Transactions Not Requiring Prior Approval

C

Under the Bank Holding Company Act (BHCA), transactions that involve bank holding companies and banks require approval from the Federal Reserve Board (FRB). However, some transactions may be exempted from prior FRB approval.

Option A states that the formation of a bank holding company is subject to prior approval. This is true because the BHCA defines a bank holding company as any company that has control over a bank or banks. As such, the formation of a bank holding company requires prior approval from the FRB.

Option B states that the acquisition by a bank holding company of a subsidiary is subject to prior approval. This is also true because the acquisition of a subsidiary by a bank holding company would result in the subsidiary becoming a part of the bank holding company's control group. Therefore, this transaction requires prior approval from the FRB.

Option C states that the acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote does not require prior approval. This is true because the BHCA exempts acquisitions of less than 25 percent of voting stock from prior approval, provided that the acquisition is made in good faith and in a fiduciary capacity, and the acquiring bank has no power to vote the stock.

Option D states that the acquisition of 25 percent of voting stock of a bank by another bank in its fiduciary capacity for the benefit of the acquiring bank's employees does not require prior approval. This statement is false because the BHCA specifically states that acquisitions made in a fiduciary capacity for the benefit of the acquiring bank's employees are not exempt from prior approval.

In summary, the correct answer is D, as the acquisition of 25 percent of voting stock of a bank by another bank in its fiduciary capacity for the benefit of the acquiring bank's employees requires prior approval from the FRB, unlike the other options listed.