DEFINITION of 'One-Bank Holding Company'

A one-bank holding company is a corporation that holds at least a quarter of the voting stock of a commercial bank. One-bank holding companies led to the creation of leveraged bank holding companies. These entities are under the supervision of the United States Federal Reserve (or, the Fed).

BREAKING DOWN 'One-Bank Holding Company'

One-bank holding companies own 25% or more of a bank’s voting stock. Voting shares allow a stockholder the right to vote on matters of corporate policy, as well as who will compose the board of directors. (For companies, voting shares and common shares are often synonymous, while other classes of shares, such as preferred stock, sometimes do not allow for voting rights.)

One-bank holding companies began to appear in the late 1960s. The leveraged entities that subsequently emerged out of them helped free up many commercial banks from their dependence on customer deposits for making loans.

Bank holding companies were allowed to issue commercial paper in capital markets. Commercial paper is usually a means for a corporation to obtain capital quickly to finance its accounts receivable, inventories, and meet its short-term liabilities. Commercial paper is a short-term debt instrument, rarely maturing after 270 days. Instead of bearing interest in the traditional sense, commercial paper is usually issued at a discount from face value.

One-Bank Holding Companies and Additional Holding Company Examples

Holding companies exist outside of the realm of banks. For example, some corporations have been formed simply to hold assets or several subsidiaries (not produce goods or services). While holding companies cannot run day-to-day operations, they are able to exercise control over management and company policies. More specifically, they can hire and fire managers and evaluate the performance of their subsidiaries’ businesses.

Holding company assets can include limited liability companies or partnerships, real estate, patent trademarks, stocks, bonds and more. They are partially protected from financial losses and can structure themselves to spread tax, financial and legal liabilities among different subsidiaries to reduce risk.

Perhaps the most famous holding company is Berkshire Hathaway. Run by famed investor and entrepreneur Warren Buffet, Berkshire Hathaway is a holding company for numerous businesses, including (as of 2017) GEICO, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, and Helzberg Diamonds, among others. In addition, Berkshire Hathaway has a 38.6% stake in Pilot Flying, a 26.7% stake in the Kraft Heinz Company, a ~17% minority holding in American Express, and more.

  1. Statutory Voting

    Statutory voting is a corporate voting procedure where each shareholder ...
  2. Commercial Bank

    A commercial bank is a type of financial institution that accepts ...
  3. Short-Term Paper

    Short-term papers are financial instruments that typically have ...
  4. Commercial Account

    A commercial account is any type of financial account, which ...
  5. Subsidiary

    A subsidiary is an independent company that is more than 50% ...
  6. Commercial

    Commercial is a term relating to commerce or business. In the ...
Related Articles
  1. Taxes

    What's a Holding Company?

    A holding company is a corporation that owns enough voting stock in another company to control its management and policies.
  2. Investing

    A Look At Berkshire Hathaway's Many Components

    Berkshire Hathaway has 59 wholly owned subsidiaries and owns big stakes in several huge companies. Just how do those pieces fit together?
  3. Investing

    6 Wholly Owned Subsidiaries of Berkshire Hathaway (BRK.A, BRK.B)

    A look at some of the more than 50 privately held companies completely owned by Berkshire Hathaway.
  4. Investing

    Always Bet On Berkshire Hathaway (And Here's Why)

    With its share price at an all-time high amid talk of a stock market correction, why would anyone buy Berkshire Hathaway shares?
  5. Managing Wealth

    How Warren Buffett made Berkshire Hathaway

    It would be easier to list the industries in which Berkshire Hathaway Inc. doesn’t turn a profit.
  6. Investing

    Is Berkshire Hathaway Stock Undervalued? (BRK-A)

    Find out why Berkshire Hathaway stock may be undervalued when the company has an overall growth business, something that should support a premium valuation.
  7. Investing

    Berkshire Hathaway Stock: Capital Structure Analysis (BRK.A)

    Review the capital structure of Berkshire Hathaway, and understand how equity and debt capitalization and enterprise value may interact with each other.
  8. Investing

    Berkshire Hathaway Stock Prices

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  9. Investing

    What Will Become of Berkshire Hathaway Beyond Buffett?

    Warren Buffett, who has become almost synonymous with the term “investor,” remains robust, but at 83 is clearly somewhere in the fourth quarter of the game. What does that mean for Berkshire ...
  10. Insights

    Top 4 Institutional Shareholders of Berkshire Hathaway (BRK.A, BRK.B)

    Take a look at which institutions hold the largest stakes of Berkshire Hathaway.
  1. Do Shareholders Get a Say in a Firm's Operation?

    Stock ownership often provides a vote on board membership and other issues put out for shareholder approval. Read Answer >>
  2. Why would a company have multiple share classes, and what are super voting shares?

    Before investing in a company with multiple share classes, be sure to learn the difference between them. Read Answer >>
  3. What is the difference between Class A shares and other common shares of company's ...

    Discover how a company can break down its common stock into multiple classes and how these classes differ from one another ... Read Answer >>
  4. What are the types of share capital?

    Companies obtain share capital by selling ownership shares to the public. The two types of share capital are common stock and preferred ... Read Answer >>
Trading Center