Frequently Asked Questions about Section 163(b) of the Dodd-Frank Act
Staff of the Board of Governors of the Federal Reserve System has developed the following frequently asked questions (FAQs) and answers related to section 163(b) of the Dodd-Frank Act (section 163(b)). Except as noted below, these FAQs are staff interpretations and have not been approved by the Board of Governors. Staff may supplement or revise these FAQs as necessary or appropriate in the future. Any questions regarding these FAQs, or requests for modification, rescission, or waiver, should be submitted through the Board's Contact Us form.
Section 163(b) of the Dodd-Frank Act
Q1: What is section 163(b) of the Dodd-Frank Act?
Section 163(b) of the Dodd-Frank Act
Q1: What is section 163(b) of the Dodd-Frank Act?
A1: Section 163(b) requires large bank holding companies (BHCs) and nonbank financial companies designated by the Financial Stability Oversight Council (FSOC) to provide prior notice to the Board before certain acquisitions involving nonbank companies. Section 163(b) states that a BHC with total consolidated assets of $250 billion or more, or a nonbank financial company designated by FSOC for supervision by the Board, must provide prior notice to the Board before acquiring direct or indirect ownership or control of any voting shares of any company (other than an insured depository institution) that is engaged in activities described in section 4(k) of the Bank Holding Company Act of 1956 (BHC Act) having total consolidated assets of $10 billion or more. 12 U.S.C. § 5363(b)(1). By statute, any BHC, regardless of asset size, that has been identified as a global systemically important BHC under 12 CFR 217.402 is considered to be a BHC with total consolidated assets of $250 billion or more for purposes of section 163(b). 12 U.S.C. § 5365 note.
This prior notice requirement does not apply, however, with regard to the acquisition of shares that would qualify for the exemptions in section 4(c) or 4(k)(4)(E) of the BHC Act. 12 U.S.C. § 5363(b)(2). Section 4(c) of the BHC Act defines the nonbanking activities that are permissible for BHCs. The exemption in section 4(k)(4)(E) of the BHC Act permits financial holding companies to engage in "[u]nderwriting, dealing in, or making a market in securities." 12 U.S.C. 1843(k)(4)(E).
When acting on a notice filed pursuant to section 163(b), the Board, "in addition to the standards provided in [section 4(j)(2) of the BHC Act] . . . shall consider the extent to which the proposed acquisition would result in greater or more concentrated risks to global or United States financial stability or the United States economy." 12 U.S.C. § 5363(b)(4).
Posted: 6/25/2026
Q2: When calculating the $10 billion threshold, should assets held by an insured depository institution to be acquired, or its subsidiaries, be included?
A2: No, any assets held by an insured depository institution to be acquired, or its subsidiaries, should not be considered for purposes of calculating the $10 billion threshold. The language of section 163(b) expressly does not apply to acquisitions where the company to be acquired is an insured depository institution. Further, where a company to be acquired owns or controls one or more insured depository institutions, only assets held outside of an insured depository institution chain should be included in the calculation of total consolidated assets for the purposes of the $10 billion threshold.
For example, consider a proposed transaction where the target company has total consolidated assets of $15 billion, and the target company’s sole subsidiary insured depository institution (including its subsidiaries) has total assets of $13 billion. After excluding the assets attributable to the target company’s insured depository institution and its subsidiaries, the target company would be viewed as having total consolidated assets of $2 billion. Accordingly, acquisition of that target company would not exceed the $10 billion asset threshold specified in section 163(b), and no section 163(b) notice would be required.
Posted: 6/25/2026