Bank Holding and Financial Holding Companies: Evaluating the Legal and Business Implications

Developing Legal Strategies to Maximize Opportunities and Manage Risk

Recording of a 90-minute CLE teleconference with Q&A

Conducted on Thursday, January 22, 2009
Recorded event now available

This seminar will examine the regulatory structure of the Bank Holding Company Act and discuss the benefits, disadvantages and future consequences of becoming a bank holding or financial holding company.

Description

In the wake of the financial crisis and bailout plans, financial institutions are lining up to become bank holding companies. This structure reduces borrowing costs and permits access both to emergency financial support from the Federal Reserve and to bank deposits, more stable sources of funding.

The Bank Holding Company Act (BHCA) imposes a whole new regulatory structure and restrictions on bank holding companies regarding capitalization, debt leverage, and the lines of business they can operate. In turn, the Financial Holding Company (FHC) model provides more flexibility in these areas.

Recent Federal Reserve action has temporarily relaxed certain requirements and restrictions on bank holding companies. More government action in this area is inevitable. Attorneys who advise financial institutions contemplating a move to a BHC or FHC must be well-versed in the BHCA.

Listen as our authoritative panel of attorneys examines the regulatory structure of the Bank Holding Company Act and discusses the advantages and disadvantages of being a bank holding or financial holding company in today's financial environment.

Outline

  1. Becoming a BHC or FHC
    1. How to get there
      1. Acquisition
      2. De novo
      3. Conversion
    2. Advantages
      1. Liquidity
        1. TARP
        2. FDIC guaranteed debt
        3. Reputational
    3. Disadvantages
      1. Capital
      2. Leverage
      3. Supervision
      4. Source of strength
    4. Federal Reserve Board Considerations
      1. Structuring
        1. Conforming ownership
        2. Divestiture requirements
      2. Processing
  2. Conforming Activities
    1. Grandfathering
    2. Time to Divest or Restructure
    3. Reallocating Activities
      1. Authorities
      2. Merchant Banking
  3. Investor Considerations
    1. Private Equity Firms
      1. September 22 Policy Statement
    2. Passivity Requirements
    3. Bondholders
      1. Impact of TARP
    4. Others
  4. Savings and Loan Holding Company (SLHC) Options
    1. Advantages
    2. Disadvantages
    3. Differences
      1. Holding company considerations
      2. Investor considerations

Benefits

The panel will review these and other key questions:

  • What is the regulatory structure of the Banking Holding Company Act?
  • What are the relative advantages and disadvantages of structuring as a Bank Holding or a Financial Holding Company?
  • What factors must be considered for the foreseeable and long-term future in considering the move to the BHC/FHC structure?

Faculty

Thomas P. Vartanian, Partner
Fried Frank, Washington, D.C.

He chairs the firm's Financial Institutions Transactions Group and advises financial services clients in compliance and enforcement actions. He is a respected writer and lecturer on financial services. He was previously General Counsel of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation.

Michael M. Wiseman, Partner
Sullivan Cromwell, New York

He specializes in banking and financial institutions law, representing domestic and foreign commercial banks, investment banks and insurance companies. He leads the firm’s Financial Institutions Group which has a long history advising global financial institutions on their largest transactional and their most sensitive regulatory matters.

Paul L. Lee, Partner
Debevoise Plimton, New York

He has extensive experience in the banking industry as a corporate lawyer, both as general counsel and in private practice, and experience in the public sector with leading bank supervisory agencies.

Peter E. Heyward, Partner
Venable, Washington, D.C.

His practice focuses on U.S. and international financial regulation and he has more than 20 years' experience in representing financial institutions. He advises clients on a broad range of matters that are subject to regulation by federal or state agencies.

Ordering

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