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Bank Holding Company |
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A Bank Holding Company is a corporation or other legal entity that owns or operates one or more commercial banks. Bank Holding Companies are regulated by the U.S. Federal Reserve Board and must adhere to all U.S. Banking regulations that affect both banks and Bank Holding Companies.
Why Do Bank Holding Companies Exist?
Originally, Bank Holding Companies were created to allow commercial banks to purchase and operate other banks and to provide a way for banks to operate in interstate commerce. Prior to the creation of Bank Holding Companies, a bank could only operate in its primary State.
As the banking industry grew, banks wanted to get into other financial markets such as investment and brokerage services as well as insurance. In 1999, the U.S. Government passed the Gramm-Leach-Bliley Act Of 1999 which is also called the The Financial Modernization Act of 1999.
This new law expanded the powers of Bank Holding Companies and allowed them to offer other financially-related services.
Bank Holding Companies can usually be identified by the usage of the word "Banc" or "Bankshares" in their name, such as United Bankshares or Capitol Bancorp, but this is not always the case.
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Credit Card Definitions > A - E > Bank Holding Company
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