Mutual has requested approval to purchase, through its majority-owned subsidiary, up to 10 percent of the total outstanding shares of a particular thrift holding company stock. The activity of making investments in listed thrift holding company stock may not be a permissible activity for a national bank or a subsidiary of a national bank. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund. The purchase of any equity stock entails risks related to the loss of investment, price volatility, and lack of market liquidity. However, intrinsic to the corporate charter of a thrift holding company are factors that lessen investment risk.
Thrift holding companies are subject to a comprehensive and stringent regulatory structure.
As such, they are required to obtain government approval to operate and to maintain regulatory minimum capitalization. They are also subject to periodic supervisory examination and enforcement jurisdiction. Although in the case in which thrift holding company assets are primarily, if not exclusively, centered in the subsidiary thrift, the risk inherent from investing in the thrift holding company stock is directly reliant on the financial condition of the subsidiary thrift. However, thrift holding companies may be invested in entities other than thrifts, which are authorized to engage in activities not permissible for a thrift. The potential for additional risk from those other activities warrants the limitation of the bank's investment in any single thrift holding company, or related entities, to preclude a concentration represented by the investment in relation to Mutual's Tier I capital.