---
kind: "range"
citation: "12 C.F.R. §§ 225.85–225.89"
title: "12"
from: "225.85"
to: "225.89"
count: 5
url: "https://uscodex.org/cfr/12/225.85..225.89"
---

# §225.85. Is notice to or approval from the Board required prior to engaging in a financial activity?

- (a) **No prior approval required generally—**
  - (1) **In general.** A financial holding company and any subsidiary (other than a depository institution or subsidiary of a depository institution) of the financial holding company may engage in any activity listed in [§ 225.86](/cfr/12/225.86.md), or acquire shares or control of a company engaged exclusively in activities listed in [§ 225.86](/cfr/12/225.86.md), without providing prior notice to or obtaining prior approval from the Board unless required under [paragraph (c)](#c) of this section.
  - (2) **Acquisitions by a financial holding company of a company engaged in other permissible activities.** In addition to the activities listed in [§ 225.86](/cfr/12/225.86.md), a company acquired or to be acquired by a financial holding company under [paragraph (a)(1)](#a-1) of this section may engage in activities otherwise permissible for a financial holding company under this part in accordance with any applicable notice, approval, or other requirement.
  - (3) **Acquisition by a financial holding company of a company engaged in limited nonfinancial activities—**
    - (i) **Mixed acquisitions generally permitted.** A financial holding company may under this subpart acquire more than 5 percent of the outstanding shares of any class of voting securities or control of a company that is not engaged exclusively in activities that are financial in nature, incidental to a financial activity, or otherwise permissible for the financial holding company under section 4(c) of the BHC Act ([12 U.S.C. 1843(c)](/usc/12/1843.md?p=c)) if:
      - (A) The company to be acquired is substantially engaged in activities that are financial in nature, incidental to a financial activity, or otherwise permissible for the financial holding company under section 4(c) of the BHC Act ([12 U.S.C. 1843(c)](/usc/12/1843.md?p=c));
      - (B) The financial holding company complies with the notice requirements of [§ 225.87](/cfr/12/225.87.md), if applicable; and
      - (C) The company conforms, terminates, or divests, within 2 years of the date the financial holding company acquires shares or control of the company, all activities that are not financial in nature, incidental to a financial activity, or otherwise permissible for the financial holding company under [section 4(c)](/cfr/12/4.md?p=c) ([12 U.S.C. 1843(c)](/usc/12/1843.md?p=c))of the BHC Act.
    - (ii) **Definition of “substantially engaged.”—** Unless the Board determines otherwise, a company will be considered to be “substantially engaged” in activities permissible for a financial holding company for purposes of paragraph (a)(3)(A) of this section if at least 85 percent of the company's consolidated total annual gross revenues is derived from and at least 85 percent of the company's consolidated total assets is attributable to the conduct of activities that are financial in nature, incidental to a financial activity, or otherwise permissible for a financial holding company under section 4(c) of the BHC Act ([12 U.S.C. 1843(c)](/usc/12/1843.md?p=c)).
- (b) **Locations in which a financial holding company may conduct financial activities.** A financial holding company may conduct any activity listed in [§ 225.86](/cfr/12/225.86.md) at any location in the United States or at any location outside of the United States subject to the laws of the jurisdiction in which the activity is conducted.
- (c) **Circumstances under which prior notice to the Board is required—**
  - (1) **Acquisition of more than 5 percent of the shares of a savings association.** A financial holding company must obtain Board approval in accordance with section 4(j) of the BHC Act ([12 U.S.C. 1843(j)](/usc/12/1843.md?p=j)) and either [§ 225.14](/cfr/12/225.14.md) or [§ 225.24](/cfr/12/225.24.md), as appropriate, prior to acquiring control or more than 5 percent of the outstanding shares of any class of voting securities of a savings association or of a company that owns, operates, or controls a savings association.
  - (2) **Supervisory actions.** The Board may, if appropriate in the exercise of its supervisory or other authority, including under [§ 225.82(g)](/cfr/12/225.82.md?p=g) or [§ 225.83(d)](/cfr/12/225.83.md?p=d) or other relevant authority, require a financial holding company to provide notice to or obtain approval from the Board prior to engaging in any activity or acquiring shares or control of any company.

