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ARTICLE · 28 AUGUST 2026

Beyond Traditional Banking: Permissible Nonbanking Activities For BHCs

Duane Morris LLP
Duane Morris LLP
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Bank holding companies have access to a surprisingly diverse array of permissible nonbanking activities under Federal Reserve Regulation Y, extending well beyond traditional banking services. From commodity transactions and real estate settlement services to minority investments in commercial enterprises, the regulatory framework offers strategic opportunities for revenue diversification when specific conditions are met.

United StatesFinance and Banking
Joseph E. Silvia
Joseph E. Silvia
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“Closely Related to Banking”

Bank holding companies seeking to diversify revenue streams beyond traditional lending and deposit-taking have a surprisingly broad menu of permissible nonbanking activities available under Regulation Y. The Federal Reserve has approved a range of activities as “closely related to banking” under 12 CFR 225.28, often subject to specific conditions and limitations. In this post, we explore a few very specific permissible nonbanking activities previously approved by the Federal Reserve.

Commodity Transactions

Volumetric Production Payment (VPP) transactions for financing purposes are permissible under 12 CFR 225.28(b)(1) when certain conditions and risk-management requirements are met. Similarly, two “commodity purchase and forward sale” (CPFS) structures have been approved as permissible lending transactions, subject to conditions including: the BHC holds title only via warehouse receipt, the commodity is not physically moved, the BHC earns a fixed

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Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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