PART 251—CONCENTRATION LIMIT (REGULATION XX) Authority: 12 U.S.C. 1818, 1844(b), 1852, 3101 et seq Source: 79 FR 68104, Nov. 14, 2014, unless otherwise noted. § 251.1 Authority, purpose, and other authorities. (a) Authority. Federal Register (b) Purpose. (c) Other authorities. § 251.2 Definitions. Unless otherwise specified, for the purposes of this part: (a) Applicable accounting standards (b) Applicable risk-based capital rules (c) Appropriate Federal banking agency (d) Control (e) Council (f) Covered acquisition (1) In the ordinary course of collecting a debt previously contracted in good faith if the acquired securities or assets are divested within the time period permitted by the appropriate Federal banking agency (including extensions) or, if the financial company does not have an appropriate Federal banking agency, five years; (2) In a fiduciary capacity in good faith under applicable fiduciary law if the acquired securities or assets are held in the ordinary course of business and not acquired for the benefit of the company or its shareholders, employees, or subsidiaries; (3) In connection with bona fide (4) Solely in connection with a corporate reorganization and the companies involved are lawfully controlled and operated by the financial company both before and following the reorganization; and (5) That is, or will be, an issuer of asset back securities (as defined in Section 3(a) of the Securities and Exchange Act of 1934) so long as the financial company that retains an ownership interest in the company complies with the credit risk retention requirements in the regulations issued pursuant to section 15G of the Securities and Exchange Act of 1934. (g) Financial company (1) An insured depository institution; (2) A bank holding company; (3) A savings and loan holding company; (4) A company that controls an insured depository institution; (5) A nonbank financial company supervised by the Board, and (6) A foreign bank or company that is treated as a bank holding company for purposes of the Bank Holding Company Act. (h) Foreign financial company (i) Insured depository institution (j) Nonbank financial company supervised by the Board (k) State (l) U.S. agency (m) Total regulatory capital (n) Total risk-based capital ratio (o) Total risk-weighted assets (p) U.S. branch (q) U.S. company (r) U.S. financial company (s) U.S. subsidiary § 251.3 Concentration limit. (a) In general. (2) Financial sector liabilities. (ii) For the period beginning July 1, 2015, and ending June 30, 2016, financial sector liabilities are equal to the year-end financial sector liabilities figure as of December 31, 2014. (iii) The year-end financial sector liabilities figure equals the sum of the total consolidated liabilities of all top-tier U.S. financial companies (as calculated under paragraph (b) of this section) and the U.S. liabilities of all top-tier foreign financial companies (as calculated under paragraph (c) of this section) as of December 31 of that year. (iv) On an annual basis and no later than July 1 of any calendar year, the Board will calculate and publish the financial sector liabilities for the preceding calendar year and the average of the financial sector liabilities for the preceding two calendar years. (b) Calculating total consolidated liabilities. (1) Covered acquisition by a U.S. company. (2) Covered acquisition by a foreign company of another foreign company. (3 ) Covered acquisition by a foreign company of a U.S. company. (c) Liabilities of a U.S. company U.S. company subject to applicable risk-based capital rules. (i) Total risk-weighted assets of the company; plus (ii) The amount of assets that are deducted from the company's regulatory capital elements under the applicable risk-based capital rules, times a multiplier that is equal to the inverse of the company's total risk-based capital ratio minus one; minus (iii) Total regulatory capital of the company. (2) U.S. company not subject to applicable risk-based capital rules. (3) Qualifying community banking organizations. (i) Average total consolidated assets (as used in § 217.12 of this chapter) of the company as last reported on the qualifying community banking organization's applicable regulatory filing with the qualifying community banking organization's appropriate Federal banking agency; minus (ii) The company's tier 1 capital (as defined in § 217.2 of this chapter and calculated in accordance with § 217.12(b) of this chapter). (d) Liabilities of a foreign company Foreign banking organization. (i) The total consolidated assets of each U.S. branch or U.S. agency of the foreign banking organization, calculated in accordance with applicable accounting standards; plus (ii) The total consolidated liabilities of each top-tier U.S. subsidiary that is subject to applicable risk-based capital rules (or reports information to the Board regarding its capital under risk-based capital rules applicable to bank holding companies), calculated as: (A) Total consolidated risk-weighted assets of the subsidiary; plus (B) The amount of