One-Bank Holding Company
Categories: Banking
Holding companies do one thing: hold things. Maybe assets, subsidiary companies...or even voting rights and control over a bank. In order for a holding company to be considered a one-bank holding company, it must hold at least 25% of stock with voting rights of a commercial bank.
One-bank holding companies hold quite a bit of power over the bank they’re invested in with a quarter of the voting rights. They have leverage over who gets to be on the bank’s board of directors, and what decisions the bank ultimately makes in governing itself. But don’t worry...in the U.S., the Federal Reserve keeps an eye on one-bank holding companies to make sure they’re playing by the rules.
One-bank holding companies are not typically hostile...in fact, commercial banks welcomed them. In order for commercial banks to make money via lending and other financial services, they need money to be able to lend. Sometimes, relying on bank deposits is not enough to get up to speed. One-bank holding companies buy up a bunch of stock from the bank, giving the bank a substantial cash infusion, which they can then loan out...and everybody’s happy as pie.