Bank Holding Companies and Change in Bank Control (Regulation Y)

Section 2208 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 amended the Bank Holding Company Act to eliminate the requirement that bank holding companies seek Board approval before engaging de novo in permissible nonbanking activities listed in Regulation Y if the holding company is well-capitalized and meets certain other criteria specified in the statute. Section 2208 also established an expedited procedure for well-capitalized bank holding companies that meet these criteria to obtain Board approval to acquire smaller companies that engage in any permissible nonbanking activities listed in Regulation Y as well as to engage in nonbanking activities that the Board has approved only by order. These changes are effective immediately. Section 2208 provides that a bank holding company shall be considered ``well-capitalized'' if it meets the capital levels required by the Board. For purposes of determining the capital levels at which a bank holding company shall be considered ``well-capitalized'' under section 2208 and Regulation Y, the Board has adopted, as an interim rule, risk-based capital thresholds that are the same as the levels set for determining that a state member bank is well capitalized under the provisions established under section 38 of the Federal Deposit Insurance Act, and a modified leverage ratio. Because section 2208 became effective upon enactment on September 30, 1996, this definition is adopted effective immediately on an interim basis. The Board invites public comment on the definition of ``well-capitalized,'' including how this provision in section 2208 applies to foreign banking organizations. The Board will adjust the definition as appropriate in light of public comment.