assets that are deducted from the subsidiary's regulatory capital elements under the applicable risk-based capital rules, times a multiplier that is equal to the inverse of the subsidiary's total risk-based capital ratio minus one; minus (C) Total consolidated regulatory capital of the subsidiary; plus (iii) The total consolidated assets of each top-tier U.S. subsidiary that is not subject to applicable risk-based capital rules and does not report information regarding its capital under risk-based capital rules applicable to bank holding companies, calculated in accordance with applicable accounting standards. (2) Foreign financial company that is not a foreign banking organization. (i) The total consolidated liabilities of each top-tier U.S. subsidiary that is subject to applicable risk-based capital rules (or reports information to the Board regarding its capital under risk-based capital rules applicable to bank holding companies), calculated as: (A) Total consolidated risk-weighted assets of the subsidiary; plus (B) The amount of assets that are deducted from the subsidiary's regulatory capital elements under the applicable risk-based capital rules, times a multiplier that is equal to the inverse of the company's total risk-based capital ratio minus one; minus (C) Total regulatory capital of the subsidiary; plus (ii) The total consolidated liabilities of each top-tier U.S. subsidiary that is not subject to applicable risk-based capital rules, calculated in accordance with applicable accounting standards. (3) Intercompany balances and transactions Foreign banking organization. (ii) Foreign financial company. (e) Applicable accounting standard. [79 FR 68104, Nov. 14, 2014, as amended at 84 FR 61802, Nov. 13, 2019] § 251.4 Exceptions to the concentration limit. (a) General. (1) A covered acquisition of an insured depository institution that is in default or in danger of default (as determined by the appropriate Federal banking agency of the insured depository institution, in consultation with the Board); (2) A covered acquisition with respect to which assistance is provided by the Federal Deposit Insurance Corporation under section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or (3) A covered acquisition that would result in an increase in the liabilities of the financial company that does not exceed $2 billion, when aggregated with all other acquisitions by the financial company made pursuant to this paragraph (a)(3) during the twelve months preceding the projected date of the acquisition. (b) Prior written consent General. (2) Contents of request. (A) A description of the covered acquisition; (B) The projected increase in the company's liabilities resulting from the acquisition; (C) If the request is made pursuant to paragraph (a)(3) of this section, the projected aggregate increase in the company's liabilities from acquisitions during the twelve months preceding the projected date of the acquisition; and (D) Any additional information requested by the Board. (ii) A financial company may satisfy the requirements of this paragraph (b) if: (A) The proposed transaction otherwise requires approval by, or prior notice to, the Board under the Change in Bank Control Act, Bank Holding Company Act, Home Owners' Loan Act, International Banking Act, or any other applicable statute, and any regulation thereunder; and (B) The financial company includes the information required in paragraph (b)(2) of this section in the notice or request for prior approval described in paragraph (b)(2)(ii)(A) of this section. (3) Procedures for providing written consent. (ii) In acting on a request under this paragraph (b), the Board will consider whether the consummation of the covered acquisition could pose a threat to financial stability. (c) General consent. § 251.5 No evasion. A financial company may not organize or operate its business or structure any acquisition of or merger or consolidation with another company in such a manner that results in evasion of the concentration limit established by section 14 of the Bank Holding Company Act or this part. § 251.6 Reporting requirements. By March 31 of each year: (a) A U.S. financial company (other than a U.S. financial company that is required to file the Bank Consolidated Reports of Condition and Income (Call Report), the Consolidated Financial Statements for Holding Companies (FR Y-9C), the Parent Company Only Financial Statements for Small Holding Companies (FR Y-9SP), or the Parent Company Only Financial Statements for Large Holding Companies (FR Y-9LP), or is required to report consolidated total liabilities on the Quarterly Savings and Loan Holding Company Report (FR 2320)) must report to the Board its consolidated liabilities as of the previous calendar year-end in the manner and form prescribed by the Board; and (b) A foreign financial company (other than a foreign financial company that is required to file a FR Y-7) must report to the Board its U.S. liabilities as of the previous calendar year-end in the manner and form prescribed by the Board.