under this
subpart is required to open a new office or to form a subsidiary to
engage in, or to relocate an existing office engaged in, a nonbanking
activity that the Board has previously approved for the bank holding
company under this regulation, only if:
(i) The Board's prior approval was limited geographically;
(ii) The activity is to be conducted in a country outside of the
United States and the bank holding company has not previously received
prior Board approval under this regulation to engage in the activity in
that country; or
(iii) The Board or appropriate Reserve Bank has notified the
company that a notice under this subpart is required.
(2) Activities outside United States. With respect to
activities to be engaged in outside the United States that require
approval under this subpart, the procedures of this section apply only
to activities to be engaged in directly by a bank holding company that
is not a qualifying foreign banking organization, or by a nonbank
subsidiary of a bank holding company approved under this subpart.
Regulation K (12 CFR part 211)
governs other international operations of bank holding companies.
(3) Alteration of nonbanking activity. Unless
otherwise permitted by the Board, a notice under this subpart is
required to alter a nonbanking activity in any material respect from
that considered by the Board in acting on the application or notice to
engage in the activity.
(d) Emergency savings association acquisitions. In the
case of a notice to acquire a savings association, the Board may modify
or dispense with the public notice and hearing requirements of this
subpart if the Board finds that an emergency exists that requires the
Board to act immediately and the primary federal regulator of the
institution concurs.
[Codified to 12 C.F.R. § 225.25]
[Section 225.25 amended at 51 Fed. Reg. 36211, October 9, 1986,
effective November 7, 1986; 51 Fed. Reg. 40000, November 4, 1986,
effective December 15, 1986; 54 Fed. Reg. 37301, September 8, 1989,
effective October 10, 1989; 57 Fed. Reg. 20961, May 18, 1992, effective
May 14, 1992; 57 Fed. Reg. 41387, September 10, 1992; 62 Fed. Reg.
9333, February 28, 1997, effective April 21, 1997; 62 Fed. Reg. 60640,
November 12, 1997]
§ 225.26 Factors considered in acting on nonbanking proposals.
(a) In general. In evaluating a notice under § 225.23
or § 225.24, the Board shall consider whether the notificant's
performance of the activities can reasonably be expected to produce
benefits to the public (such as greater convenience, increased
competition, and gains in efficiency) that outweigh possible adverse
effects (such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, and unsound banking practices).
(b) Financial and managerial resources. Consideration of
the factors in paragraph (a) of this section includes an evaluation of
the financial and managerial resources of the
{{12-31-97 p.6110.02}}notificant, including its subsidiaries
and any company to be acquired, the effect of the proposed transaction
on those resources, and the management expertise, internal control and
risk-management systems, and capital of the entity conducting the
activity.
(c) Competitive effect of de novo proposals. Unless the
record demonstrates otherwise, the commencement or expansion of a
nonbanking activity de novo is presumed to result in
benefits to the public through increased competition.
(d) Denial for lack of information. The Board may deny
any notice submitted under this subpart if the notificant neglects,
fails, or refuses to furnish all information required by the Board.
(e) Conditional approvals. The Board may impose
conditions on any approval, including conditions to address
permissibility, financial, managerial, safety and soundness,
competitive, compliance, conflicts of interest, or other concerns to
ensure that approval is consistent with the relevant statutory factors
and other provisions of the BHC Act.
[Codified to 12 C.F.R. § 225.26]
[Section 225.26 added at 62 Fed. Reg. 9334, February 28, 1997,
effective April 21, 1997]
§ 225.27 Procedures for determining scope of nonbanking
activities.
(a) Advisory opinions regarding scope of previously approved
nonbanking activities--(1) Request for advisory
opinion. Any person may submit a request to the Board for an
advisory opinion regarding the scope of any permissible nonbanking
activity. The request shall be submitted in writing to the Board and
shall identify the proposed parameters of the activity, or describe the
service or product that will be provided, and contain an explanation
supporting an interpretation regarding the scope of the permissible
nonbanking activity.
(2) Response to request. The Board shall provide an
advisory opinion within 45 days of receiving a written request under
this paragraph.