# §225.86. What activities are permissible for any financial holding company?


The following activities are financial in nature or incidental to a financial activity:

- (a) **Activities determined to be closely related to banking.**
  - (1) Any activity that the Board had determined by regulation prior to November 12, 1999, to be so closely related to banking as to be a proper incident thereto, subject to the terms and conditions contained in this part, unless modified by the Board. These activities are listed in [§ 225.28](/cfr/12/225.28.md).
  - (2) Any activity that the Board had determined by an order that was in effect on November 12, 1999, to be so closely related to banking as to be a proper incident thereto, subject to the terms and conditions contained in this part and those in the authorizing orders. These activities are:
    - (i) Providing administrative and other services to mutual funds (Societe Generale, 84 Federal Reserve Bulletin 680 (1998));
    - (ii) Owning shares of a securities exchange (J.P. Morgan & Co, Inc., and UBS AG, 86 Federal Reserve Bulletin 61 (2000));
    - (iii) Acting as a certification authority for digital signatures and authenticating the identity of persons conducting financial and nonfinancial transactions (Bayerische Hypo- und Vereinsbank AG, et al., 86 Federal Reserve Bulletin 56 (2000));
    - (iv) Providing employment histories to third parties for use in making credit decisions and to depository institutions and their affiliates for use in the ordinary course of business (Norwest Corporation, 81 Federal Reserve Bulletin 732 (1995));
    - (v) Check cashing and wire transmission services (Midland Bank, PLC, 76 Federal Reserve Bulletin 860 (1990) (check cashing); Norwest Corporation, 81 Federal Reserve Bulletin 1130 (1995) (money transmission));
    - (vi) In connection with offering banking services, providing notary public services, selling postage stamps and postage-paid envelopes, providing vehicle registration services, and selling public transportation tickets and tokens (Popular, Inc., 84 Federal Reserve Bulletin 481 (1998)); and
    - (vii) Real estate title abstracting (The First National Company, 81 Federal Reserve Bulletin 805 (1995)).
- (b) **Activities determined to be usual in connection with the transaction of banking abroad.** Any activity that the Board had determined by regulation in effect on November 11, 1999, to be usual in connection with the transaction of banking or other financial operations abroad (see [§ 211.5(d)](/cfr/12/211.5.md?p=d) of this chapter), subject to the terms and conditions in [part 211](/cfr/12/part211.md) and Board interpretations in effect on that date regarding the scope and conduct of the activity. In addition to the activities listed in paragraphs [(a)](#a) and [(c)](#c) of this section, these activities are:
  - (1) Providing management consulting services, including to any person with respect to nonfinancial matters, so long as the management consulting services are advisory and do not allow the financial holding company to control the person to which the services are provided;
  - (2) Operating a travel agency in connection with financial services offered by the financial holding company or others; and
  - (3) **Organizing, sponsoring, and managing a mutual fund, so long as—**
    - (i) The fund does not exercise managerial control over the entities in which the fund invests; and
    - (ii) The financial holding company reduces its ownership in the fund, if any, to less than 25 percent of the equity of the fund within one year of sponsoring the fund or such additional period as the Board permits.
- (c) **Activities permitted under section 4(k)(4) of the BHC Act—** ([12 U.S.C. 1843(k)(4)](/usc/12/1843.md?p=k-4)). Any activity defined to be financial in nature under sections 4(k)(4)(A) through (E), (H) and (I) of the BHC Act (12 U.S.C. [1843(k)(4)(A) through (E)](/usc/12/1843.md?p=k-4-A..k-4-E), [(H)](/usc/12/1843.md?p=k-4-H) and [(I)](/usc/12/1843.md?p=k-4-I)).
- (d) **Activities determined to be financial in nature or incidental to financial activities by the Board—**
  - (1) **Acting as a finder—** Acting as a finder in bringing together one or more buyers and sellers of any product or service for transactions that the parties themselves negotiate and consummate.
    - (i) **What is the scope of finder activities?** Acting as a finder includes providing any or all of the following services through any means—
      - (A) Identifying potential parties, making inquiries as to interest, introducing and referring potential parties to each other, and arranging contacts between and meetings of interested parties;
      - (B) Conveying between interested parties expressions of interest, bids, offers, orders and confirmations relating to a transaction; and
      - (C) Transmitting information concerning products and services to potential parties in connection with the activities described in paragraphs [(d)(1)(i)(A)](#d-1-i-A) and [(B)](#d-1-i-B) of this section.
    - (ii) **What are some examples of finder services?** The following are examples of the services that may be provided by a finder when done in accordance with paragraphs [(d)(1)(iii)](#d-1-iii) and [(iv)](#d-1-iv) of this section. These examples are not exclusive.
      - (A) Hosting an electronic marketplace on the financial holding company's Internet web site by providing hypertext or similar links to the web sites of third party buyers or sellers.
      - (B) **Hosting on the financial holding company's servers the Internet web site of—** (1) A buyer (or seller) that provides information concerning the buyer (or seller) and the products or services it seeks to buy (or sell) and allows sellers (or buyers) to submit expressions of interest, bids, offers, orders and confirmations relating to such products or services; or

