Holding company

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A holding company, also called a parent company, is one that controls sufficient interest in another company to exert influence over it through its board of directors but generally not through day-to-day management or operations. Banks and other financial-service businesses are usually owned by holding companies that are closely regulated by the Federal Reserve, the former moreso. Holding companies allow new acquisitions to be controlled with minimal investment but the holding company must keep control of at least 80% of voting shares to avoid onerous taxation. Holding companies in the public utility, railroad and air transport sectors are also subject to special federal regulation.

Loosened Hold

Since 1999, bank holding companies have been able to apply to the Federal Reserve to convert themselves to financial service holding companies under the Bank Holding Company Act. The Federal Reserve maintains an updated list of the bank holding companies under its control that have successfully done this, allowing them much greater freedom to engage in non-banking activities that would be otherwise proscribed for a solely bank owner. Non-bank holding companies can also apply for the status.

Supermarket Effect

Since that loosening, the rankings of largest American bank and financial-service holding companies have become dominated by the retail-finance giants that have merged banking, insurance, investments and other financial services under one roof. The latest ranking by total assets for Q1 2008 combining bank and financial-service holding companies below also shows Deutsche Bank Trust's Taunus Corporation at number five, above better-known groups like Wells Fargo and US Bancorp.

• 1. Citigroup Inc.

• 2. Bank of America Corp.

• 3. JPMorgan Chase & Co.

• 4. Wachovia Corp.

• 5. Taunus Corp.