Reg O - Bancshares as Collateral

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Question:

I've been told that when 100% of a bank stock is issued by a holding company and it is not publicly traded, the reporting requirements under section 215.10 of Reg O do not apply should an executive officer or director pledge the bancshares as collateral for a loan at another financial institution. I cannot substantiate this claim. Have you ever heard of this?

Answer:

You are correct, the reporting of such loans are not required by Reg O. However, they may be reportable under Reg Y - see 12 CFR 225.4(e):

(e) Reporting requirement for credit secured by certain bank holding company stock. Each executive officer or director of a bank holding company the shares of which are not publicly traded shall report annually to the board of directors of the bank holding company the outstanding amount of any credit that was extended to the executive officer or director and that is secured by shares of the bank holding company. For purposes of this paragraph, the terms "executive officer" and ` "director" shall have the meaning given in Sec. 215.2 of Regulation O (12 CFR 215.2).

First published on BankersOnline.com 9/03/07