what is an affiliate under regulation w

What are considered affiliates based on Regulation W?

Any company that controls the member bank; (2) Companies under common control by a parent company. Any company, including any subsidiary of the member bank, that is controlled by a company that controls the member bank; (3) Companies under other common control.

What is a covered transaction under Reg W and the bank affiliate transaction policy?

Covered transactions include loans and other extensions of credit to an affiliate, investments in the securities of an affiliate, purchases of assets from an affiliate, and certain other transactions that expose the bank to the risks of its affiliates.

What is considered a bank affiliate?

Bank Affiliate means any office or branch of the Bank and any other entity that directly, or indirectly through one or more intermediaries, controls the Bank or that is controlled by or is under common control with the Bank.

What is prohibited under Regulation W?

The quantitative limits of Regulation W only prohibit a member bank from engaging in a new covered transaction if the bank would be in excess of the 10 or 20 percent threshold after consummation of the new transaction.

What is an affiliate transaction?

Affiliated Transaction means any proposed merger or consolidation with, purchase of an equity interest in, or purchase of assets other than in the ordinary course of business from an Affiliate.

What is a covered affiliate?

Covered Affiliate means any Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by the Borrower.

What is the difference between an affiliate and a subsidiary?

Key Takeaways. A subsidiary is a company whose parent company is a majority shareholder that owns more than 50% of all the subsidiary company's shares. An affiliate is used to describe a company with a parent company that possesses 20 to 50% ownership of the affiliate.

Are affiliates considered employees?

Affiliate Employee means any person employed by an Affiliate. Affiliate Employee means any Employee who is an officer or director of the Company.

Who does regulation W apply?

The regulation applies to banks that are members of the Fed, insured state non-member banks, and insured savings associations. Regulation W was introduced to consolidate several decades of interpretations and rulemaking under Sections 23A and 23B of the Federal Reserve Act.

What are two types of regulation W asset Purchase prohibitions?

12 CFR § 223.53 - What asset purchases are prohibited by section 23B?(a) Fiduciary purchases of assets from an affiliate. ... (1) Under the instrument creating the fiduciary relationship;(2) By court order; or.(3) By law of the jurisdiction governing the fiduciary relationship.More items...

Which transactions and services have Reg W applicability?

It regulates Covered Transactions, such as the extension of credit to an affiliate, investment in securities issued by an affiliate, asset purchases from an affiliate, issuance of a guarantee on behalf of an affiliate, and acceptance of securities issued by an affiliate as collateral for credit.

Is a bank subsidiary an affiliate?

Therefore, a subsidiary controlled by a non- member bank, whether wholly owned or not, is considered an “affiliate” of the bank2 for purposes of the FDI Act.

What is a Reg W transaction?

What Is Regulation W? Regulation W is a U.S. Federal Reserve System (FRS) regulation that limits certain transactions between depository institutions, such as banks and their affiliates. In particular, it sets quantitative limits on covered transactions and requires collateral for certain transactions.

Which transactions and services have Reg W applicability?

It regulates Covered Transactions, such as the extension of credit to an affiliate, investment in securities issued by an affiliate, asset purchases from an affiliate, issuance of a guarantee on behalf of an affiliate, and acceptance of securities issued by an affiliate as collateral for credit.

What is a 23A covered transaction?

Section 23A requires all covered transactions between a bank and its affiliate to be on terms and conditions consistent with safe and sound banking practices (Safety and Soundness Requirement ), subject to certain exemptions discussed below in Special Rules and Exemptions under Regulation W, and prohibits a bank from ...

Who does Reg W protect?

2 As background, Regulation W (along with Sections 23A and 23B) limits the risks to a bank from transactions between the bank and its affiliates and limits the ability of a bank to transfer to its affiliates the subsidy arising from the bank's access to the federal safety net (i.e., lower-cost insured deposits, the ...