(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.
4-047.1
(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.
(ii) 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.
4-047.2
(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
3 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.
4-047.3
(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 section 225.12(b);
4(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.
54-048
(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;
6(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.
4-049
(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.
4-049.1
(6) Financial and investment advisory activities. Acting as investment or financial adviser 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;
7(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.
4-049.2
(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 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
8 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.
94-049.3
(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.
4-049.4
(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.
4-049.5
(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
10,
if—(1) a state member bank is authorized
to invest in the asset underlying the contract;
(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,
11 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.
4-049.6
(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.
4-049.7
(9) Management
consulting and counseling activities.
(i) Management consulting.
(A) Providing
management consulting advice
12 —(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.
4-049.8
(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
13 and individuals currently employed by, or recently displaced
from, a financial organization;
(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.
4-050
(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.
14(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.
4-050.1
(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
15 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
16 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
17 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.
4-050.2
(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 in the preceding decennial census); or
(B) has inadequate insurance agency facilities,
as determined by the Board, after notice and opportunity for hearing.
(iv)
Insurance agency activities conducted on May
1, 1982. Engaging in any specific insurance agency activity
18 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.
19 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 such bank holding company or subsidiary.
4-050.21
(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.
4-050.3
(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.
4-050.4
(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, data storage, and data transmission hardware, software,
documentation, or operating personnel), databases, advice, and access
to such services, facilities, or databases by any technological means,
if—
(A) the data to be processed 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, data storage, 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.
