Bank Holding Companies and Financial Holding Companies Comparison

Summary

This practice note compares the key similarities and distinctions between bank holding companies (BHCs) and financial holding companies (FHCs), with a focus on the scope of permissible "nonbanking" activities, investments, and related procedures required for engaging in such activities and investments. This practice note begins by reviewing key definitions of BHC and FHC under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. § 1841 et seq. (BHC Act). This practice note also provides an overview of those aspects of the BHC Act that generally are the same for both classes of institutions. This practice note concludes by discussing those areas where FHCs and BHCs vary most; specifically, the scope of permissible nonbanking activities, investments, and related procedural requirements and regulatory limitations, including compliance with management, capital and Community Reinvestment Act (CRA) requirements.