        (2) A government or government agency that provides information concerning the services or benefits made available by the government or government agency, assists persons in completing applications to receive such services or benefits from the government or agency, and allows persons to transmit their applications for services or benefits to the government or agency.

      - (C) Operating an Internet web site that allows multiple buyers and sellers to exchange information concerning the products and services that they are willing to purchase or sell, locate potential counterparties for transactions, aggregate orders for goods or services with those made by other parties, and enter into transactions between themselves.
      - (D) **Operating a telephone call center that provides permissible finder services.**
    - (iii) **What limitations are applicable to a financial holding company acting as a finder?**
      - (A) A finder may act only as an intermediary between a buyer and a seller.
      - (B) A finder may not bind any buyer or seller to the terms of a specific transaction or negotiate the terms of a specific transaction on behalf of a buyer or seller, except that a finder may—

        (1) Arrange for buyers to receive preferred terms from sellers so long as the terms are not negotiated as part of any individual transaction, are provided generally to customers or broad categories of customers, and are made available by the seller (and not by the financial holding company); and

        (2) Establish rules of general applicability governing the use and operation of the finder service, including rules that—

        (i) Govern the submission of bids and offers by buyers and sellers that use the finder service and the circumstances under which the finder service will match bids and offers submitted by buyers and sellers; and

        (ii) Govern the manner in which buyers and sellers may bind themselves to the terms of a specific transaction.

      - (C) A finder may not—

        (1) Take title to or acquire or hold an ownership interest in any product or service offered or sold through the finder service;

        (2) Provide distribution services for physical products or services offered or sold through the finder service;

        (3) Own or operate any real or personal property that is used for the purpose of manufacturing, storing, transporting, or assembling physical products offered or sold by third parties; or

        (4) Own or operate any real or personal property that serves as a physical location for the physical purchase, sale or distribution of products or services offered or sold by third parties.

      - (D) A finder may not engage in any activity that would require the company to register or obtain a license as a real estate agent or broker under applicable law.
    - (iv) **What disclosures are required?** A finder must distinguish the products and services offered by the financial holding company from those offered by a third party through the finder service.
  - (2) [Reserved]
- (e) **Activities permitted under section 4(k)(5) of the Bank Holding Company Act (12 U.S.C. 1843(k)(5)).**
  - (1) The following types of activities are financial in nature or incidental to a financial activity when conducted pursuant to a determination by the Board under [paragraph (e)(2)](#e-2) of this section:
    - (i) Lending, exchanging, transferring, investing for others, or safeguarding financial assets other than money or securities;
    - (ii) Providing any device or other instrumentality for transferring money or other financial assets; and
    - (iii) **Arranging, effecting, or facilitating financial transactions for the account of third parties.**
  - (2) **Review of specific activities—**
    - (i) **Is a specific request required?** A financial holding company that wishes to engage on the basis of [paragraph (e)(1)](#e-1) of this section in an activity that is not otherwise permissible for a financial holding company must obtain a determination from the Board that the activity is permitted under [paragraph (e)(1)](#e-1).
    - (ii) **Consultation with the Secretary of the Treasury.** After receiving a request under this section, the Board will provide the Secretary of the Treasury with a copy of the request and consult with the Secretary in accordance with section 4(k)(2)(A) of the Bank Holding Company Act ([12 U.S.C. 1843(k)(2)(A)](/usc/12/1843.md?p=k-2-A)).
    - (iii) **Board action on requests.** After consultation with the Secretary, the Board will promptly make a written determination regarding whether the specific activity described in the request is included in an activity category listed in [paragraph (e)(1)](#e-1) of this section and is therefore either financial in nature or incidental to a financial activity.
  - (3) **What factors will the Board consider?** In evaluating a request made under this section, the Board will take into account the factors listed in section 4(k)(3) of the BHC Act ([12 U.S.C. 1843(k)(3)](/usc/12/1843.md?p=k-3)) that it must consider when determining whether an activity is financial in nature or incidental to a financial activity.
  - (4) **What information must the request contain?** Any request by a financial holding company under this section must be in writing and must:
    - (i) Identify and define the activity for which the determination is sought, specifically describing what the activity would involve and how the activity would be conducted; and
    - (ii) Provide information supporting the requested determination, including information regarding how the proposed activity falls into one of the categories listed in [paragraph (e)(1)](#e-1) of this section, and any other information required by the Board concerning the proposed activity.

