(a) Ownership or control of any company not a bank; engagement in activities
other than banking. Except as otherwise provided in this Act,
no bank holding company shall—
(1) after the date of enactment of this
Act acquire direct or indirect ownership or control of any voting
shares of any company which is not a bank, or
(2) after two years from the date as of
which it becomes a bank holding company, or in the case of a company
which has been continuously affiliated since May 15, 1955, with a
company which was registered under the Investment Company Act of
1940, prior to May 15, 1955, in such a manner as to constitute an
affiliated company within the meaning of that Act, after December
31, 1978, or in the case of any company which becomes, as a result
of the enactment of the Bank Holding Company Act Amendments of 1970,
a bank holding company on the date of such enactment, after December
31, 1980, retain direct or indirect ownership or control of any voting
shares of any company which is not a bank or bank holding company
or engage in any activities other than (A) those of banking or of
managing or controlling banks and other subsidiaries authorized under
this Act or of furnishing services to or performing services for its
subsidiaries, and (B) those permitted under paragraph (8) of subsection
(c) of this section subject to all the conditions specified in such
paragraph or in any order or regulation issued by the Board under
such paragraph: Provided, That a company covered in 1970 may
also engage in those activities in which directly or through a subsidiary
(i) it was lawfully engaged on June 30, 1968 (or on a date subsequent
to June 30, 1968 in the case of activities carried on as the result
of the acquisition by such company or subsidiary, pursuant to a binding
written contract entered into on or before June 30, 1968, of another
company engaged in such activities at the time of the acquisition),
and (ii) it has been continuously engaged since June 30, 1968 (or
such subsequent date). The Board by order, after opportunity for hearing,
may terminate the authority conferred by the preceding proviso on
any company to engage directly or through a subsidiary in an activity
otherwise permitted by that proviso if it determines, having due regard
to the purposes of this Act, that such action is necessary to prevent
undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices; and in the case
of any such company controlling a bank having bank assets in excess
of $60,000,000 on or after the date of enactment of the Bank Holding
Company Act Amendments of 1970 the Board shall determine, within two
years after such date (or, if later, within two years after the date
on which the bank assets first exceed $60,000,000), whether the authority
conferred by the preceding proviso with respect to such company should
be terminated as provided in this sentence. Nothing in this paragraph
shall be construed to authorize any bank holding company referred
to in the preceding proviso, or any subsidiary thereof, to engage
in activities authorized by that proviso through the acquisition,
pursuant to a contract entered into after June 30, 1968, of any interest
in or the assets of a going concern engaged in such activities. Any
company which is authorized to engage in any activity pursuant to
the preceding proviso or subsection (d) of this section but, as a
result of action of the Board, is required to terminate such activity
may (notwithstanding any otherwise applicable time limit prescribed
in this paragraph) retain the ownership or control of shares in any
company carrying on such activity for a period of ten years from the
date on which its authority was so terminated by the Board.
4-072
The Board is authorized, upon application by a bank holding
company, to extend the two-year period referred to in paragraph (2)
above from time to time as to such bank holding company for not more
than one year at a time, if, in its judgment, such an extension would
not be detrimental to the public interest, but no such extensions
shall in the aggregate exceed three years. Notwithstanding any other
provision of this Act, the period ending December 31, 1980, referred
to in paragraph (2) above, may be extended by the Board of Governors
to December 31, 1984, but only for the divestiture by a bank holding
company of real estate or interests in real estate lawfully acquired
for investment or development. In making its decision whether to grant
such extension, the Board shall consider whether the company has made
a good faith effort to divest such interests and whether such extension
is necessary to avert substantial loss to the company. Notwithstanding
any other provision of this paragraph, if any company that became
a bank holding company as a result of the enactment of the Competitive
Equality Amendments of 1987 acquired, between March 5, 1987, and the
date of the enactment of such Amendments, an institution that became
a bank as a result of the enactment of such Amendments, that company
shall, upon the enactment of such Amendments, immediately come into
compliance with the requirements of this Act.
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(b) Statement purporting to represent shares of
any company except a bank or bank holding company. After two
years from the date of enactment of this Act, no certificate evidencing
shares of any bank holding company shall bear any statement purporting
to represent shares of any other company except a bank or a bank holding
company, nor shall the ownership, sale, or transfer of shares of any
bank holding company be conditioned in any manner whatsoever upon
the ownership, sale, or transfer of shares of any other company except
a bank or a bank holding company.
4-074
(c) Exemptions. The prohibitions in this section
shall not apply to (i) 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 of 1954, or to any labor, agricultural, or horticultural
organization to which all or substantially all of the assets of such
company are hereafter transferred, or (ii) a company covered in 1970
more than 85 per centum of the voting stock of which was collectively
owned on June 30, 1968, and continuously thereafter, directly or indirectly,
by or for members of the same family, or their spouses, who are lineal
descendants of common ancestors; and such prohibitions shall not,
with respect to any other bank holding company, apply to—
(1) shares of any company engaged or to
be engaged solely in one or more of the following activities: (A)
holding or operating properties used wholly or substantially by any
banking subsidiary of such bank holding company in the operations
of such banking subsidiary or acquired for such future use; or (B)
conducting a safe deposit business; or (C) furnishing services to
or performing services for such bank holding company or its banking
subsidiaries; or (D) liquidating assets acquired from such bank holding
company or its banking subsidiaries or acquired from any other source
prior to May 9, 1956, or the date on which such company became a bank
holding company, whichever is later;
4-075
(2) shares acquired by a bank holding company
or any of its subsidiaries in satisfaction of a debt previously contracted
in good faith, but such shares shall be disposed of within a period
of two years from the date on which they were acquired, except that
the Board is authorized upon application by such bank holding company
to extend such period of two years from time to time as to such holding
company, in its judgment, such an extension would not be detrimental
to the public interest, and, in the case of a bank holding company
which has not disposed of such shares within 5 years after the date
on which such shares were acquired, the Board may, upon the application
of such company, grant additional exemptions if, in the judgment of
the Board, such extension would not be detrimental to the public interest
and, either the bank holding company has made a good faith attempt
to dispose of such shares during such 5-year period, or the disposal
of such shares during such 5-year period would have been detrimental
to the company, except that the aggregate duration of such extensions
shall not extend beyond 10 years after the date on which such shares
were acquired;
(3)
shares acquired by such bank holding company from any of its subsidiaries
which subsidiary has been requested to dispose of such shares by any
Federal or State authority having statutory power to examine such
subsidiary, but such bank holding company shall dispose of such shares
within a period of two years from the date on which they were acquired;
4-076
(4) shares held or acquired
by a bank in good faith in a fiduciary capacity, except where such
shares are held under a trust that constitutes a company as defined
in section 2(b) and except as provided in paragraphs (2) and (3) of
section 2(g);
(5) shares
which are of the kinds and amounts eligible for investment by national banking associations
under the provisions of section 5136 of the Revised Statutes;
(6) shares of any company
which do not include more than 5 per centum of the outstanding voting
shares of such company;
(7) shares of an investment company which is not a bank holding company
and which is not engaged in any business other than investing in securities,
which securities do not include more than 5 per centum of the outstanding
voting shares of any company;
4-077
(8) shares of any company the activities
of which had been determined by the Board by regulation or order under
this paragraph as of the day before the date of the enactment of the
Gramm-Leach-Bliley Act, to be so closely related to banking as to
be a proper incident thereto (subject to such terms and conditions
contained in such regulation or order, unless modified by the Board);
4-078
(9) shares held or activities
conducted by any company organized under the laws of a foreign country
the greater part of whose business is conducted outside the United
States, if the Board by regulation or order determines that, under
the circumstances and subject to the conditions set forth in the regulation
or order, the exemption would not be substantially at variance with
the purposes of this Act and would be in the public interest;
(10) shares lawfully acquired
and owned prior to May 9, 1956, by a bank which is a bank holding
company, or by any of its wholly owned subsidiaries;
(11) shares owned directly or indirectly
by a company covered in 1970 in a company which does not engage in
any activities other than those in which the bank holding company,
or its subsidiaries, may engage by virtue of this section, but nothing
in this paragraph authorizes any bank holding company, or subsidiary
thereof, to acquire any interest in or the assets of any going concern
(except pursuant to a binding written contract entered into before
June 30, 1968, or pursuant to another provision of this Act) other
than one which was a subsidiary on June 30, 1968;
4-079
(12) shares retained or acquired, or activities
engaged in, by any company which becomes, as a result of the enactment
of the Bank Holding Company Act Amendments of 1970, a bank holding
company on the date of such enactment, or by any subsidiary thereof,
if such company—
(A) within the applicable time limits
prescribed in subsection (a)(2) of this section (i) ceases to be a
bank holding company, or (ii) ceases to retain direct or indirect
ownership or control of those shares and to engage in those activities
not authorized under this section; and
(B) complies with such other conditions
as the Board may by regulation or order prescribe;
4-080
(13) shares of, or activities
conducted by, any company which does no business in the United States
except as an incident to its international or foreign business, if
the Board by regulation or order determines that, under the circumstances
and subject to the conditions set forth in the regulation or order,
the exemption would not be substantially at variance with the purposes
of this Act and would be in the public interest; or
4-080.1
(14) shares of any company which is an
export trading company whose acquisition (including each acquisition
of shares) or formation by a bank holding company has not been disapproved
by the Board pursuant to this paragraph, except that such investments,
whether direct or indirect, in such shares shall not exceed 5 per
centum of the bank holding company’s consolidated capital and surplus.
