Bank holding company

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"Bancorp" redirects here. For other uses, see Bancorp (disambiguation).
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A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself.[1] The compound bancorp (banc/bank + corp[oration]) or bancorporation is often used to refer to these companies as well.

United States

In the United States, a bank holding company, as provided by the

Federal Reserve System
.

Regulation

The

capital standards, approving mergers and acquisitions and inspecting the operations of such companies. This authority applies even though a bank owned by a holding company may be under the primary supervision of the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corporation
.

Bank holding company status

Becoming a bank holding company makes it easier for the firm to raise capital than as a traditional bank. The holding company can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater regulatory ease. It also has a greater legal authority to conduct share repurchases of its own stock.

The downside includes responding to additional regulatory authorities, especially if there are more than 2,000 shareholders (note: prior to the Jobs Act or

Securities and Exchange Commission
. There are also added expenses of operating with an extra layer of administration.

2008 credit crisis

As a result of the

investment banks and finance corporations such as Goldman Sachs, Morgan Stanley,[3] American Express, CIT Group and GMAC (now Ally Financial)[4] converted to bank holding companies to gain access to the Federal Reserve
's credit facilities.

See also

References

  1. ISBN 0-13-063085-3.{{cite book}}: CS1 maint: location (link
    )
  2. ^ "Bank Holding Company Act". FDIC.
  3. ^ "Morgan Stanley Granted Federal Bank Holding Company Status By U.S. Federal Reserve Board of Governors". Archived from the original on 2011-08-31. Retrieved 2011-04-26.
  4. ^ "AFP: Fed approves GMAC bank request in boost for GM". Associated Press.

External links

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