12 C.F.R. § 223.72

Current through September 30, 2024

Section 223.72 - Transactions with affiliates

(a)Scope.

(1) This subpart implements section 11(a) of the Home Owners' Loan Act (12 U.S.C. 1468(a) ) . Section 11(a) applies sections 23A and 23B of the FRA (12 U.S.C. 371c and 371c 1 ) to every savings association in the same manner and to the same extent as if the association were a member bank; prohibits certain types of transactions with affiliates; and authorizes the Board to impose additional restrictions on a savings association's transactions with affiliates.

(2) For the purposes of this subpart, "savings association" is defined at section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813 ), and also includes any savings bank or any cooperative bank that is a savings association under 12 U.S.C. 1467a(l) . A non-affiliate subsidiary of a savings association is treated as part of the savings association. For purposes of this subpart, a "non-affiliate subsidiary" is a subsidiary of a savings association other than a subsidiary described at 12 CFR 223.2(b)(1)(i), and (b)(1)(iii) through (v) .

(b)Sections 23A and 23B of the FRA. A savings association must comply with sections 23A and 23B of the Federal Reserve Act and this part as if it were a member bank, except as described in the following chart.

Provision of Regulation W	Application
(1) 12 CFR 223.2(a)(8) -"Affiliate" includes a financial subsidiary	Does not apply. Savings association subsidiaries do not meet the statutory definition of financial subsidiary.
(2) 12 CFR 223.2(a)(12) -Determination that "affiliate" includes other types of companies	Read to include the following statement: "Affiliate also includes any company that the Board determines, by order or regulation, to present a risk to the safety and soundness of the savings association."
(3) 12 CFR 223.2(b)(1)(ii) -"Affiliate" includes a subsidiary that is a financial subsidiary	Does not apply. Savings association subsidiaries do not meet the statutory definition of financial subsidiary.
(4) 12 CFR 223.3(d) -Definition of "capital stock and surplus."	"Capital stock and surplus" for a savings association has the same meaning as under the regulatory capital requirements applicable to that savings association.
(5) 12 CFR 223.3(h)(1) -Section 23A covered transactions include an extension of credit to the affiliate	Read to incorporate paragraph (c)(1) of this section, which prohibits loans or extensions of credit to an affiliate, unless the affiliate is engaged only in the activities described at 12 U.S.C. 1467a(c)(2)(F)(i) , as defined in Regulation LL at 12 CFR 238.54 .
(6) 12 CFR 223.3(h)(2) -Section 23A covered transactions include a purchase of or investment in securities issued by an affiliate	Read to incorporate paragraph (c)(2) of this section, which prohibits purchases and investments in securities issued by an affiliate, other than with respect to shares of a subsidiary.
(7) 12 CFR 223.3(k) -Definition of "depository institution."	Read to include the following statement: "For the purposes of this definition, a non-affiliate subsidiary of a savings association is treated as part of the depository institution."
(8) 12 CFR 223.3(p) -Definition of "financial subsidiary."	Does not apply. Savings association subsidiaries do not meet the statutory definition of financial subsidiary.
(9) 12 CFR 223.3(w) -Definition of "member bank."	Read to include the following statement: "Member bank also includes a savings association. For purposes of this definition, a non-affiliate subsidiary of a savings association is treated as part of the savings association."
(10) 12 CFR 223.3(aa) -Definition of "operating subsidiary."	Does not apply.
(11) 12 CFR 223.31 -Application of section 23A to an acquisition of an affiliate that becomes an operating subsidiary	Read to refer to "a non-affiliate subsidiary" instead of "operating subsidiary."
(12) 12 CFR 223.32 -Rules that apply to financial subsidiaries of a bank	Does not apply. Savings association subsidiaries do not meet the statutory definition of financial subsidiary.
(13) 12 CFR 223.42(f)(2) -Exemption for purchasing certain marketable securities	Read to refer to "Thrift Financial Report" instead of "Call Report." References to "state member bank" are unchanged.
(14) 12 CFR 223.42(g)(2) -Exemption for purchasing municipal securities	Read to refer to "Thrift Financial Report" instead of "Call Report." References to "state member bank" are unchanged.
(15) 12 CFR 223.61 -Application of sections 23A and 23B to U.S. branches and agencies of foreign banks	Does not apply to savings associations or their subsidiaries.

(c)Additional prohibitions and restrictions. A savings association must comply with the additional prohibitions and restrictions in this paragraph (c). Except as described in paragraph (b) of this section, the definitions in this part apply to these additional prohibitions and restrictions.

(1)Loans and extensions of credit.

(i) A savings association may not make a loan or other extension of credit to an affiliate, unless the affiliate is solely engaged in the activities described at 12 U.S.C. 1467a(c)(2)(F)(i) , as defined in § 238.54 of Regulation LL (12 CFR 238.54 ) . A loan or extension of credit to a third party is not prohibited merely because proceeds of the transaction are used for the benefit of, or are transferred to, an affiliate.

(ii) If the Board determines that a particular transaction is, in substance, a loan or extension of credit to an affiliate that is engaged in activities other than those described at 12 U.S.C. 1467a(c)(2)(F)(i) , as defined in § 238.54 of Regulation LL (12 CFR 238.54 ), or the Board has other supervisory concerns concerning the transaction, the Board may inform the savings association that the transaction is prohibited under this paragraph (c)(1), and require the savings association to divest the loan, unwind the transaction, or take other appropriate action.

(2)Purchases or investments in securities. A savings association may not purchase or invest in securities issued by any affiliate other than with respect to shares of a subsidiary. For the purposes of this paragraph (c)(2), subsidiary includes a bank and a savings association.

12 C.F.R. §223.72

76 FR 56531, Sept. 13, 2011