(b) Procedure for consideration of new
activities--(1) Initiation of proceeding. The Board
may, at any time, on its own initiative or in response to a written
request from any person, initiate a proceeding to determine whether any
activity is so closely related to banking or managing or controlling
banks as to be a proper incident thereto.
(2) Requests for determination. Any request for a
Board determination that any activity is so closely related to banking
or managing or controlling banks as to be a proper incident thereto,
shall be submitted to the Board in writing, and shall contain evidence
that the proposed activity is so closely related to banking or managing
or controlling banks as to be a proper incident thereto.
(3) Publication. The Board shall publish in the
Federal Register notice that it is considering the
permissibility of a new activity and invite public comment for a period
of at least 30 calendar days. In the case of a request submitted under
paragraph (b) of this section, the Board may determine not to publish
notice of the request if the Board determines that the requester has
provided no reasonable basis for a determination that the activity is
so closely related to banking, or managing or controlling banks as to
be a proper incident thereto, and notifies the requester of the
determination.
(4) Comments and hearing requests. Any comment and any
request for a hearing regarding a proposal under this section shall
comply with the provisions of § 262.3(e) of the Board's Rules of
Procedure (12 CFR 262.3(e)).
[Codifed to 12 C.F.R. § 225.27]
[Section 225.27 added at 62 Fed. Reg. 9334, February 28, 1997,
effective April 21, 1997]
§ 225.28 List of permissible nonbanking activities.
(a) Closely related nonbanking activities. The
activities listed in paragraph (b) of this section are so closely
related to banking or managing or controlling banks as to be a proper
incident thereto, and may be engaged in by a bank holding company or
its subsidiary in accordance with the requirements of this
regulation.
{{2-28-97 p.6110.03}}
(b) Activities determined by regulation to be
permissible--(1) Extending credit and servicing loans.
Making, acquiring, brokering, or servicing loans or other
extensions of credit (including factoring, issuing letters of credit
and accepting drafts) for the company's account or for the account of
others.
(2) Activities related to extending credit. Any
activity usual in connection with making, acquiring, brokering or
servicing loans or other extensions of credit, as determined by the
Board. The Board has determined that the following activities are usual
in connection with making, acquiring, brokering or servicing loans or
other extensions of credit:
(i) Real estate and personal property appraising.
Performing appraisals of real estate and tangible and intangible
personal property, including securities.
(iii) Arranging commercial real estate equity financing.
Acting as intermediary for the financing of commercial or
industrial income-producing real estate by arranging for the transfer
of the title, control, and risk of such a real estate project to one or
more investors, if the bank holding company and its affiliates do not
have an interest in, or participate in managing or developing, a real
estate project for which it arranges equity financing, and do not
promote or sponsor the development of the property.
(iii) Check-guaranty services. Authorizing a
subscribing merchant to accept personal checks tendered by the
merchant's customers in payment for goods and services, and purchasing
from the merchant validly authorized checks that are subsequently
dishonored.
(iv) Collection agency services. Collecting overdue
accounts receivable, either retail or commercial.
(v) Credit bureau services. Maintaining information
related to the credit history of consumers and providing the
information to a credit grantor who is considering a borrower's
application for credit or who has extended credit to the borrower.
(vi) Asset management, servicing, and collection
activities. Engaging under contract with a third party in asset
management, servicing, and collection 2
of assets of a type that an insured depository institution may
originate and own, if the company does not engage in real property
management or real estate brokerage services as part of these services.
(vii) Acquiring debt in default. Acquiring debt that
is in default at the time of acquisition, if the company:
(A) Divests shares or assets securing debt in default that are
not permissible investments for bank holding companies, within the time
period required for divestiture of property acquired in satisfaction of
a debt previously contracted under
§ 225.12(b); 3
(B) Stands only in the position of a creditor and does not
purchase equity of obligors of debt in default (other than equity that
may be collateral for such debt); and
(C) Does not acquire debt in default secured by shares of a bank
or bank holding company.
