(1) In general. Except as provided in this section or section 225.173,
a financial holding company may not, directly or indirectly, own,
control, or hold any share, asset, or ownership interest pursuant
to this subpart for a period that exceeds 10 years.
(2) Ownership
interests acquired from or transferred to companies held under this
subpart. For purposes of paragraph (b)(1) of this section, shares,
assets, or ownership interests—
(i) acquired by a financial
holding company from a company in which the financial holding company
held an interest under this subpart will be considered to have been
acquired by the financial holding company on the date that the share,
asset, or ownership interest was acquired by the company; and
(ii) acquired by a company
from a financial holding company will be considered to have been acquired
by the company on the date that the share, asset, or ownership interest
was acquired by the financial holding company if—
(A) the financial
holding company held the share, asset, or ownership interest under this subpart;
and
(B) the financial
holding company holds an interest in the acquiring company under this
subpart.
(3) Interests
previously held by a financial holding company under limited authority. For purposes of paragraph (b)(1) of this section, any shares, assets,
or ownership interests previously owned or controlled, directly or
indirectly, by a financial holding company under any other provision
of the federal banking laws that imposes a limited holding period
will be considered to have been acquired by the financial holding
company under this subpart on the date the financial holding company
first acquired ownership or control of the shares, assets, or ownership
interests under such other provision of law. For purposes of this
paragraph (b)(3), a financial holding company includes a depository
institution controlled by the financial holding company and any subsidiary
of such a depository institution.
4-058.31
(4) Approval
required to hold interests held in excess of time limit. A financial
holding company may seek Board approval to own, control, or hold shares,
assets, or ownership interests of a company under this subpart for
a period that exceeds the period specified in paragraph (b)(1) of
this section. A request for approval must—
(i) be submitted to
the Board at least 90 days prior to the expiration of the applicable
time period;
(ii)
provide the reasons for the request, including information that addresses
the factors in paragraph (b)(5) of this section; and
(iii) explain the financial holding
company’s plan for divesting the shares, assets, or ownership interests.
(5) Factors governing Board determinations. In reviewing any proposal under paragraph (b)(4) of this section,
the Board may consider all the facts and circumstances related to
the investment, including—
(i) the cost to the financial holding
company of disposing of the investment within the applicable period;
(ii) the total exposure
of the financial holding company to the company and the risks that
disposing of the investment may pose to the financial holding company;
(iii) market conditions;
(iv) the nature of
the portfolio company’s business;
(v) the extent and history of involvement
by the financial holding company in the management and operations
of the company; and
(vi) the average holding period of the financial holding company’s
merchant banking investments.
4-058.32
(6) Restrictions
applicable to investments held beyond time period. A financial
holding company that directly or indirectly owns, controls, or holds
any share, asset, or ownership interest of a company under this subpart
for a total period that exceeds the period specified in paragraph
(b)(1) of this section must—
(i) For purposes of determining the
financial holding company’s regulatory capital, apply to the financial
holding company’s adjusted carrying value of such shares, assets,
or ownership interests a capital charge determined by the Board that
must be—
(A) higher than the maximum marginal tier
1 capital charge applicable under part 217 to merchant banking investments
held by that financial holding company; and
(B) in no event less than 25 percent of the
adjusted carrying value of the investment; and
(ii) abide
by any other restrictions that the Board may impose in connection
with granting approval under paragraph (b)(4) of this section.
