Proposal to expand the definition of a Small Bank Holding Company.The Federal Reserve Board proposed on September September: see month. 7, 2005, expanding the definition of a small bank holding company (BHC BHC benzene hexachloride. BHC, ?-BHC see benzene hexachloride. ) under the Board's Small Bank Holding Company Policy and the Board's risk-based and leverage capital guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. for bank holding companies. The policy statement facilitates the transfer of ownership of small community banks by permitting debt levels at small BHCs that are higher than what would be permitted for larger BHCs. Because small BHCs may, consistent with the policy statement, operate at a level of leverage that generally is inconsistent Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. with the capital guidelines, the capital guidelines provide an exemption for small BHCs. The policy statement and the capital guidelines define a small BHC as one with consolidated assets of less than $150 million. However, a small BHC with consolidated assets of less than $150 million can be ineligible in·el·i·gi·ble adj. 1. Disqualified by law, rule, or provision: ineligible to run for office; ineligible for health benefits. 2. for treatment under the policy statement if it meets certain qualitative criteria. The Board is proposing to raise the small BHC asset-size threshold from $150 million to $500 million and to amend the related qualitative criteria for determining eligibility as a small BHC for the purposes of the policy statement and the capital guidelines. The proposed amendments to the threshold and the qualitative criteria are designed to reflect changes in the industry since the initial issuance of the policy statement in 1980. The Board is also proposing changes to the policy statement that would clarify the treatment of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". associated with issuances of trust preferred securities. The proposal indicates that such subordinated debt would be considered debt for most purposes under the policy statement, subject to a transition period. In the near term, the Board anticipates issuing a separate request for public comment on a proposal that would make related changes in regulatory financial reporting requirements. Under that proposal, qualifying small BHCs would only be required to file parent-only financial data on a semiannual Semiannual An event that occurs twice in a calendar year. Notes: A bond with semiannual coupons would issue payment once every six months. See also: Annual, Bond, Coupon Bond basis (FR Y-9SP). |
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