(viii) Real estate settlement servicing. Providing
real estate settlement services. 4
(3) Leasing personal or real property. Leasing
personal or real property or acting as agent, broker, or adviser in
leasing such property if:
(i) The lease is on a nonoperating
basis; 5
{{2-28-97 p.6110.04}}
(ii) The initial term of the lease is at least 90 days;
(iii) In the case of leases involving real property:
(A) At the inception of the initial lease, the effect of the
transaction will yield a return that will compensate the lessor for not
less than the lessor's full investment in the property plus the
estimated total cost of financing the property over the term of the
lease from rental payments, estimated tax benefits, and the estimated
residual value of the property at the expiration of the initial lease;
and
(B) The estimated residual value of property for purposes of
paragraph (b)(3)(iii)(A) of this section shall not exceed 25 percent of
the acquisition cost of the property to the lessor.
(4) Operating nonbank depository
institutions--(i) Industrial banking. Owning,
controlling, or operating an industrial bank, Morris Plan bank, or
industrial loan company, so long as the institution is not a bank.
(ii) Operating savings association. Owning,
controlling, or operating a savings association, if the savings
association engages only in deposit-taking activities, lending, and
other activities that are permissible for bank holding companies under
this subpart C.
(5) Trust company functions. Performing functions or
activities that may be performed by a trust company (including
activities of a fiduciary, agency, or custodial nature), in the manner
authorized by federal or state law, so long as the company is not a
bank for purposes of section 2(c) of the Bank Holding Company Act.
(6) Financial and investment advisory activities.
Acting as investment or financial advisor to any person, including
(without, in any way, limiting the foregoing):
(i) Serving as investment adviser (as defined in section 2(a)(20)
of the Investment Company Act of 1940,
15 U.S.C. 80a--2(a)(20)), to
an investment company registered under that act, including sponsoring,
organizing, and managing a closed-end investment company;
(ii) Furnishing general economic information and advice, general
economic statistical forecasting services, and industry studies;
(iii) Providing advice in connection with mergers, acquisitions,
divestitures, investments, joint ventures, leveraged buyouts,
recapitalizations, capital structurings, financing transactions and
similar transactions, and conducting financial feasibility
studies; 6
(iv) Providing information, statistical forecasting, and advice
with respect to any transaction in foreign exchange, swaps, and similar
transactions, commodities, and any forward contract, option, future,
option on a future, and similar instruments;
(v) Providing educational courses, and instructional materials to
consumers on individual financial management matters; and
(vi) Providing tax-planning and tax-preparation services to any
person.
(7) Agency transactional services for customer
investments--(i) Securities brokerage. Providing
securities brokerage services (including securities clearing and/or
securities execution services on an exchange), whether alone or in
combination with investment advisory services, and incidental
activities (including related securities credit activities and
custodial services), if the securities brokerage services are
restricted to buying and selling securities solely as agent for the
account of customers and do not include securities underwriting or
dealing.
(ii) Riskless principal transactions. Buying and
selling in the secondary market all types of securities on the order of
customers as a "riskless principal" to the extent of engaging in
a transaction in which the company, after receiving an order to buy (or
sell) a
{{8-29-03 p.6110.05}}security from a customer, purchases (or
sells) the security for its own account to offset a contemporaneous
sale to (or purchase from) the customer. This does not include:
(A) Selling bank-ineligible
securities 7
at the order of a customer that is the issuer of the securities, or
selling bank-ineligible securities in any transaction where the company
has a contractual agreement to place the securities as agent of the
issuer; or
(B) Acting as a riskless principal in any transaction involving a
bank-ineligible security for which the company or any of its affiliates
acts as underwriter (during the period of the underwriting or for 30
days thereafter) or dealer. 8
(iii) Private placement services. Acting as agent for
the private placement of securities in accordance with the requirements
of the Securities Act of 1933 (1933 Act) and the rules of the
Securities and Exchange Commission, if the company engaged in the
activity does not purchase or repurchase for its own account the
securities being placed, or hold in inventory unsold portions of issues
of these securities.
