Magazine article American Banker

Nonfinancial Equity Investment Bared by GLB

Magazine article American Banker

Nonfinancial Equity Investment Bared by GLB

Article excerpt

The Gramm-Leach-Bliley Act of 1999 mandated new reports to track how much banking companies are investing in nonfinancial firms. American Banker reported on subsets of the new data on March 8 and 12. Today we offer a more complete table, with some notations.

Banking companies that invest $200 million of equity in nonfinancial firms or 5% of the holding company's consolidated Tier One capital, whichever is less, must file these Y-12 reports quarterly at the Federal Reserve. Forty-four did so.

Holding companies investing 5% of their total capital in nonfinancial companies are required to report only semiannually to the Fed.

The three-page reports, first required in the third quarter of 2001, are jammed with data including original cost of investment, value at the end of the quarter, and impact on net income.

Because the reports are new, banks as well as their regulators are still working out some kinks. Several banks had to revise their original reports, including Wells Fargo & Co., Bank of America Corp., and J.P. Morgan Chase & Co.

Both Bank of America and Morgan Chase plan to amend their fourth-quarter reports again. The Charlotte, N.C., giant says it misreported the value of its equity investments. It also reported that equity investments had zero impact on fourth-quarter net income, but may change that in an amended filing.

The 10 largest financial companies filing Y-12s account for nearly 93% of the $65.5 billion the industry has invested in nonfinancial companies.

Wachovia appears to have taken the most advantage of Gramm-Leach-Bliley reforms, reporting some 40% of its $3.45 billion in equity investments as made possible under the act.

Wells Fargo requested and received confidential treatment - but only for the Y- 12 report covering the third quarter. Its fourth-quarter report is public.

Any figure look out of whack? …

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