Agencies Finalize Rules on Nonfinancial Equity Investment Capital Charges
The OCC, FRB and FDIC (the "Agencies") finalized their rule to modify the methods of calculating the risk-weighted and leverage capital ratios for bank holding companies ("BHCs") and banks with respect to the risks associated with equity investments in nonfinancial companies, including: merchant banking investments, portfolio investments held under Regulation K, shares representing less than 5% of the voting stock of a company, shares held through a small business investment company ("SBIC"), and certain shares held by a state bank in accordance with Section 24 of the Federal Deposit Insurance Act. For these purposes, an equity "investment" includes the purchase, acquisition or retention of any equity instrument (including common and preferred stock, partnership interests, LLC interests, trust certificates, warrants giving the right to purchase an equity instrument, any equity feature of a debt instrument, and
