Regulation Y Law and Legal Definition

Regulation Y is a federal reserve regulation that governs banking and nonbanking activities of bank holding companies. Regulation Y determines the divestiture of impermissible nonbank activities. The regulation lays down:

  • the procedures for forming a bank holding company;
  • the procedures to be followed by bank holding companies acquiring voting shares in bank or nonbank companies; and
  • nonbank activities related to banking permissible for bank holding companies.

Moreover Regulation Y lays down bank holding company transactions that require federal reserve approval. Transactions requiring federal sanction are:

  • the acquisition or merger with another bank holding company;
  • directly or indirectly engaging in non banking activity;
  • individual or group acquisition of a state member bank or bank holding company; and
  • appointment of a new senior officer or director by a troubled bank holding company or state member bank