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.

BREAKING DOWN '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.

RELATED TERMS
  1. Bank Reserve

    Bank reserves are the currency deposits which are not lent out ...
  2. Subsidiary Bank

    A type of foreign bank that is incorporated in the host country ...
  3. Regulation I

    A regulation set forth by the Federal Reserve. Regulation I stipulates ...
  4. State Bank

    A financial institution that has been chartered by a state to ...
  5. Permission Marketing

    Permission marketing refers to a form advertising where the intended ...
  6. Edge Act Corporation

    An Edge Act corporation is a subsidiary of a U.S. or foreign ...
Related Articles
  1. Personal Finance

    Retail Banking Vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking, also known as business banking, refers to the aspect of banking that deals with corporate customers.
  2. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  3. Personal Finance

    How Will Bank Regulation Affect British Banks?

    We look at the proposed changes to Britain's banking system, and see whether it will be able to stay competitive.
  4. Investing

    Introduction To The Chinese Banking System

    As China steps into a greater role in the global economic system, their banking system continues to evolve.
  5. Investing

    How Bank of America Holds 1/8 of All U.S. Deposits

    Bank of America isn't America's central bank, but given its size and spread, you could be forgiven this misapprehension.
  6. Investing

    Top 4 Companies Owned by JPMorgan (JPM)

    Read about JPMorgan Chase & Company's main operating subsidiaries, including its retail and investment banking operations and its global asset management firm.
  7. Tech

    What Are the Biggest Risks Associated With Banks Today?

    Evolving mechanisms and techniques of cybercrime have become the most severe risk associated with banks today.
RELATED FAQS
  1. What is the average profit margin for a company in the banking sector?

    Learn what the average profit margin is for companies in the banking sector, along with other evaluation metrics often used ... Read Answer >>
  2. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  3. What's the difference between investment banks and commercial banks?

    Understand the principal differences between investment banks and commercial banks, and the areas of banking services that ... Read Answer >>
  4. How does investment banking differ from commercial banking?

    Discover how investment banking differs from commercial banking, the responsibilities of each and how the two can be combined ... Read Answer >>
  5. What developed countries have the highest concentration in the banking sector?

    Learn about the developed countries that have the greatest concentration in the banking sector and the most important emerging ... Read Answer >>
  6. What are the main reasons an investor should consider an allocation to the banking ...

    Learn about investment opportunities in the commercial and investment banking industry. Find out why many investors choose ... Read Answer >>
Hot Definitions
  1. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
  2. Drawdown

    The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted ...
  3. Inverse Transaction

    A transaction that can cancel out a forward contract that has the same value date.
  4. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  5. Solvency

    The ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business, but a ...
  6. Dilution

    A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur ...
Trading Center