(iv) Futures commission merchant. Acting as a futures
commission merchant (FCM) for unaffiliated persons in the execution,
clearance, or execution and clearance of any futures contract and
option on a futures contract traded on an exchange in the United States
or abroad if:
(A) The activity is conducted through a separately incorporated
subsidiary of the bank holding company, which may engage in activities
other than FCM activities (including, but not limited to, permissible
advisory and trading activities); and
(B) The parent bank holding company does not provide a guarantee
or otherwise become liable to the exchange or clearing association
other than for those trades conducted by the subsidiary for its own
account or for the account of any affiliate.
(v) Other transactional services. Providing to
customers as agent transactional services with respect to swaps and
similar transactions, any transaction described in paragraph (b)(8) of
this section, any transaction that is permissible for a state member
bank, and any other transaction involving a forward contract, option,
futures, option on a futures or similar contract (whether traded on an
exchange or not) relating to a commodity that is traded on an exchange.
(8) Investment transactions as
principal--(i) Underwriting and dealing in government
obligations and money market instruments. Underwriting and dealing
in obligations of the United States, general obligations of states and
their political subdivisions, and other obligations that state member
banks of the Federal Reserve System may be authorized to underwrite and
deal in under 12 U.S.C. 24 and 335, including banker's acceptances and
certificates of deposit, under the same limitations as would be
applicable if the activity were performed by the bank holding company's
subsidiary member banks or its subsidiary nonmember banks as if they
were member banks.
(ii) Investing and trading activities. Engaging as
principal in:
(A) Foreign exchange;
(B) Forward contracts, options, futures, options on futures,
swaps, and similar contracts, whether traded on exchanges or not, based
on any rate, price, financial asset (including gold, silver, platinum,
palladium, copper, or any other metal approved by the Board),
nonfinancial asset, or group of assets, other than a bank-ineligible
security, 9
if:
(1) A state member bank is authorized to invest in the
asset underlying the contract;
{{8-29-03 p.6110.06}}
(2) The contract requires cash settlement;
(3) The contract allows for assignment, termination,
or offset prior to delivery or expiration, and the company--
(i) Makes every reasonable effort to avoid taking or
making delivery of the asset underlying the contract; or
(ii) Receives and instantaneously transfers title to
the underlying asset, by operation of contract and without taking or
making physical delivery of the asset; or
(4) The contract does not allow for assignment,
termination, or offset prior to delivery or expiration and is based on
an asset for which futures contracts or options on futures contracts
have been approved for trading on a U.S. contract market by the
Commodity Futures Trading Commission, and the company--
(i) Makes every reasonable effort to avoid taking or
making delivery of the asset underlying the contract; or
(ii) Receives and instantaneously transfers title to
the underlying asset, by operation of contract and without taking or
making physical delivery of the asset.
(C) Forward contracts,
options, 10
futures, options on futures, swaps, and similar contracts, whether
traded on exchanges or not, based on an index of a rate, a price, or
the value of any financial asset, nonfinancial asset, or group of
assets, if the contract requires cash settlement.
(iii) Buying and selling bullion, and related activities.
Buying, selling and storing bars, rounds, bullion, and coins of
gold, silver, platinum, palladium, copper, and any other metal approved
by the Board, for the company's own account and the account of others,
and providing incidental services such as arranging for storage, safe
custody, assaying, and shipment.
(9) Management consulting and counseling
activities--(i) Management consulting. (A) Providing
management consulting advice: 11
(1) On any matter to unaffiliated depository
institutions, including commercial banks, savings and loan
associations, savings banks, credit unions, industrial banks, Morris
Plan banks, cooperative banks, industrial loan companies, trust
companies, and branches or agencies of foreign banks;
(2) On any financial, economic, accounting, or audit
matter to any other company.
(B) A company conducting management consulting activities under
this subparagraph and any affiliate of such company may not:
(1) Own or control, directly or indirectly, more than
5 percent of the voting securities of the client institution; and
(2) Allow a management official, as defined in 12 CFR
212.2(h), of the company or any of its affiliates to serve as a
management official of the client institution, except where such
interlocking relationship is permitted pursuant to an exemption granted
under 12 CFR 212.4(b) or otherwise permitted by the Board.