(A) (i) No bank holding company shall invest
in an export trading company under this paragraph unless the Board
has been given sixty days’ prior written notice of such proposed investment
and within such period has not issued a notice disapproving the proposed
investment or extending for up to another thirty days the period during
which such disapproval may be issued.
(ii) The period for disapproval may be extended
for such additional thirty-day period only if the Board determines
that a bank holding company proposing to invest in an export trading
company has not furnished all the information required to be submitted
or that in the Board’s judgment any material information submitted
is substantially inaccurate.
(iii) The notice required to be filed by a bank holding company shall
contain such relevant information as the Board shall require by regulation
or by specific request in connection with any particular notice.
(iv) The Board may disapprove
any proposed investment only if—
(I) such disapproval is necessary to prevent unsafe or unsound banking
practices, undue concentration of resources, decreased or unfair competition,
or conflicts of interest;
(II) the Board finds that such investment would affect the financial
or managerial resources of a bank holding company to an extent which
is likely to have a materially adverse effect on the safety and soundness
of any subsidiary bank of such bank holding company, or
(III) the bank hoding company
fails to furnish the information required under clause (iii).
(v) The Board may not disapprove
any proposed investment solely on the basis of the anticipated or
proposed asset-to-equity ratio of the export trading company with
respect to which such investment is proposed, unless the anticipated
or proposed annual average asset-to-equity ratio is greater than 20-to-1.
(vi) Within three days after
a decision to disapprove an investment, the Board shall notify the
bank holding company in writing of the disapproval and shall provide
a written statement of the basis for the disapproval.
(vii) A proposed investment may
be made prior to the expiration of the disapproval period if the Board
issues written notice of its intent not to disapprove the investment.
4-080.2
(B) (i) The total amount of extensions of credit by a bank holding
company which invests in an export trading company, when combined
with all such extensions of credit by all the subsidiaries of such
bank holding company, to an export trading company shall not exceed
at any one time 10 per centum of the bank holding company’s consolidated
capital and surplus. For purposes of the preceding sentence, an extension
of credit shall not be deemed to include any amount invested by a
bank holding company in the shares of an export trading company.
(ii) No provision of any
other Federal law in effect on October 1, 1982, relating specifically
to collateral requirements shall apply with respect to any such extension
of credit.
(iii) No bank
holding company or subsidiary of such company which invests in an
export trading company may extend credit to such export trading company
or to customers of such export trading company on terms more favorable
than those afforded similar borrowers in similar circumstances, and
such extension of credit shall not involve more than the normal risk
of repayment or present other unfavorable features.
4-080.3
(C) For purposes of this
paragraph, an export trading company—
(i) may engage in or hold
shares of a company engaged in the business of underwriting, selling,
or distributing securities in the United States only to the extent that any
bank holding company which invests in such export trading company
may do so under applicable Federal and State banking laws and regulations;
and
(ii) may not engage
in agricultural production activities or in manufacturing, except
for such incidental product modification including repackaging, reassembling
or extracting byproducts, as is necessary to enable United States
goods or services to conform with requirements of a foreign country
and to facilitate their sale in foreign countries.
4-080.4
(D) A bank holding company
which invests in an export trading company may be required, by the
Board, to terminate its investment or may be made subject to such
limitations or conditions as may be imposed by the Board, if the Board
determines that the export trading company has taken positions in
commodities or commodity contracts, in securities, or in foreign exchange,
other than as may be necessary in the course of the export trading
company’s business operations.
4-080.5
(E) Notwithstanding any other provision
of law, an Edge Act corporation, organized under section 25(a) of
the Federal Reserve Act (12 U.S.C. 611-631), which is a subsidiary
of a bank holding company, or an agreement corporation, operating
subject to section 25 of the Federal Reserve Act (12 U.S.C. 601-604(a)),
which is a subsidiary of a bank holding company, may invest directly
and indirectly in the aggregate up to 5 per centum of its consolidated
capital and surplus (25 per centum in the case of a corporation not
engaged in banking) in the voting stock or other evidences of ownership
in one or more export trading companies.
4-080.6
(F) For purposes of this paragraph—
(i) the term “export trading company” means a company which does
business under the laws of the United States or any State, which is
exclusively engaged in activities related to international trade,
and which is organized and operated principally for purposes of exporting
goods or services produced in the United States or for purposes of
facilitating the exportation of goods or services produced in the
United States by unaffiliated persons by providing one or more export
trade services;
(ii) the
term “export trade services” includes, but is not limited to, consulting,
international market research, advertising, marketing, insurance (other
than acting as principal, agent or broker in the sale of insurance
on risks resident or located, or activities performed, in the United
States, except for insurance covering the transportation of cargo
from any point of origin in the United States to a point of final
destination outside the United States), product research and design,
legal assistance, transportation, including trade documentation and
freight forwarding, communication and processing of foreign orders
to and for exporters and foreign purchasers, warehousing, foreign
exchange, financing, and taking title to goods, when provided in order
to facilitate the export of goods or services produced in the United
States;
(iii) the term
“bank holding company” shall include a bank which (I) is organized
solely to do business with other banks and their officers, directors,
or employees; (II) is owned primarily by the banks with which it does
business; and (III) does not do business with the general public.
