Financial Holding Company (2024)

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Financial Holding Company

Financial Holding Company Election

Section 1843(l) of 12 U.S.C.; Sections 225.82 and 225.91-92 of Regulation Y.

Who must file?
A bank holding company ("BHC") and a foreign bank that operates a branch, agency, or commercial lending company in the United States, or a company of which the foreign bank is a subsidiary ("FBO"), must file a written declaration with the appropriate Federal Reserve Bank to become a Financial Holding Company ("FHC"). Savings and loan holding companies should consult with Federal Reserve staff before filing an FHC election in order to be treated as an FHC.

Publication requirements--newspaper/Federal Register
No publication is required for proposals associated with this filing.

Required forms
While no form is required, a written declaration must be submitted containing the following information and in the format prescribed below:

1. An affirmative statement that the BHC or FBO elects to be an FHC.
2. The name and head-office address of the BHC or FBO and each depository institution it controls. For purposes of the election process, the term "depository institution'' means any national bank, state-chartered bank, savings association, savings bank, industrial bank, and any trust company or other banking institution that engages in the business of receiving deposits other than trust funds.
3. A certification that the BHC or FBO and all depository institutions controlled by the BHC or FBO are well capitalized as of the date the declaration is filed.1
4. The capital ratios for all relevant capital measures as of the close of the previous quarter, for the consolidated BHC or FBO and each depository institution controlled by the BHC or FBO on the date the BHC or FBO files its declaration.2
5. A certification that the BHC or FBO and each of the depository institutions it controls are well managed3 as of the date the BHC or FBO files its declaration.4
6. The declaration must be signed by an official or representative with authority to legally bind the BHC or FBO.

Additional requirements for FBOs to qualify as FHCs
Refer to the following references for processing time frames and more specific requirements for an FBO to meet the well-capitalized and well-managed criteria: (a) Section 4(l) of the BHC Act, as amended by section 606(a) of the DFA; (b) Sections 225.81-82 and 225.90-91 of Regulation Y (12 CFR 225.81-82; 225.90-91); and (c) Supervisory Letter SR 08-9, Consolidated Supervision of Bank Holding Companies and the Combined U.S. Operations of Foreign Banking Organizations. Before filing an election to be treated as an FHC, it is recommended that an FBO file a request for review of its qualifications through the pre-clearance process in accordance with section 225.91(c).

Consultations with Reserve Bank
Certain situations, such as an FHC election in the context of a merger or acquisition, or an FHC election by an FBO, will require additional information. The relevant Reserve Bank should be consulted prior to filing an FHC election in such situations.

Factors reviewed
The Federal Reserve considers the factors in sections 1843(l)(1) and (2) of 12 U.S.C.; sections 225.82 and 225.91-92 of Regulation Y (12 CFR 225.82 and 225.91-92).

Processing time frames
A BHC's election to become an FHC is effective on the 31st calendar day after the date that a complete declaration is received by the responsible Federal Reserve Bank unless the Federal Reserve Bank or the Federal Reserve Board notifies the BHC before that time that the election is effective. The processing clock will not commence until the Federal Reserve Bank has acknowledged receipt of a complete declaration. Typically, the Federal Reserve will send a letter noting that the election is effective and outlining ongoing requirements, including filing requirements.

Consummation period
When an FHC declaration becomes effective, the BHC or FBO may engage in the expanded financial activities available to such companies. If, however, the Board has timely notified a BHC or FBO that its declaration is ineffective, the BHC or FBO will not be considered an FHC and may not begin to engage in any expanded activities.

Ongoing requirements
A BHC or FBO with an effective election to be, or be treated as, an FHC is subject to the requirements under sections 4(l) and 4(m) of the BHC Act.

Sample declaration by a BHC
1. Affirmative Statement of Declaration - [Name of BHC] hereby elects to be a Financial Holding Company.

2. Names and Addresses - The head office address of [Name of BHC] is as follows:

[Name of BHC]
[Address]

The names and addresses of all depository institutions controlled by [Name of BHC] are as follows [Repeat as needed]:

[Name of Depository Institution]
[Address]

3. Capital Certification - [Name of BHC] certifies that it and [name of each of its depository institutions] are well capitalized as of the [date of the declaration].

4. Capital Ratios5- As of [date of the previous quarter], the capital ratios of [name of depository institution] were as follows: _ % (Tier 1 Risk-Based Capital); __ % (Total Risk-Based Capital); and __ % (Tier 1 Leverage)." [Repeat as needed].

As of [date of the previous quarter-end], the capital ratios of [name of BHC] were as follows: _ % (Tier 1 Risk-Based Capital); __ % (Total Risk-Based Capital); and __ % (Tier 1 Leverage)." [Repeat as needed].

5. Management Certification - [Name of BHC] certifies that it and [name of each of its depository institutions] are well managed as of the [date of the declaration].

________________________________
Signature of Authorized Representative

________________________________
Name and Title

________________________________
Date of Declaration