(C) A company conducting management consulting activities may
provide management consulting services to customers not described in
paragraph (b)(9)(i)(A)(1) of this section or regarding
matters not described in paragraph (b)(9)(i)(A)(2) of this
section, if the total annual revenue derived from those management
consulting services does not exceed 30 percent of the company's total
annual revenue derived from management consulting
activities.
{{8-29-03 p.6110.06-A}}
(ii) Employee benefits consulting services. Providing
consulting services to employee benefit, compensation and insurance
plans, including designing plans, assisting in the implementation of
plans, providing administrative services to plans, and developing
employee communication programs for plans.
(iii) Career counseling services. Providing career
counseling services to:
(A) A financial organization 12
and individuals currently employed by, or recently displaced from, a
financial organization;
{{12-31-03 p.6110.07}}
(B) Individuals who are seeking employment at a financial
organization; and
(C) Individuals who are currently employed in or who seek
positions in the finance, accounting, and audit departments of any
company.
(10) Support services--(i) Courier services.
Providing courier services for:
(A) Checks, commercial papers, documents and written instruments
(excluding currency or bearer-type negotiable instruments) that are
exchanged among banks and financial institutions; and
(B) Audit and accounting media of a banking or financial nature
and other business records and documents used in processing such
media. 13
(ii) Printing and selling MICR-encoded items. Printing
and selling checks and related documents, including corporate image
checks, cash tickets, voucher checks, deposit slips, savings withdrawal
packages, and other forms that require Magnetic Ink Character
Recognition (MICR) encoding.
(11) Insurance agency and
underwriting--(i) Credit insurance. Acting as
principal, agent, or broker for insurance (including home mortgage
redemption insurance) that is:
(A) Directly related to an extension of credit by the bank
holding company or any of its subsidiaries; and
(B) Limited to ensuring the repayment of the outstanding balance
due on the extension of credit 14
in the event of the death, disability, or involuntary unemployment of
the debtor.
(ii) Finance company subsidiary. Acting as agent or
broker for insurance directly related to an extension of credit by a
finance company 15
that is a subsidiary of a bank holding company, if:
(A) The insurance is limited to ensuring repayment of the
outstanding balance on such extension of credit in the event of loss or
damage to any property used as collateral for the extension of credit;
and
(B) The extension of credit is not more than $10,000, or $25,000
if it is to finance the purchase of a residential manufactured
home 16
and the credit is secured by the home; and
(C) The applicant commits to notify borrowers in writing that:
(1) They are not required to purchase such insurance
from the applicant;
(2) Such insurance does not insure any interest of the
borrower in the collateral; and
(3) The applicant will accept more comprehensive
property insurance in place of such single-interest insurance.
(iii) Insurance in small towns. Engaging in any
insurance agency activity in a place where the bank holding company or
a subsidiary of the bank holding company has a lending office and that:
(A) Has a population not exceeding 5,000 (as shown on the
preceding decennial census); or
(B) Has inadequate insurance agency facilities, as determined by
the Board, after notice and opportunity for hearing.
{{12-31-03 p.6110.08}}
(iv) Insurance-agency activities conducted on May 1, 1982.
Engaging in any specific insurance-agency
activity 17
if the bank holding company, or subsidiary conducting the specific
activity, conducted such activity on May 1, 1982, or received Board
approval to conduct such activity on or before May 1,
1982. 18
A bank holding company or subsidiary engaging in a specific insurance
agency activity under this clause may:
(A) Engage in such specific insurance agency activity only at
locations:
(1) In the state in which the bank holding company has
its principal place of business (as defined in
12 U.S.C. 1842(d));
(2) In any state or states immediately adjacent to
such state; and
(3) In any state in which the specific
insurance-agency activity was conducted (or was approved to be
conducted) by such bank holding company or subsidiary thereof or by any
other subsidiary of such bank holding company on May 1, 1982; and
(B) Provide other insurance coverages that may become available
after May 1, 1982, so long as those coverages insure against the types
of risks as (or are otherwise functionally equivalent to) coverages
sold or approved to be sold on May 1, 1982, by the bank holding company
or subsidiary.