No such other bank, owning stock in a bank described in this clause
that invests in an export trading company, shall extend credit to
an export trading company in an amount exceeding at any one time 10 per centum
of such other bank’s capital and surplus; and
(iv) the term “extension of credit” shall
have the same meaning given such term in the fourth paragraph of section
23A of the Federal Reserve Act.
4-080.61
(G) (i) For
purposes of determining whether an export trading company is operated
principally for the purposes described in subparagraph (F)(i)—
(I) the operations of such company during
the 2-year period beginning on the date such company commences operations
shall not be taken into account in making any such determination;
and
(II) not less than
4 consecutive years of operations of such company (not including any
portion of the period referred to in subclause (I)) shall be taken
into account in making any such determination.
(ii) A company shall not
be treated as operated principally for the purposes described in subparagraph
(F)(i) unless—
(I) the revenues of such company from the export, or facilitating
the export, of goods or services produced in the United States exceed
the revenues of such company from the import, or facilitating the
import, into the United States of goods or services produced outside
the United States; and
(II) at least ⅓ of such company’s total revenues are revenues from
the export, or facilitating the export, of goods or services produced
in the United States by persons not affiliated with such company.
4-080.62
(H) (i) The Board may not
prescribe by regulation any maximum dollar amount limitation on the
value of goods which an export trading company may maintain in inventory
at any time.
(ii) Notwithstanding
clause (i), the Board may issue an order establishing a maximum dollar
amount limitation on the value of goods which a particular export
trading company may maintain in inventory at any time (after such
company has been operating for a reasonable period of time) if the
Board finds that, under the facts and circumstances, such limitation
is necessary to prevent risks that would affect the financial or managerial
resources of an investor bank holding company to an extent which would
be likely to have a materially adverse effect on the safety and soundness
of any subsidiary bank of such bank holding company.
The Board shall include in its annual report to the Congress
a description and a statement of the reasons for approval of each
activity approved by it by order or regulation under such paragraph
during the period covered by the report.
4-081
(d) Hardship exemption of company controlling
one bank prior to July 1, 1968. To the extent that such action
would not be substantially at variance with the purposes of this Act
and subject to such conditions as it considers necessary to protect
the public interest, the Board by order, after opportunity for hearing,
may grant exemptions from the provisions of this section to any bank
holding company which controlled one bank prior to July 1, 1968, and
has not thereafter acquired the control of any other bank in order
(1) to avoid disrupting business relationships that have existed over
a long period of years without adversely affecting the banks or communities
involved, or (2) to avoid forced sales of small locally owned banks
to purchasers not similarly representative of community interests,
or (3) to allow retention of banks that are so small in relation to
the holding company’s total interests and so small in relation to
the banking market to be served as to minimize the likelihood that
the bank’s powers to grant or deny credit may be influenced by a desire to further
the holding company’s other interests.
4-082
(e) Divestiture of nonexempt shares. With respect
to shares which were not subject to the prohibitions of this section
as originally enacted by reason of any exemption with respect thereto
but which were made subject to such prohibitions by the subsequent
repeal of such exemption, no bank holding company shall retain direct
or indirect ownership or control of such shares after five years from
the date of the repeal of such exemption, except as provided in paragraph
(2) of subsection (a). Any bank holding company subject to such five-year
limitation on the retention of nonbanking assets shall endeavor to
divest itself of such shares promptly and such bank holding company
shall report its progress in such divestiture to the Board two years
after repeal of the exemption applicable to it and annually thereafter.
4-082.1
(f) Certain companies not
treated as bank holding companies.
(1) Except as provided in paragraph (9),
any company which—
(A) on March 5, 1987, controlled an
institution which became a bank as a result of the enactment of the
Competitive Equality Amendments of 1987; and
(B) was not a bank holding company on
the day before the date of the enactment of the Competitive Equality
Amendments of 1987,
shall not be treated as a bank holding company for purposes
of this Act solely by virtue of such company’s control of such institution.
4-082.11
(2) Subject to paragraph
(3), a company described in paragraph (1) shall no longer qualify
for the exemption provided under that paragraph if—
(A) such
company directly or indirectly—
(i) acquires control of an additional
bank or an insured institution (other than an insured institution
described in paragraph (10) or (12) of this subsection) after March
5, 1987; or
(ii) acquires
control of more than 5 percent of the shares or assets of an additional
bank or a savings association other than—
(I) shares held as a bona fide fiduciary (whether with or without
the sole discretion to vote such shares);
(II) shares held by any person as a bona
fide fiduciary solely for the benefit of employees of either the company
described in paragraph (1) or any subsidiary of that company and the
beneficiaries of those employees;
(III) shares held temporarily pursuant to
an underwriting commitment in the normal course of an underwriting
business;
(IV) shares
held in an account solely for trading purposes;
(V) shares over which no control is held
other than control of voting rights acquired in the normal course
of a proxy solicitation;
(VI) loans or other accounts receivable acquired in the normal course
of business;
(VII) shares
or assets acquired in securing or collecting a debt previously contracted
in good faith, during the 2-year period beginning on the date of such
acquisition or for such additional time (not exceeding 3 years) as
the Board may permit if the Board determines that such an extension
will not be detrimental to the public interest;
(VIII) shares or assets of a savings association
described in paragraph (10) or (12) of this subsection;
(IX) shares of a savings association
held by any insurance company, as defined in section 2(a)(17) of the
Investment Company Act of 1940, except as provided in paragraph (11);
(X) shares issued in a qualified stock issuance
under section 10(q) of the Home Owners’ Loan Act; and
(XI) assets that are derived
from, or incidental to, activities in which institutions described
in subparagraph (F) or (H) of section 2(c)(2) are permitted to engage;
except that the aggregate amount of shares held under
this clause (other than under subclauses (I), (II), (III), (IV), (V),
and (VIII)) may not exceed 15 percent of all outstanding shares or
of the voting power of a savings association;
(B) any bank subsidiary
of such company—
(i) accepts demand deposits or deposits that
the depositor may withdraw by check or similar means for payment to
third parties; and
(ii)
engages in the business of making commercial loans (except that, for
purposes of this clause, loans made in the ordinary course of a credit
card operation shall not be treated as commercial loans); or
(C) after the date of
the enactment of the Competitive Equality Amendments of 1987, any
bank subsidiary of such company permits any overdraft (including any
intraday overdraft), or incurs any such overdraft in the account of
the bank at a Federal reserve bank, on behalf of an affiliate, other
than an overdraft described in paragraph (3).
4-082.12
(3) For purposes of paragraph (2)(C), an
overdraft is described in this paragraph if—
(A) such overdraft results
from an inadvertent computer or accounting error that is beyond the
control of both the bank and the affiliate;
(B) such overdraft—
(i) is permitted
or incurred on behalf of an affiliate that is monitored by, reports
to, and is recognized as a primary dealer by the Federal Reserve Bank
of New York; and
(ii) is
fully secured, as required by the Board, by bonds, notes, or other
obligations that are direct obligations of the United States or on
which the principal and interest are fully guaranteed by the United
States or by securities and obligations eligible for settlement on
the Federal Reserve book entry system; or
(C) such overdraft—
(i) is permitted or incurred by, or on behalf of, an affiliate in
connection with an activity that is financial in nature or incidental
to a financial activity; and
(ii) does not cause the bank to violate any provision of section
23A or 23B of the Federal Reserve Act, either directly, in the case
of a bank that is a member of the Federal Reserve System, or by virtue
of section 18(j) of the Federal Deposit Insurance Act, in the case
of a bank that is not a member of the Federal Reserve System.
