[Code of Federal Regulations] [Title 12, Volume 3] [Revised as of January 1, 2003] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR225.1] [Page 82-83] TITLE 12--BANKS AND BANKING CHAPTER II--FEDERAL RESERVE SYSTEM PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents Subpart A--General Provisions Sec. 225.1 Authority, purpose, and scope. Source: Reg. Y, 62 FR 9319, Feb. 28, 1997, unless otherwise noted. (a) Authority. This part \1\ (Regulation Y) is issued by the Board of Governors of the Federal Reserve System (Board) under section 5(b) of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(b)) (BHC Act); sections 8 and 13(a) of the International Banking Act of 1978 (12 U.S.C. 3106 and 3108); section 7(j)(13) of the Federal Deposit Insurance Act, as amended by the Change in Bank Control Act of 1978 (12 U.S.C. 1817(j)(13)) (Bank Control Act); section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)); section 914 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (12 U.S.C. 1831i); section 106 of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972); and the International Lending Supervision Act of 1983 (Pub. L. 98-181, title IX). The BHC Act is codified at 12 U.S.C. 1841, et seq. --------------------------------------------------------------------------- \1\ Code of Federal Regulations, title 12, chapter II, part 225. --------------------------------------------------------------------------- (b) Purpose. The principal purposes of this part are to: (1) Regulate the acquisition of control of banks by companies and individuals; [[Page 83]] (2) Define and regulate the nonbanking activities in which bank holding companies and foreign banking organizations with United States operations may engage; and (3) Set forth the procedures for securing approval for these transactions and activities. (c) Scope--(1) Subpart A contains general provisions and definitions of terms used in this regulation. (2) Subpart B governs acquisitions of bank or bank holding company securities and assets by bank holding companies or by any company that will become a bank holding company as a result of the acquisition. (3) Subpart C defines and regulates the nonbanking activities in which bank holding companies and foreign banking organizations may engage directly or through a subsidiary. The Board's Regulation K governs certain nonbanking activities conducted by foreign banking organizations and certain foreign activities conducted by bank holding companies (12 CFR part 211, International Banking Operations). (4) Subpart D specifies situations in which a company is presumed to control voting securities or to have the power to exercise a controlling influence over the management or policies of a bank or other company; sets forth the procedures for making a control determination; and provides rules governing the effectiveness of divestitures by bank holding companies. (5) Subpart E governs changes in bank control resulting from the acquisition by individuals or companies (other than bank holding companies) of voting securities of a bank holding company or state member bank of the Federal Reserve System. (6) Subpart F specifies the limitations that govern companies that control so-called nonbank banks and the activities of nonbank banks. (7) Subpart G prescribes minimum standards that apply to the performance of real estate appraisals and identifies transactions that require state certified appraisers. (8) Subpart H identifies the circumstances when written notice must be provided to the Board prior to the appointment of a director or senior officer of a bank holding company and establishes procedures for obtaining the required Board approval. (9) Subpart I establishes the procedure by which a bank holding company may elect to become a financial holding company, enumerates the consequences if a financial holding company ceases to meet a requirement applicable to a financial holding company, lists the activities in which a financial holding company may engage, establishes the procedure by which a person may request the Board to authorize additional activities as financial in nature or incidental thereto, and establishes the procedure by which a financial holding company may seek approval to engage in an activity that is complementary to a financial activity. (10) Subpart J governs the conduct of merchant banking investment activities by financial holding companies as permitted under section 4(k)(4)(H) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H)). (11) Appendix A to the regulation contains the Board's Risk-Based Capital Adequacy Guidelines for bank holding companies. (12) Appendix B contains the Board's Capital Adequacy Guidelines for measuring leverage for bank holding companies and state member banks. (13) Appendix C contains the Board's policy statement governing small bank holding companies. (14) Appendix D contains the Board's Capital Adequacy Guidelines for measuring tier 1 leverage for bank holding companies. (15) Appendix E contains the Board's Capital Adequacy Guidelines for measuring market risk of bank holding companies. (16) Appendix F contains the Interagency Guidelines Establishing Standards for Safeguarding Customer Information. [Reg. Y, 62 FR 9319, Feb. 28, 1997, as amended at 65 FR 16472, Mar. 28, 2000; 66 FR 414, Jan. 3, 2001; 66 FR 8484, Jan. 31, 2001; 66 FR 8636, Feb. 1, 2001] [[Page 84]]