(v) Supervision of retail insurance agents.
Supervising on behalf of insurance underwriters the activities of
retail insurance agents who sell:
(A) Fidelity insurance and property and casualty insurance on the
real and personal property used in the operations of the bank holding
company or its subsidiaries; and
(B) Group insurance that protects the employees of the bank
holding company or its subsidiaries.
(vi) Small bank holding companies. Engaging in any
insurance-agency activity if the bank holding company has total
consolidated assets of $50 million or less. A bank holding company
performing insurance-agency activities under this paragraph may not
engage in the sale of life insurance or annuities except as provided in
paragraphs (b)(11)(i) and (iii) of this section, and it may not
continue to engage in insurance-agency activities pursuant to this
provision more than 90 days after the end of the quarterly reporting
period in which total assets of the holding company and its
subsidiaries exceed $50 million.
(vii) Insurance-agency activities conducted before 1971.
Engaging in any insurance-agency activity performed at any
location in the United States directly or indirectly by a bank holding
company that was engaged in insurance-agency activities prior to
January 1, 1971, as a consequence of approval by the Board prior to
January 1, 1971.
(12) Community development
activities--(i) Financing and investment activities.
Making equity and debt investments in corporations or projects
designed primarily to promote community welfare, such as the economic
rehabilitation and development of low-income areas by providing
housing, services, or jobs for residents.
(ii) Advisory activities. Providing advisory and
related services for programs designed primarily to promote community
welfare.
(13) Money orders, savings bonds, and traveler's checks.
The issuance and sale at retail of money orders and similar
consumer-type payment instruments; the sale of U.S. savings bonds; and
the issuance and sale of traveler's checks.
(14) Data processing. (i) Providing data processing,
data storage and data transmission services, facilities (including data
processing and data transmission hardware, software,
{{12-31-03 p.6110.09}}documentation, or operating personnel),
data bases, advice, and access to such services, facilities, or
data-bases by any technological means, if:
(A) The data to be processed, stored or furnished are financial,
banking, or economic; and
(B) The hardware provided in connection therewith is offered only
in conjunction with software designed and marketed for the processing,
storage and transmission of financial, banking, or economic data, and
where the general purpose hardware does not constitute more than 30
percent of the cost of any packaged offering.
(ii) A company conducting data processing and data transmission
activities may conduct data processing, data storage and data
transmission activities not described in paragraph (b)(14)(i) of this
section if the total annual revenue derived from those activities does
not exceed 49 percent of the company's total annual revenues derived
from data processing, data storage and data transmission activities.
[Codified to 12 C.F.R. § 225.28]
[Section 225.28 added at 62 Fed. Reg. 9335, February 28, 1997,
effective April 21, 1997; 68 Fed. Reg. 39810, July 3, 2003, effective
August 4, 2003; amended at 68 Fed. Reg. 68499, December 9, 2003,
effective January 8, 2004]
1A bank holding company may acquire voting securities or assets
of a savings association or other insured depository institution that
is not a bank by using the procedures in
§ 225.14 of subpart B if
the bank holding company and the proposal qualify under that section as
if the savings association or other institution were a bank for
purposes of that section. Go Back to Text
2Asset management services include acting as agent in the
liquidation or sale of loans and collateral for loans, including real
estate and other assets acquired through foreclosure or in satisfaction
of debts previously contracted. Go Back to Text
3For this purpose, the divestiture period for property begins
on the date that the debt is acquired, regardless of when legal title
to the property is acquired. Go Back to Text
4For purposes of this section, real estate settlement services
do not include providing title insurance as principal, agent, or
broker. Go Back to Text
5The requirement that the lease be on a nonoperating basis
means that the bank holding company may not, directly or indirectly,
engage in operating, servicing, maintaining, or repairing leased
property during the lease term. For purposes of the leasing of
automobiles, the requirement that the lease be on a nonoperating basis
means that the bank holding company may not, directly or indirectly:
(1) Provide servicing, repair, or maintenance of the leased vehicle