4-082.13
(4) If any company described
in paragraph (1) fails to qualify for the exemption provided under
paragraph (1) by operation of paragraph (2), such exemption shall
cease to apply to such company and such company shall divest control
of each bank it controls before the end of the 180-day period beginning
on the date on which the company receives notice from the Board that
the company has failed to continue to qualify for such exemption,
unless, before the end of such 180-day period, the company has—
(A) either—
(i) corrected the condition or ceased the
activity that caused the company to fail to continue to qualify for
the exemption; or
(ii)
submitted a plan to the Board for approval to cease the activity or
correct the condition in a timely manner (which shall not exceed 1
year); and
(B) implemented procedures that are
reasonably adapted to avoid the reoccurrence of such condition or
activity.
(5) This subsection shall cease to apply to any company described in paragraph
(1) if such company—
(A) registers as a bank holding company
under section 5(a) of this Act;
(B) immediately upon such registration,
complies with all of the requirements of this Act, and regulations
prescribed by the Board pursuant to this Act, including the nonbanking
restrictions of this section; and
(C) does not, at the time of such registration,
control banks in more than one State, the acquisition of which would
be prohibited by section 3(d) of this Act if an application for such
acquisition by such company were filed under section 3(a) of this
Act.
4-082.14
(6)
Each company described in paragraph (1) shall, within 60 days after
the date of enactment of the Competitive Equality Amendments of 1987,
provide the Board with the name and address of such company, the name
and address of each bank such company controls, and a description
of each such bank’s activities.
(7) The Board may, from time to time, examine
a company described in paragraph (1), or a bank controlled by such
company, or require reports under oath from appropriate officers or
directors of such company or bank solely for purposes of assuring
compliance with the provisions of this subsection and enforcing such
compliance.
4-082.15
(8) (A) In addition to any other
power of the Board, the Board may enforce compliance with the provisions
of this Act which are applicable to any company described in paragraph
(1), and any bank controlled by such company, under section 8 of the
Federal Deposit Insurance Act and such company or bank shall be subject
to such section (for such purposes) in the same manner and to the
same extent as if such company or bank were a State member insured
bank.
(B) Any violation
of this Act by any company described in paragraph (1), and any bank
controlled by such company, may also be treated as a violation of
the Federal Deposit Insurance Act for purposes of subparagraph (A).
(C) No provision of
this paragraph shall be construed as limiting any authority of the
Comptroller of the Currency or the Federal Deposit Insurance Corporation.
4-082.16
(9) A company described
in paragraph (1) shall be—
(A) treated as a bank holding company
for purposes of section 106 of the Bank Holding Company Act Amendments
of 1970 and section 22(h) of the Federal Reserve Act and any regulation
prescribed under any such section; and
(B) subject to the restrictions of section
106 of the Bank Holding Company Act Amendments of 1970, in connection
with any transaction involving the products or services of such company
or affiliate and those of a bank affiliate, as if such company or
affiliate were a bank and such bank were a subsidiary of a bank holding
company.
(10) For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A),
an insured institution is described in this paragraph if—
(A) the insured
institution was acquired (or any shares or assets of such institution
were acquired) by a company described in paragraph (1) in an acquisition
under section 408(m) of the National Housing Act or section 13(k)
of the Federal Deposit Insurance Act; and
(B) either—
(i) the insured institution
is located in a State in which such company controlled a bank on March
5, 1987; or
(ii) the insured
institution has total assets of $500,000,000 or more at the time of
such acquisition.
4-082.17
(11) Shares described in clause (ii)(IX)
of paragraph (2)(A) shall not be excluded for purposes of clause (ii) of such
paragraph if—
(A) all shares held under such clause
(ii)(IX) by all insurance company affiliates of such savings association
in the aggregate exceed 5 percent of all outstanding shares or of
the voting power of the savings association; or
(B) such shares are acquired or retained
with a view to acquiring, exercising, or transferring control of the
savings association.
(12) For purposes of clauses (i) and (ii)(VIII)
of paragraph (2)(A), an insured institution is described in this paragraph
if the insured institution was acquired (or any shares or assets of
such institution were acquired) by a company described in paragraph
(1)—
(A) from the Resolution Trust Corporation,
the Federal Deposit Insurance Corporation, or the Director of the
Office of Thrift Supervision, in any capacity; or
(B) in an acquisition in which the insured
institution has been found to be in danger of default (as defined
in section 3 of the Federal Deposit Insurance Act by the appropriate
Federal or State authority.
4-082.2
(13) A company described in paragraph (1)
that holds shares issued in a qualified stock issuance pursuant to
section 10(q) of the Home Owners’ Loan Act by any savings association
or savings and loan holding company (neither of which is a subsidiary)
shall not be deemed to control such savings association or savings
and loan holding company solely because such company holds such shares
unless—
(A) the company fails to comply with
any requirement or condition imposed by paragraph (2)(A)(ii)(X) or
section 10(q) of the Home Owners’ Loan Act with respect to such shares;
or
(B) the shares
are acquired or retained with a view to acquiring, exercising, or
transferring control of the savings association or savings and loan
holding company.
4-082.21
(14) (A) An institution
described in section 2(c)(2)(F) may control a foreign bank if—
(i) the investment of the institution in the foreign bank meets the
requirements of section 25 or 25A of the Federal Reserve Act and the
foreign bank qualifies under such sections;
(ii) the foreign bank does not offer any products
or services in the United States; and
(iii) the activities of the foreign bank are
permissible under otherwise applicable law.
(B) The limitations contained
in any clause of section 2(c)(2)(F) shall not apply to a foreign bank
described in subparagraph (A) that is controlled by an institution
described in such section.
4-082.3
(g) Limitations on certain banks.
(1) Notwithstanding any other
provision of this section (other than the last sentence of subsection
(a)(2)), a bank holding company which controls an institution that
became a bank as a result of the enactment of the Competitive Equality
Amendments of 1987 may retain control of such institution if such
institution does not—
(A) engage in any activity after the
date of the enactment of such Amendments which would have caused such
institution to be a bank (as defined in section 2(c), as in effect
before such date) if such activities had been engaged in before such
date; or
(B) increase
the number of locations from which such institution conducts business
after March 5, 1987.
(2) The limitations contained in paragraph
(1) shall cease to apply to a bank described in such paragraph at
such time as the acquisition of such bank, by the bank holding company
referred to in such paragraph, would not be prohibited under section
3(d) of this Act if—
(A) an application for such acquisition were filed
under section 3(a) of this Act; and
(B) such bank were treated as an additional
bank (under section 3(d)).
4-082.4
(h) Tying provisions.
(1) An institution described in subparagraph
(D), (F), (G), or (H) of section 2(c)(2) shall be treated as a bank,
and a company that controls such an institution shall be treated as
a bank holding company, for purposes of section 106 of the Bank Holding
Company Act Amendments of 1970 and section 22(h) of the Federal Reserve
Act and any regulation prescribed under any such section.
(2) A company that controls
an institution described in subparagraph (D), (F), (G), or (H) of
section 2(c)(2) and any of such company’s other affiliates, shall
be subject to the tying restrictions of section 106 of the Bank Holding
Company Act Amendments of 1970 in connection with any transaction
involving the products or services of such company or affiliate and
those of such institution, as if such company or affiliate were a
bank and such institution were a subsidiary of a bank holding company.
4-082.5
(i) Acquisition of savings
associations.
