AmazonScience/document-haystack

1purposes of these regulations. The federal banking agencies have issued an interagency statement addressing the application of these 2insider lending restrictions to the other portfolio companies owned or controlled by the advised funds and accounts of a fund complex 3that could be considered a principal shareholder of a bank, which is effective the earlier of January 1, 2025, and the effective date of a 4final Federal Reserve rule that addresses the treatment of extensions of credit by a bank to fund complex-controlled portfolio 5companies that are considered insiders of the bank. The statement explains that the federal banking agencies will continue to exercise 6discretion to not take enforcement action against either a fund complex that is a principal shareholder of a bank, or a bank for which a 7fund complex is a principal shareholder, with respect to extensions of credit by the bank to the related interests of such fund complex 8that otherwise would violate the insider lending restrictions, subject to certain conditions.9The Federal Reserve is required to establish standards under the statutory provision known as the “Durbin Amendment” for assessing 10whether the amount of any interchange fee received by a debit card issuer such as PNC Bank is reasonable and proportional to the cost 11incurred by the issuer, subject to certain adjustments. The Federal Reserve implemented these standards through Regulation II, which 12limits the interchange fee an issuer may charge based on three components. On October 25, 2023, the Federal Reserve proposed 13revisions to the three components of the interchange fee cap. We expect the proposed rule, if finalized in its current form, would 14reduce PNC Bank’s interchange fee revenue.15The Federal Reserve and the OCC have provided guidance regarding incentive and other elements of compensation provided to 16executives and other employees at banking organizations they regulate, both as general industry-wide guidance and guidance specific 17to select larger companies, including PNC. These guidelines are intended to ensure that the incentive compensation practices of 18covered banking organizations do not encourage excessive risk-taking. Dodd-Frank requires the Federal Reserve, the OCC, the FDIC, 19the SEC and two other regulatory agencies to adopt regulations governing incentive compensation provided by regulated financial 20services companies to their executives and other employees. These agencies jointly proposed regulations in 2011 and again in 2016 to 21implement these requirements. Final regulations have not been adopted. 22The trust, investment advisory and other fiduciary activities conducted by PNC Bank also are subject to the OCC’s regulations 23governing the fiduciary activities of national banks, as well as applicable state fiduciary laws. The OCC’s regulations, among other 24things, set standards for the administration of fiduciary accounts, prohibit or govern potential conflicts of interests and establish 25recordkeeping requirements for fiduciary accounts. 26The Federal Reserve’s prior approval is required whenever we propose to acquire all or substantially all of the assets of any bank, to 27acquire direct or indirect ownership or control of more than 5% of any class of voting securities of any bank or BHC, or to merge or 28consolidate with any other BHC. In reviewing the merger of BHCs, the acquisition of banks or the acquisition of voting securities of a 29bank or BHC, the factors the Federal Reserve must consider include (i) the competitive effects of the proposal in the relevant 30geographic markets; (ii) the financial and managerial resources and future prospects of the companies and banks involved in the 31transaction; (iii) the effect of the transaction on the financial stability of the U.S.; (iv) the organizations’ compliance with AML laws 32and regulations; (v) the convenience and needs of the communities to be served; and (vi) the records of performance under the CRA of 33the insured depository institutions involved in the transaction. On July 9, 2021, President Biden signed an executive order that, among 34other things, recommended that the U.S. Department of Justice and federal banking agencies update guidelines on banking mergers to 35provide more robust scrutiny of mergers. The agencies have not yet published updated guidelines.36The Federal Reserve’s prior approval also is required, and similar factors are considered, for a BHC to acquire direct or indirect 37ownership or control of more than 5% of any class of voting securities of a savings association or savings and loan holding company, 38or to merge or consolidate with a savings and loan holding company. In cases involving interstate bank acquisitions, the Federal 39Reserve also must consider the concentration of deposits nationwide and in certain individual states. A BHC is generally prohibited 40from merging or consolidating with, or acquiring, another company or bank if upon consummation the resulting company would 41control 10% or more of deposits in the U.S. or a state, or if the resulting company’s liabilities would exceed 10% of the aggregate 42liabilities of the U.S. financial sector (including the U.S. liabilities of foreign financial companies). In extraordinary cases, the FSOC, 43in conjunction with the Federal Reserve, could order the break-up of financial firms that are deemed to present a grave threat to the 44financial stability of the U.S.45OCC prior approval is required for PNC Bank to acquire another insured bank or savings association by merger or to acquire deposits 46or substantially all of the assets of such institutions. In deciding whether to approve such a transaction, the OCC is required to consider 47factors similar to those that must be considered by the Federal Reserve in connection with the acquisition of a bank or BHC. Approval 48of the OCC and the FDIC is required to merge a non-bank entity into PNC Bank. 49The Federal Reserve also has issued rules governing when a BHC is presumed to “control” another company for purposes of the BHC 50Act, thereby causing the company to be considered a subsidiary for purposes of the BHC Act. The rules establish a set of 51presumptions identifying when a BHC would be deemed to control another company, with the nature and scope of relationships a 52BHC may have with a non-controlled company (e.g., director or officer representatives, scope of business relationships, etc.) declining 53as the BHC’s voting ownership percentage in the company increases. 54 55The PNC Financial Services Group, Inc. –  2023 Form 10-K  9