Permissible Non-Bank Activities

Definition of 'Permissible Non-Bank Activities'


Financial business that can be conducted by bank holding companies because they are deemed close enough to banking to be permissible by the Federal Reserve. Bank holding companies can either engage in the businesses directly or through subsidiary firms. Common examples are ownership or operation in the finance and mortgage banking sectors.

The Federal Reserve looks at whether such practices are in the public's interest before making decisions about what lines of business banks can conduct.

Investopedia explains 'Permissible Non-Bank Activities'


Most of the large multi-national banks operating in the U.S. and abroad have expanded into financial management, mortgage banking and investment banking as a way of diversifying cash flows and offering more services to their clients. Economies of scale also become a large factor in defining the expansion and diversification strategies of companies like Citigroup, JP Morgan Chase and Bank of America.

The Federal Reserve continues to monitor large financial holding companies to ensure that proper competition still exists, and that no conflicts of interest arise within different operational units.



comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center