# §225.87. Is notice to the Board required after engaging in a financial activity?

- (a) **Post-transaction notice generally required to engage in a financial activity.** A financial holding company that commences an activity or acquires shares of a company engaged in an activity listed in [§ 225.86](/cfr/12/225.86.md) must notify the appropriate Reserve Bank in writing within 30 calendar days after commencing the activity or consummating the acquisition by using the appropriate form.
- (b) **Cases in which notice to the Board is not required—**
  - (1) **Acquisitions that do not involve control of a company.** A notice under [paragraph (a)](#a) of this section is not required in connection with the acquisition of shares of a company if, following the acquisition, the financial holding company does not control the company.
  - (2) **No additional notice required to engage—** de novo in an activity for which a financial holding company already has provided notice. After a financial holding company provides the appropriate Reserve Bank with notice that the company is engaged in an activity listed in [§ 225.86](/cfr/12/225.86.md), a financial holding company may, unless otherwise notified by the Board, commence the activity de novo through any subsidiary that the financial holding company is authorized to control without providing additional notice under [paragraph (a)](#a) of this section.
  - (3) **Conduct of certain investment activities.** Unless required by [paragraph (b)(4)](#b-4) of this section, a financial holding company is not required to provide notice under [paragraph (a)](#a) of this section of any individual acquisition of shares of a company as part of the conduct by a financial holding company of securities underwriting, dealing, or market making activities as described in section 4(k)(4)(E) of the BHC Act ([12 U.S.C. 1843(k)(4)(E)](/usc/12/1843.md?p=k-4-E)), merchant banking activities conducted pursuant to section 4(k)(4)(H) of the BHC Act ([12 U.S.C. 1843(k)(4)(H)](/usc/12/1843.md?p=k-4-H)), or insurance company investment activities conducted pursuant to section 4(k)(4)(I) of the BHC Act ([12 U.S.C. 1843(k)(4)(I)](/usc/12/1843.md?p=k-4-I)), if the financial holding company previously has notified the Board under [paragraph (a)](#a) of this section that the company has commenced the relevant securities, merchant banking, or insurance company investment activities, as relevant.
  - (4) **Notice of large merchant banking or insurance company investments.** Notwithstanding paragraph [(b)(1)](#b-1) or [(b)(3)](#b-3) of this section, a financial holding company must provide notice under [paragraph (a)](#a) of the section if:
    - (i) As part of a merchant banking activity conducted under section 4(k)(4)(H) of the BHC Act ([12 U.S.C. 1843(k)(4)(H)](/usc/12/1843.md?p=k-4-H)), the financial holding company acquires more than 5 percent of the shares, assets, or ownership interests of any company at a total cost that exceeds the lesser of 5 percent of the financial holding company's Tier 1 capital or $200 million;
    - (ii) As part of an insurance company investment activity conducted under section 4(k)(4)(I) of the BHC Act ([12 U.S.C. 1843(k)(4)(I)](/usc/12/1843.md?p=k-4-I)), the financial holding company acquires more than 5 percent of the shares, assets, or ownership interests of any company at a total cost that exceeds the lesser of 5 percent of the financial holding company's Tier 1 capital or $200 million; or
    - (iii) The Board in the exercise of its supervisory authority notifies the financial holding company that a notice is necessary.
    - (iv) For purposes of this [paragraph (b)(4)](#b-4), a financial holding company that is a qualifying community banking organization (as defined in [§ 217.12](/cfr/12/217.12.md) of this chapter) that is subject to the community bank leverage ratio framework (as defined in [§ 217.12](/cfr/12/217.12.md) of this chapter) calculates its Tier 1 capital (as defined in [§ 217.2](/cfr/12/217.2.md) of this chapter) in accordance with [§ 217.12(b)](/cfr/12/217.12.md?p=b) of this chapter.