(1) The Board may approve an application
by any bank holding company under subsection (c)(8) to acquire any
savings association in accordance with the requirements and limitations
of this section.
(2)
In approving an application by a bank holding company to acquire a
savings association, the Board shall not impose any restriction on
transactions between the savings association and its holding company
affiliates, except as required under sections 23A and 23B of the Federal
Reserve Act or any other applicable law.
(3) (A) Notwithstanding
any other provision of this Act, any qualified savings association
which became a federally chartered stock company in December of 1986
and which is acquired by any bank holding company without Federal
financial assistance after June 1, 1991, and before March 1, 1992,
and any subsidiary of any such association, may after such acquisition
continue to engage within the home State of the qualified savings
association in insurance agency activities in which any Federal savings
association (or any subsidiary thereof) may engage in accordance with
the Home Owners’ Loan Act and regulations pursuant to such Act if
the qualified savings association or subsidiary thereof was continuously
engaged in such activity from June 1, 1991, to the date of the acquisition.
(B) For purposes of
this paragraph, the term “qualified savings association” means
any savings association that—
(i) was chartered or organized
as a savings association before June 1, 1991;
(ii) had, immediately before the acquisition
of such association by the bank holding company referred to in subparagraph
(A), negative tangible capital and total insured deposits in excess
of $3,000,000,000; and
(iii) will meet all applicable regulatory capital requirements as
a result of such acquisition.
(4) (A)
Upon receiving any application or notice by a bank holding company
to acquire, directly or indirectly, a savings association under subsection
(c)(8), the Board shall solicit comments and recommendations from—
(i) the Comptroller of the Currency, with respect to the acquisition
of a Federal savings association; and
(ii) the Federal Deposit Insurance Corporation,
with respect to the acquisition of a State savings association.
(B)
The comments and recommendations of the Comptroller of the Currency
or the Federal Deposit Insurance Corporation, as applicable, under
subparagraph (A) with respect to any acquisition subject to such subparagraph
shall be transmitted to the Board not later than 30 days after the
receipt by the Comptroller of the Currency or the Federal Deposit
Insurance Corporation, as applicable, of the notice relating to such
acquisition (or such shorter period as the Board may specify if the
Board advises the Comptroller of the Currency or the Federal Deposit
Insurance Corporation, as applicable, that an emergency exists that
requires expeditious action).
(5) (A) The Board
shall consult with the Director, as appropriate, in establishing the
scope of an examination by the Board of a bank holding company that
directly or indirectly controls a savings association.
(B) Upon the request of
the Comptroller of the Currency or the Federal Deposit Insurance Corporation,
as applicable, the Board shall furnish the Comptroller of the Currency
or the Federal Deposit Insurance Corporation, as applicable, with
a copy of any inspection report, additional examination materials,
or supervisory information relating to any bank holding company that
directly or indirectly controls a savings association.
(6) The Board and the
Comptroller of the Currency or the Federal Deposit Insurance Corporation,
as applicable, shall cooperate in any enforcement action against any
bank holding company that controls a savings association, if the relevant
conduct involves such association.
(A) The Board may not approve an application
by a bank holding company to acquire an insured depository institution
under subsection (c)(8) or any other provision of this Act if—
(i) the home State of such insured depository institution is a State
other than the home State of the bank holding company; and
(ii) the applicant (including
all insured depository institutions which are affiliates of the applicant)
controls, or upon consummation of the transaction would control, more
than 10 percent of the total amount of deposits of insured depository
institutions in the United States.
(B) Subparagraph (A) shall not apply
to an acquisition that involves an insured depository institution
in default or in danger of default, or with respect to which the Federal
Deposit Insurance Corporation provides assistance under section 13
of the Federal Deposit Insurance Act (12 U.S.C. 1823).
4-082.6
(j) Notice procedures for
nonbanking activities.
(1) (A) Except
as provided in paragraph (3), no bank holding company may engage in
any nonbanking activity or acquire or retain ownership or control
of the shares of a company engaged in activities based on subsection
(c)(8) or (a)(2) or in any complementary activity under subsection
(k)(1)(B) without providing the Board with written notice of the proposed
transaction or activity at least 60 days before the transaction or
activity is proposed to occur or commence.
(B) The notice submitted to the Board
shall contain such information as the Board shall prescribe by regulation
or by specific request in connection with a particular notice.
(C) (i) Any notice filed under this subsection shall be deemed to
be approved by the Board unless, before the end of the 60-day period
beginning on the date the Board receives a complete notice under subparagraph
(A), the Board issues an order disapproving the transaction or activity
and setting forth the reasons for disapproval.
(ii) The Board may extend the 60-day period
referred to in clause (i) for an additional 30 days. The Board may
further extend the period with the agreement of the bank holding company
submitting the notice pursuant to this subsection.
(iii) In the event a hearing is requested
or the Board determines that a hearing is warranted, the Board may
extend the notice period provided in this subsection for such time as is reasonably
necessary to conduct a hearing and to evaluate the hearing record.
Such extension shall not exceed the 91-day period beginning on the
date that the hearing record is complete.
4-082.61
(D) (i) Any transaction or activity may
commence before the expiration of any period for disapproval established
under this paragraph if the Board issues a written notice of approval.
(ii) The Board may prescribe
regulations which provide for a shorter notice period with respect
to particular activities or transactions.
(E) In the case of any notice
to engage in, or to acquire or retain ownership or control of shares
of any company engaged in, any activity pursuant to subsection (c)(8)
or (a)(2) or in any complementary activity under subsection (k)(1)(B)
that has not been previously approved by regulation, the Board may
extend the notice period under this subsection for an additional 90
days. The Board may further extend the period with the agreement of
the bank holding company submitting the notice pursuant to this subsection.
4-082.62
(2) (A) In connection with a notice
under this subsection, the Board shall consider whether performance
of the activity by a bank holding company or a subsidiary of such
company can reasonably be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests,
unsound banking practices, or risk to the stability of the United
States banking or financial system.
(B) The Board may deny any proposed
transaction or activity for which notice has been submitted pursuant
to this subsection if the bank holding company submitting such notice
neglects, fails, or refuses to furnish the Board all the information
required by the Board.
(C) Nothing in this subsection limits the authority of the Board
to impose conditions in connection with an action under this section.
(3) No notice
under paragraph (1) of this subsection or under subsection (c)(8)
or (a)(2)(B) is required for a proposal by a bank holding company
to engage in any activity, other than any complementary activity under
subsection (k)(1)(B), or acquire the shares or assets of any company,
other than an insured depository institution or a company engaged
in any complementary activity under subsection (k)(1)(B), if the proposal
qualifies under paragraph (4).
4-082.63
(4) A proposal qualifies under this paragraph
if all of the following criteria are met:
(A) Both before and
immediately after the proposed transaction—
(i) the acquiring
bank holding company is well capitalized;
(ii) the lead insured depository institution
of such holding company is well capitalized;
(iii) well capitalized insured depository
institutions control at least 80 percent of the aggregate total risk-weighted
assets of insured depository institutions controlled by such holding
company; and
(iv) no insured
depository institution controlled by such holding company is undercapitalized.
(B) (i) At the time of the transaction,
the acquiring bank holding company, its lead insured depository institution,
and insured depository institutions that control at least 90 percent
of the aggregate total risk-weighted assets of insured depository
institutions controlled by such holding company are well managed.
(ii) Except as provided in
paragraph (6), 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.
