Pros and Cons of Bank Holding Companies: Determining Whether a Bank Holding Company Structure Makes Sense for Your Bank
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, October 29, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine pros and cons of operating under a bank holding company or financial holding company (BHC) vs. a simple stand-alone bank structure. The presentation will include a discussion of the federal laws and regulations regarding permissible activities for banks and their holding companies. The panel will also discuss potential benefits and costs of merging a BHC into a bank.
Ms. Kirby advises boards and management of financial institutions and other financial services firms on strategic corporate governance and bank regulatory matters, public company reporting, and corporate finance and M&A transactions, including bank mutual-to-stock conversions, holding company formations, and de novo bank chartering. In addition to working with the firm's full service bank and thrift clients, Ms. Kirby has worked extensively with nonbank financial services providers to establish limited purpose trust banks and other nontraditional vehicles for providing fiduciary and asset management services, and advises banks and trust companies that manage collective investment funds and other commingled pools.
Mr. MacDonald is a financial services lawyer who focuses on M&As, public and private securities, governance, and policy issues for clients engaged in this industry. Since 1979, he has helped domestic and international clients including bank holding companies, banks, investment banks, broker-dealers, investment managers, and fintech companies. He advises senior management and boards of directors. Mr. MacDonald also provides strategic and transaction guidance, including evolving areas such as regulatory relief and financial services policy. A growing area is the fintech industry, particularly its regulation and relationships with state, federal, and foreign regulators and traditional financial services companies. Clients range from global banks such as Citibank and BNP to regional and community banks. He often advises commercial businesses with respect to relationships and services with their financial services providers. Mr. MacDonald advises clients frequently regarding financial services M&As, asset and liability transactions, public and private securities offerings, Volcker Rule, investments and risk management, and bank, trust company, credit card, fintech, and other financial services charters.
In deciding whether a BHC is the best route to conduct its businesses, banks should weigh the operational flexibility of BHCs against the added administrative and regulatory costs. Counsel must have a thorough understanding of the permitted activities of banks vs. BHCs and steps to allow a bank to function without the BHC umbrella.
Bank holding companies are frequently used to engage in a variety of activities that are financial but outside of traditional depository activities, usually through affiliates under the ownership umbrella of a BHC. However, banks can now engage in many activities deemed closely related to banking or financial without requiring a BHC.
In recent years a handful of BHCs have merged or liquidated into their bank subsidiaries, eliminating the BHC by merging it into the bank. These mergers are done to simplify financial reporting, reduce Federal Reserve oversight and SEC registration costs, and consolidate governance and organizational structure.
Listen as our authoritative panel discusses the regulatory framework in which banks and BHCs operate and the non-banking activities which are permitted for each. The panel will also discuss the logistics of merging a BHC into a bank and issues to consider in deciding whether to do so.
- Regulatory framework for banks
- Bank holding companies and financial holding companies
- Small BHC Policy Statement: impact on banks with under $1 billion in assets
- Disadvantages of BHCs
- Advantages of BHCs
- Eliminating an existing BHC into a bank: procedural issues
The panel will review these and other key issues:
- What kinds of activities and investments are allowed for banks beyond traditional banking activities?
- What are the additional operational flexibilities of BHCs?
- How does the Small BHC Policy Statement impact the analysis for banks with under $1 billion in assets?
- What are the regulatory and cost considerations of forming and operating as a BHC?
- When might it be desirable to merge a BHC (and affiliates) into a bank?
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