Financial Holding Company (FHC)

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DEFINITION of 'Financial Holding Company (FHC)'

A financial institution engaged in nonbanking activities that offers customers a wide range of financial services, including the opporunity to purchase insurance products and invest in securities. Financial Holding Companies (FHCs) were created by changes in legislation brought about by the Gramm-Leach-Bliley Act of 1999 that first allowed bank holding companies to affiliate with securities firms and insurance companies.

BREAKING DOWN 'Financial Holding Company (FHC)'

The Federal Reserve Board is responsible for supervising FHCs. Any non-bank company that earns 85% of its gross income from financial services may elect to become an FHC but must divest itself of all nonfinancial businesses within 10 years.

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