(C) Following consummation of the proposal, the bank holding company
engages directly or through a subsidiary solely in—
(i) activities
that are permissible under subsection (c)(8), as determined by the
Board by regulation or order thereunder, subject to all of the restrictions,
terms, and conditions of such subsection and such regulation or order;
and
(ii) such other activities
as are otherwise permissible under this section, subject to the restrictions,
terms and conditions, including any prior notice or approval requirements,
provided in this section.
(D) (i) The book value
of the total assets to be acquired does not exceed 10 percent of the
consolidated total risk-weighted assets of the acquiring bank holding
company.
(ii) The gross
consideration to be paid for the securities or assets does not exceed
15 percent of the consolidated Tier 1 capital of the acquiring bank
holding company.
(E) For proposals described in paragraph
(5)(B), the Board has not, before the conclusion of the period provided
in paragraph (5)(B), advised the bank holding company that a notice
under paragraph (1) is required.
(F) During the 12-month period ending
on the date on which the bank holding company proposes to commence
an activity or acquisition, no administrative enforcement action has
been commenced, and no cease and desist order has been issued pursuant
to section 8 of the Federal Deposit Insurance Act, against the bank
holding company or any depository institution subsidiary of the holding
company, and no such enforcement action, order, or other administrative
enforcement proceeding is pending as of such date.
4-082.64
(5) (A) A bank holding company
that qualifies under paragraph (4) and that proposes to engage de
novo, directly or through a subsidiary, in any activity that is permissible
under subsection (c)(8), as determined by the Board by regulation,
may commence that activity without prior notice to the Board and must
provide written notification to the Board not later than 10 business
days after commencing the activity.
(B) (i) At least 12 business
days before commencing any activity pursuant to paragraph (3) (other
than an activity described in subparagraph (A) of this paragraph)
or acquiring shares or assets of any company pursuant to paragraph
(3), the bank holding company shall provide written notice of the
proposal to the Board, unless the Board determines that no notice
or a shorter notice period is appropriate.
(ii) A notification under this subparagraph
shall include a description of the proposed activities and the terms
of any proposed acquisition.
4-082.65
(6) Any insured depository institution
which has been acquired by a bank holding company during the 12-month
period preceding the date on which the company proposes to commence
an activity or acquisition pursuant to paragraph (3) may be excluded
for purposes of paragraph (4)(B)(ii) if—
(A) the bank holding
company has developed a plan for the institution to restore the capital
and management of the institution which is acceptable to the appropriate
Federal banking agency; and
(B) all such insured depository institutions
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.
(7) The Board may, by regulation, adjust the percentages
and the manner in which the percentages of insured depository institutions
are calculated under paragraph (4)(B)(i), (4)(D), or (6)(B) if the
Board determines that any such adjustment is consistent with safety
and soundness and the purposes of this Act.
4-082.7
(k) Engaging in activities that are financial
in nature.
(1) Notwithstanding subsection (a), a financial
holding company may engage in any activity, and may acquire and retain
the shares of any company engaged in any activity, that the Board,
in accordance with paragraph (2), determines (by regulation or order)—
(A) to be financial in nature or incidental to such financial activity;
or
(B) is complementary
to a financial activity and does not pose a substantial risk to the
safety or soundness of depository institutions or the financial system
generally.
(2) (A)
(i) The Board
shall notify the Secretary of the Treasury of, and consult with the
Secretary of the Treasury concerning, any request, proposal, or application
under this subsection for a determination of whether an activity is
financial in nature or incidental to a financial activity.
(ii) The Board shall not determine
that any activity is financial in nature or incidental to a financial
activity under this subsection if the Secretary of the Treasury notifies
the Board in writing, not later than 30 days after the date of receipt
of the notice described in clause (i) (or such longer period as the
Board determines to be appropriate under the circumstances) that the
Secretary of the Treasury believes that the activity is not financial
in nature or incidental to a financial activity or is not otherwise
permissible under this section.
(B) (i) The
Secretary of the Treasury may, at any time, recommend in writing that
the Board find an activity to be financial in nature or incidental
to a financial activity.
(ii) Not later than 30 days after the date of receipt of a written
recommendation from the Secretary of the Treasury under clause (i)
(or such longer period as the Secretary of the Treasury and the Board
determine to be appropriate under the circumstances), the Board shall
determine whether to initiate a public rulemaking proposing that the
recommended activity be found to be financial in nature or incidental
to a financial activity under this subsection, and shall notify the
Secretary of the Treasury in writing of the determination of the Board
and, if the Board determines not to seek public comment on the proposal,
the reasons for that determination.
4-082.71
(3) In determining whether
an activity is financial in nature or incidental to a financial activity,
the Board shall take into account—
(A) the purposes of this
Act and the Gramm-Leach-Bliley Act;
(B) changes or reasonably expected changes
in the marketplace in which financial holding companies compete;
(C) changes or reasonably
expected changes in the technology for delivering financial services;
and
(D) whether such
activity is necessary or appropriate to allow a financial holding
company and the affiliates of a financial holding company to—
(i) compete effectively
with any company seeking to provide financial services in the United
States;
(ii) efficiently
deliver information and services that are financial in nature through
the use of technological means, including any application necessary
to protect the security or efficacy of systems for the transmission
of data or financial transactions; and
(iii) offer customers any available or emerging
technological means for using financial services or for the document
imaging of data.
4-082.72
(4) For purposes of this subsection, the
following activities shall be considered to be financial in nature:
(A) Lending, exchanging, transferring, investing for others, or safeguarding
money or securities.
(B) Insuring, guaranteeing, or indemnifying against loss, harm, damage,
illness, disability, or death, or providing and issuing annuities,
and acting as principal, agent, or broker for purposes of the foregoing,
in any State.
(C)
Providing financial, investment, or economic advisory services, including
advising an investment company (as defined in section 3 of the Investment
Company Act of 1940).
(D) Issuing or selling instruments representing interests in pools
of assets permissible for a bank to hold directly.
(E) Underwriting, dealing in, or making
a market in securities.
(F) Engaging in any activity that the
Board has determined, by order or regulation that is in effect on
the date of the enactment of the Gramm-Leach-Bliley Act, to be so
closely related to banking or managing or controlling banks as to
be a proper incident thereto (subject to the same terms and conditions
contained in such order or regulation, unless modified by the Board).
(G) Engaging, in the
United States, in any activity that—
(i) a bank holding company
may engage in outside of the United States; and
(ii) the Board has determined, under regulations
prescribed or interpretations issued pursuant to subsection (c)(13)
(as in effect on the day before the date of the enactment of the Gramm-Leach-Bliley
Act) to be usual in connection with the transaction of banking or
other financial operations abroad.
(H) Directly or indirectly acquiring
or controlling, whether as principal, on behalf of 1 or more entities
(including entities, other than a depository institution or subsidiary
of a depository institution, that the bank holding company controls),
or otherwise, shares, assets, or ownership interests (including debt
or equity securities, partnership interests, trust certificates, or
other instruments representing ownership) of a company or other entity,
whether or not constituting control of such company or entity, engaged
in any activity not authorized pursuant to this section if—
(i) the shares,
assets, or ownership interests are not acquired or held by a depository
institution or subsidiary of a depository institution;
(ii) such shares, assets, or
ownership interests are acquired and held by—
(I) a securities affiliate or an affiliate
thereof; or
(II) an affiliate
of an insurance company described in subparagraph (I)(ii) that provides
investment advice to an insurance company and is registered pursuant
to the Investment Advisers Act of 1940, or an affiliate of such investment
adviser;
as part of a bona fide underwriting or merchant
or investment banking activity, including investment activities engaged
in for the purpose of appreciation and ultimate resale or disposition
of the investment;
(iii)
such shares, assets, or ownership interests are held for a period
of time to enable the sale or disposition thereof on a reasonable
basis consistent with the financial viability of the activities described
in clause (ii); and
(iv)
during the period such shares, assets, or ownership interests are
held, the bank holding company does not routinely manage or operate
such company or entity except as may be necessary or required to obtain
a reasonable return on investment upon resale or disposition.
