(a) Certain de
novo activities. A bank holding company may, either directly
or indirectly, engage de novo in any nonbanking activity listed in
section 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 section 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 section 225.23.
4-032.1
(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 furnishing services to or performing services
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 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.
4-033
(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.
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(4) Securities eligible for investment
by 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 outstanding
shares of any class of voting securities of a company, or that represent
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 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.
4-035
(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 requirements of 12 CFR part 217, and the Board has not previously
notified the acquiring company that it may not acquire assets under
the exemption in this paragraph (d).
(vi) Qualifying
community banking organizations. For purposes of paragraph (d)(8)(ii)
of this section, a lending company or industrial bank that is a qualifying
community banking organization (as defined in section 217.12 of this
chapter) that is subject to the community bank leverage ratio framework
(as defined in section 217.12 of this chapter), or is a subsidiary
of such a qualifying community banking organization, has risk-weighted
assets equal to:
(A)
Its average total consolidated assets (as used in section 217.12 of
this chapter) as most recently reported to its primary banking supervisor
(as defined in section 225.14(d)(5)); or
(B) Its total assets, if the company or industrial bank does not
report such average total consolidated assets.
4-036
(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.
4-037
(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.
(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 211).
