Related Organizations

Chain Banking Organizations

In a chain banking organization, two or more independently chartered financial institutions, including at least one national bank, are controlled either directly or indirectly by the same individual, family, or group of individuals closely associated in their business dealings. ^[5] Control generally exists when the common ownership has the ability, directly or indirectly, to control the vote of 25 percent or more of any class of each institution’s voting securities; owns at least 25 percent of the equity capital of each institution; controls in any manner the election of a majority of the directors of each institution; or has the power to exercise a controlling influence over the management or policies of each institution.

Members of a chain banking organization are affiliates of each other for purposes of sections 23A and 23B and Regulation W, the same as if they were owned by the same holding company, as long as they meet one of the applicable tests for affiliation. However, the chain banking organization cannot take advantage of the sister-bank exemption (see discussion in the "Transactions with Affiliates" section) because that exemption requires ownership by a holding company.

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