(I) Directly or indirectly
acquiring or controlling, whether as principal, on behalf of 1 or
more entities (including entities, other than a depository institution
or subsidiary of a depository institution, that the bank holding company
controls) or otherwise, shares, assets, or ownership interests (including
debt or equity securities, partnership interests, trust certificates
or other instruments representing ownership) of a company or other
entity, whether or not constituting control of such company or entity,
engaged in any activity not authorized pursuant to this section if—
(i) the shares, assets, or ownership interests are not acquired or
held by a depository institution or a subsidiary of a depository institution;
(ii) such shares, assets,
or ownership interests are acquired and held by an insurance company
that is predominantly engaged in underwriting life, accident and health,
or property and casualty insurance (other than credit-related insurance)
or providing and issuing annuities;
(iii) such shares, assets, or ownership interests
represent an investment made in the ordinary course of business of
such insurance company in accordance with relevant State law governing
such investments; and
(iv) during the period such shares, assets, or ownership interests
are held, the bank holding company does not routinely manage or operate
such company except as may be necessary or required to obtain a reasonable
return on investment.
4-082.73
(5) (A)
The Board shall, by regulation or order, define, consistent with the
purposes of this Act, the activities described in subparagraph (B)
as financial in nature, and the extent to which such activities are
financial in nature or incidental to a financial activity.
(B) The activities described
in this subparagraph are as follows:
(i) Lending, exchanging, transferring,
investing for others, or safeguarding financial assets other than
money or securities.
(ii)
Providing any device or other instrumentality for transferring money
or other financial assets.
(iii) Arranging, effecting, or facilitating financial transactions
for the account of third parties.
(6) (A) A financial holding company
that acquires any company or commences any activity pursuant to this
subsection shall provide written notice to the Board describing the
activity commenced or conducted by the company acquired not later
than 30 calendar days after commencing the activity or consummating
the acquisition, as the case may be.
(B) (i) Except as provided
in subsection (j) with regard to the acquisition of an insured depository
institution and clause (ii), a financial holding company may commence
any activity, or acquire any company, pursuant to paragraph (4) or
any regulation prescribed or order issued under paragraph (5), without
prior approval of the Board.
(ii) A financial holding company may not acquire a company, without
the prior approval of the Board, in a transaction in which the total
consolidated assets to be acquired by the financial holding company
exceed $10,000,000,000.
(iii) Solely for purposes of section 7A(c)(8) of the Clayton Act
(15 U.S.C. 18a(c)(8)), the transactions subject to the requirements
of this paragraph shall be treated as if the approval of the Board
is not required.
4-082.74
(7) (A)
The Board and the Secretary of the Treasury may issue such regulations
implementing paragraph (4)(H), including limitations on transactions
between depository institutions and companies controlled pursuant
to such paragraph, as the Board and the Secretary jointly deem appropriate
to assure compliance with the purposes and prevent evasions of this
Act and the Gramm-Leach-Bliley Act and to protect depository institutions.
(B) The restrictions
contained in paragraph (4)(H) on the ownership and control of shares,
assets, or ownership interests by or on behalf of a subsidiary of
a depository institution shall not apply to a financial subsidiary
(as defined in section 5136A of the Revised Statutes of the United
States) of a bank, if the Board and the Secretary of the Treasury
jointly authorize financial subsidiaries of banks to engage in merchant
banking activities pursuant to section 122 of the Gramm-Leach-Bliley
Act.
4-082.8
(l) Conditions for engaging in expanded financial
activities.
(1) Notwithstanding subsection (k), (n),
or (o), a bank holding company may not engage in any activity, or
directly or indirectly acquire or retain shares of any company engaged
in any activity, under subsection (k), (n), or (o), other than activities
permissible for any bank holding company under subsection (c)(8),
unless—
(A) all of the depository institution
subsidiaries of the bank holding company are well capitalized;
(B) all of the depository
institution subsidiaries of the bank holding company are well managed;
(C) the bank holding
company is well capitalized and well managed; and
(D) the bank holding company has filed
with the Board—
(i) a declaration that the company elects
to be a financial holding company to engage in activities or acquire
and retain shares of a company that were not permissible for a bank
holding company to engage in or acquire before the enactment of the
Gramm-Leach-Bliley Act; and
(ii) a certification that the company meets the requirements of subparagraphs
(A), (B), and (C).
4-082.81
(2) Notwithstanding subsection (k) or (n)
of this section, section 5136A(a) of the Revised Statutes of the United
States, or section 46(a) of the Federal Deposit Insurance Act, the
appropriate Federal banking agency shall prohibit a financial holding
company or any insured depository institution from—
(A) commencing
any new activity under subsection (k) or (n) of this section, section
5136A(a) of the Revised Statutes of the United States, or section
46(a) of the Federal Deposit Insurance Act; or
(B) directly or indirectly acquiring
control of a company engaged in any activity under subsection (k)
or (n) of this section, section 5136A(a) of the Revised Statutes of
the United States, or section 46(a) of the Federal Deposit Insurance
Act (other than an investment made pursuant to subparagraph (H) or
(I) of subsection (k)(4), or section 122 of the Gramm-Leach-Bliley
Act, or under section 46(a) of the Federal Deposit Insurance Act by
reason of such section 122, by an affiliate already engaged in activities
under any such provision);
if any insured depository institution subsidiary of such
financial holding company, or the insured depository institution or
any of its insured depository institution affiliates, has received
in its most recent examination under the Community Reinvestment Act
of 1977, a rating of less than “satisfactory record of meeting community
credit needs”.
(3)
For purposes of paragraph (1), the Board shall apply comparable capital
and management standards to a foreign bank that operates a branch
or agency or owns or controls a commercial lending company in the
United States, giving due regard to the principle of national treatment
and equality of competitive opportunity.
4-082.85
(m) Provisions applicable to financial
holding companies that fail to meet certain requirements.
(1) If the Board finds that—
(A) a financial
holding company is engaged, directly or indirectly, in any activity
under subsection (k), (n), or (o), other than activities that are
permissible for a bank holding company under subsection (c)(8); and
(B) such financial
holding company is not in compliance with the requirements of subsection
(l)(1); the Board shall give notice to the financial holding
company to that effect, describing the conditions giving rise to the
notice.
(2) Not later than 45 days after the date of receipt by a financial
holding company of a notice given under paragraph (1) (or such additional
period as the Board may permit), the financial holding company shall
execute an agreement with the Board to comply with the requirements
applicable to a financial holding company under subsection (l)(1).
(3) Until the
conditions described in a notice to a financial holding company under
paragraph (1) are corrected, the Board may impose such limitations
on the conduct or activities of that financial holding company or
any affiliate of that company as the Board determines to be appropriate
under the circumstances and consistent with the purposes of this Act.
