FEC Corporate & Financial Services Alert: Relief Now Available For More Small Bank Holding Companies A bill enacted last month will expand regulatory relief for more community bank holding companies. House Resolution 3329, originally introduced on October 23, 2013, was signed into law by the President on December 18, 2014. The law includes a directive to the Federal Reserve to ...
FEC Corporate & Financial Services Alert: Relief Now Available For More Small Bank Holding Companies
A bill enacted last month will expand regulatory relief for more community bank holding companies. House Resolution 3329, originally introduced on October 23, 2013, was signed into law by the President on December 18, 2014. The law includes a directive to the Federal Reserve to revise its current Small Bank Holding Company Policy Statement1 by increasing the applicable qualifying asset threshold from $500 million to $1 billion.
The Policy Statement currently applies to bank holding companies with assets of less than $500 million that are not engaged in significant nonbanking activities and satisfy other requirements. The Policy Statement generally gives more latitude in the formation and expansion of small bank holding companies by allowing those entities to incur higher levels of debt. This includes permitting an acquisition to be debt funded up to 75% of the acquisition price.
In addition to expanding the application of the Policy Statement, the bill will also effectively exempt bank holding companies with assets of less than $1 billion from the leverage and risk-based capital requirements contained in Section 171 of the Dodd-Frank Act.
The law directs the Federal Reserve to publish proposed revisions to the Policy Statement within 6-months of enactment (or by June 18, 2015). It is estimated that the change will reduce the regulatory burden on 89% of bank holding companies, up from 75% prior to enactment.
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1 12 CFR 225 (Appendix C).
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