during the lease term; (2) purchase parts and accessories in bulk or
for an individual vehicle after the lessee has taken delivery of the
vehicle; (3) provide the loan of an automobile during servicing of the
leased vehicle; (4) purchaseinsurance for the lessee; or (5) provide for the renewal of the
vehicle's license merely as a service to the lessee where the lessee
could renew the license without authorization from the lessor. The bank
holding company may arrange for a third party to provide these services
or products. [5 continued] Go Back to Text
6Feasibility studies do not include assisting management with
the planning or marketing for a given project or providing general
operational or management advice. Go Back to Text
7A bank-ineligible security is any security that a State member
bank is not permitted to underwrite or deal in under 12 U.S.C. 24 and
335. Go Back to Text
8A company or its affiliates may not enter quotes for specific
bank-ineligible securities in any dealer quotation system in connection
with the company's riskless principal transactions; except that the
company or its affiliates may enter "bid" or "ask"
quotations, or publish "offering wanted" or "bid wanted"
notices on trading systems other than NASDAQ or an exchange, if the
company or its affiliate does not enter price quotations on different
sides of the market for a particular security during any two-day
period. Go Back to Text
9A bank-ineligible security is any security that a state member
bank is not permitted to underwrite or deal in under 12 U.S.C. 24 and
335. Go Back to Text
10This reference does not include acting as a dealer in options
based on indices of bank-ineligible securities when the options are
traded on securities exchanges. These options are securities for
purposes of the federal securities laws and bank-ineligible securities
for purposes of section 20 of the Glass-Steagall Act, 12 U.S.C. 337.
Similarly, this reference does not include acting as a dealer in any
other instrument that is a bank-ineligible security for purposes of
section 20. A bank holding company may deal in these instruments in
accordance with the Board's orders on dealing in bank-ineligible
securities. Go Back to Text
11In performing this activity, bank holding companies are not
authorized to perform tasks or operations or provide services to client
institutions either on a daily or continuing basis, except as necessary
to instruct the client institution on how to perform such services for
itself. See also the Board's interpretation of bank management
consulting advice (12 CFR 225.131). Go Back to Text
12Financial organization refers to insured
depository institution holding companies and their subsidiaries, other
than nonbanking affiliates of diversified savings and loan holding
companies that engage in activities not permissible under section
4(c)(8) of the Bank Holding Company Act
(12 U.S.C. 1842(c)(8)). Go Back to Text
13See also the Board's interpretation on courier activities
(12 CFR 225.129), which
sets forth conditions for bank holding company entry into the
activity. Go Back to Text
14Extension of credit includes direct loans to
borrowers, loans purchased from other lenders, and leases of real or
personal property so long as the leases are nonoperating and
full-payout leases that meet the requirements of paragraph (b)(3) of
this section. Go Back to Text
15Finance company includes all non-deposit-taking
financial institutions that engage in a significant degree of consumer
lending (excluding lending secured by first mortgages) and all
financial institutions specifically defined by individual states as
finance companies and that engage in a significant degree of consumer
lending. Go Back to Text
16These limitations increase at the end of each calendar year,
beginning with 1982, by the percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers published by the
Bureau of Labor Statistics. Go Back to Text
17Nothing contained in this provision shall preclude a bank
holding company subsidiary that is authorized to engage in a specific
insurance-agency activity under this clause from continuing to engage
in the particular activity after merger with an affiliate, if the
merger is for legitimate business purposes and prior notice has been
provided to the Board. Go Back to Text
18For the purposes of this paragraph, activities engaged in on
May 1, 1982, include activities carried on subsequently as the result
of an application to engage in such activities pending before the Board
on May 1, 1982, and approved subsequently by the Board or as the result
of the acquisition by such company pursuant to a binding written
contract entered into on or before May 1, 1982, of another company
engaged in such activities at the time of the acquisition. Go Back to Text
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