# §225.88. How to request the Board to determine that an activity is financial in nature or incidental to a financial activity?

- (a) **Requests regarding activities that may be financial in nature or incidental to a financial activity.** A financial holding company or other interested party may request a determination from the Board that an activity not listed in [§ 225.86](/cfr/12/225.86.md) is financial in nature or incidental to a financial activity.
- (b) **Required information.** A request submitted under this section must be in writing and must:
  - (1) Identify and define the activity for which the determination is sought, specifically describing what the activity would involve and how the activity would be conducted;
  - (2) Explain in detail why the activity should be considered financial in nature or incidental to a financial activity; and
  - (3) Provide information supporting the requested determination and any other information required by the Board concerning the proposed activity.
- (c) **Board procedures for reviewing requests—**
  - (1) **Consultation with the Secretary of the Treasury.** Upon receipt of the request, the Board will provide the Secretary of the Treasury a copy of the request and consult with the Secretary in accordance with section 4(k)(2)(A) of the BHC Act ([12 U.S.C. 1843(k)(2)(A)](/usc/12/1843.md?p=k-2-A)).
  - (2) **Public notice.** The Board may, as appropriate and after consultation with the Secretary, publish a description of the proposal in the Federal Register with a request for public comment.
- (d) **Board action.** The Board will endeavor to make a decision on any request filed under [paragraph (a)](#a) of this section within 60 calendar days following the completion of both the consultative process described in [paragraph (c)(1)](#c-1) of this section and the public comment period, if any.
- (e) **Advisory opinions regarding scope of financial activities—**
  - (1) **Written request.** A financial holding company or other interested party may request an advisory opinion from the Board about whether a specific proposed activity falls within the scope of an activity listed in [§ 225.86](/cfr/12/225.86.md) as financial in nature or incidental to a financial activity. The request must be submitted in writing and must contain:
    - (i) A detailed description of the particular activity in which the company proposes to engage or the product or service the company proposes to provide;
    - (ii) An explanation supporting an interpretation regarding the scope of the permissible financial activity; and
    - (iii) **Any additional information requested by the Board regarding the activity.**
  - (2) **Board response.** The Board will provide an advisory opinion within 45 calendar days of receiving a complete written request under [paragraph (e)(1)](#e-1) of this section.

# §225.89. How to request approval to engage in an activity that is complementary to a financial activity?

- (a) **Prior Board approval is required.** A financial holding company that seeks to engage in or acquire more than 5 percent of the outstanding shares of any class of voting securities of a company engaged in an activity that the financial holding company believes is complementary to a financial activity must obtain prior approval from the Board in accordance with section 4(j) of the BHC Act ([12 U.S.C. 1843(j)](/usc/12/1843.md?p=j)). The notice must be in writing and must:
  - (1) Identify and define the proposed complementary activity, specifically describing what the activity would involve and how the activity would be conducted;
  - (2) Identify the financial activity for which the proposed activity would be complementary and provide detailed information sufficient to support a finding that the proposed activity should be considered complementary to the identified financial activity;
  - (3) Describe the scope and relative size of the proposed activity, as measured by the percentage of the projected financial holding company revenues expected to be derived from and assets associated with conducting the activity;
  - (4) Discuss the risks that conducting the activity may reasonably be expected to pose to the safety and soundness of the subsidiary depository institutions of the financial holding company and to the financial system generally;
  - (5) Describe the potential adverse effects, including potential conflicts of interest, decreased or unfair competition, or other risks, that conducting the activity could raise, and explain the measures the financial holding company proposes to take to address those potential effects;
  - (6) Describe the potential benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that the proposal reasonably can be expected to produce; and
  - (7) Provide any information about the financial and managerial resources of the financial holding company and any other information requested by the Board.
- (b) **Factors for consideration by the Board.** In evaluating a notice to engage in a complementary activity, the Board must consider whether:
  - (1) The proposed activity is complementary to a financial activity;
  - (2) The proposed activity would pose a substantial risk to the safety or soundness of depository institutions or the financial system generally; and
  - (3) The proposal could be expected to produce benefits to the public that outweigh possible adverse effects.
- (c) **Board action.** The Board will inform the financial holding company in writing of the Board's determination regarding the proposed activity within the period described in section 4(j) of the BHC Act ([12 U.S.C. 1843(j)](/usc/12/1843.md?p=j)).