4-082.86
(4) If the conditions
described in a notice to a financial holding company under paragraph
(1) are not corrected within 180 days after the date of receipt by
the financial holding company of a notice under paragraph (1), the
Board may require such financial holding company, under such terms
and conditions as may be imposed by the Board and subject to such
extension of time as may be granted in the discretion of the Board,
either—
(A) to divest control of any subsidiary
depository institution; or
(B) at the election of the financial
holding company instead to cease to engage in any activity conducted
by such financial holding company or its subsidiaries (other than
a depository institution or a subsidiary of a depository institution)
that is not an activity that is permissible for a bank holding company
under subsection (c)(8).
(5) In taking any action under this subsection,
the Board shall consult with all relevant Federal and State regulatory
agencies and authorities.
4-082.9
(n) Authority to retain limited nonfinancial activities
and affiliations.
(1) Notwithstanding subsection (a), a company
that is not a bank holding company or a foreign bank (as defined in
section 1(b)(7) of the International Banking Act of 1978) and becomes
a financial holding company after the date of the enactment of the
Gramm-Leach-Bliley Act may continue to engage in any activity and
retain direct or indirect ownership or control of shares of a company
engaged in any activity if—
(A) the holding company lawfully was
engaged in the activity or held the shares of such company on September
30, 1999;
(B) the
holding company is predominantly engaged in financial activities as
defined in paragraph (2); and
(C) the company engaged in such activity
continues to engage only in the same activities that such company
conducted on September 30, 1999, and other activities permissible
under this Act.
(2) For purposes of this subsection, a
company is predominantly engaged in financial activities if the annual
gross revenues derived by the holding company and all subsidiaries
of the holding company (excluding revenues derived from subsidiary
depository institutions), on a consolidated basis, from engaging in
activities that are financial in nature or are incidental to a financial
activity under subsection (k) represent at least 85 percent of the
consolidated annual gross revenues of the company.
4-082.91
(3) A financial holding company that engages
in activities or holds shares pursuant to this subsection, or a subsidiary
of such financial holding company, may not acquire, in any merger,
consolidation, or other type of business combination, assets of any
other company that is engaged in any activity that the Board has not
determined to be financial in nature or incidental to a financial
activity under subsection (k), except this paragraph shall not apply
with respect to a company that owns a broadcasting station licensed
under title III of the Communications Act of 1934 and the shares of
which are under common control with an insurance company since January
1, 1998, unless such company is acquired by, or otherwise becomes
an affiliate of, a bank holding company that, at the time such acquisition
or affiliation is consummated, is 1 of the 5 largest domestic bank
holding companies (as determined on the basis of the consolidated
total assets of such companies).
(4) Notwithstanding any other provision
of this subsection, a financial holding company may continue to engage
in activities or hold shares in companies pursuant to this subsection
only to the extent that the aggregate annual gross revenues derived
from all such activities and all such companies does not exceed 15
percent of the consolidated annual gross revenues of the financial
holding company (excluding revenues derived from subsidiary depository
institutions).
4-082.92
(5) (A) A depository institution
controlled by a financial holding company shall not—
(i) offer or market,
directly or through any arrangement, any product or service of a company
whose activities are conducted or whose shares are owned or controlled
by the financial holding company pursuant to this subsection or subparagraph
(H) or (I) of subsection (k)(4); or
(ii) permit any of its products or services
to be offered or marketed, directly or through any arrangement, by
or through any company described in clause (i).
(B) Subparagraph (A)
shall not be construed as prohibiting an arrangement between a depository
institution and a company owned or controlled pursuant to subparagraph
(H) or (I) of subsection (k)(4) for the marketing of products or services
through statement inserts or Internet websites if—
(i) such arrangement
does not violate section 106 of the Bank Holding Company Act Amendments
of 1970; and
(ii) the
Board determines that the arrangement is in the public interest, does
not undermine the separation of banking and commerce, and is consistent
with the safety and soundness of depository institutions.
4-082.93
(6) A depository institution
controlled by a financial holding company may not engage in a covered
transaction (as defined in section 23A(b)(7) of the Federal Reserve
Act) with any affiliate controlled by the company pursuant to this
subsection.
(7) A financial
holding company engaged in any activity, or retaining direct or indirect
ownership or control of shares of a company, pursuant to this subsection,
shall terminate such activity and divest ownership or control of the
shares of such company before the end of the 10-year period beginning
on the date of the enactment of the Gramm-Leach-Bliley Act. The Board
may, upon application by a financial holding company, extend such
10-year period by a period not to exceed an additional 5 years if
such extension would not be detrimental to the public interest.
4-082.95
(o) Regulation of certain
financial holding companies. Notwithstanding subsection (a),
a company that is not a bank holding company or a foreign bank (as
defined in section 1(b)(7) of the International Banking Act of 1978)
and becomes a financial holding company after the date of enactment
of the Gramm-Leach-Bliley Act, may continue to engage in, or directly
or indirectly own or control shares of a company engaged in, activities
related to the trading, sale, or investment in commodities and underlying
physical properties that were not permissible for bank holding
companies to conduct in the United States as of September 30, 1997,
if—
(1) the holding company, or
any subsidiary of the holding company, lawfully was engaged, directly
or indirectly, in any of such activities as of September 30, 1997,
in the United States;
(2) the attributed aggregate consolidated assets of the company held
by the holding company pursuant to this subsection, and not otherwise
permitted to be held by a financial holding company, are equal to
not more than 5 percent of the total consolidated assets of the bank
holding company, except that the Board may increase that percentage
by such amounts and under such circumstances as the Board considers
appropriate, consistent with the purposes of this Act; and
(3) the holding company does
not permit—
(A) any company, the shares of which
it owns or controls pursuant to this subsection, to offer or market
any product or service of an affiliated depository institution; or
(B) any affiliated
depository institution to offer or market any product or service of
any company, the shares of which are owned or controlled by such holding
company pursuant to this subsection.
[12 USC 1843. As amended
by acts of July 1, 1966 (80 Stat. 238); Dec. 31, 1970 (84 Stat. 1763);
Nov. 16, 1977 (91 Stat. 1389); Nov. 10, 1978 (92 Stat. 3671); March
31, 1980 (94 Stat. 186); Oct. 8, 1982 (96 Stat. 1236); Oct. 15, 1982
(96 Stat. 1479, 1489, 1527, 1536); Jan. 12, 1983 (96 Stat. 2511);
Oct. 22, 1986 (100 Stat. 2095); Aug. 10, 1987 (101 Stat. 557, 558,
628, 635); Aug. 23, 1988 (102 Stat. 1384); Aug. 9, 1989 (103 Stat.
408, 409, 410, 411, 546); Dec. 19, 1991 (105 Stat. 2384); Sept. 23,
1994 (108 Stat. 2239, 2240); Sept. 30, 1996 (110 Stat. 3009-404, 406,
413, 425, 476); Nov. 12, 1999 (113 Stat. 1341, 1342, 1351, 1359, 1360,
1361); Oct. 13, 2006 (120 Stat. 1984, 2003); and July 21, 2010 (124
Stat. 1546, 1547, 1601, 1602, 1607, 1634).
Section 601(b) of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 USC 1843 note) reads as follows:
(b) If the Board of Governors of the Federal Reserve System,
in approving an application by a bank holding company to acquire a
savings association, imposed any restriction that would have been
prohibited under section 4(i)(2) of the Bank Holding Company Act of
1956 (as added by subsection (a) of this section) if that section
had been in effect when the application was approved, the Board shall
modify that approval in a manner consistent with that section.]
