{"id":615,"date":"2026-11-04T14:36:37","date_gmt":"2026-11-04T18:36:37","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/bankinglaw\/?p=615"},"modified":"2026-11-04T14:36:38","modified_gmt":"2026-11-04T18:36:38","slug":"the-premises-holding-company-exclusion-under-regulation-w-a-narrow-but-useful-carve-out","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/bankinglaw\/2026\/11\/04\/the-premises-holding-company-exclusion-under-regulation-w-a-narrow-but-useful-carve-out\/","title":{"rendered":"The Premises-Holding Company Exclusion under Regulation W: A Narrow but Useful Carve-Out"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Regulation W excludes from the definition of &#8216;affiliate&#8217; any company that is engaged solely in holding the premises of the relevant bank. Under <a href=\"https:\/\/www.ecfr.gov\/current\/title-12\/chapter-II\/subchapter-A\/part-223\/subpart-A\/section-223.2\" data-type=\"link\" data-id=\"https:\/\/www.ecfr.gov\/current\/title-12\/chapter-II\/subchapter-A\/part-223\/subpart-A\/section-223.2\">12 CFR 223.2(b)(2<\/a>), this exclusion allows banks to structure real property holdings through a separate entity without triggering affiliate transaction restrictions. But the exclusion is <em>extremely <\/em>narrow.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To qualify for this exclusion, the premises-holding company <span style=\"text-decoration: underline\">must meet all of the following conditions<\/span>: <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">(1) it must engage <strong>only <\/strong>in holding real property; <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">(2) that property must be used <strong>exclusively<\/strong> by the bank and any Regulation W &#8220;sister&#8221; bank; <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">(3) <strong>no portion<\/strong> of the property may be leased to external parties; and <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">(4) the company <strong>may not<\/strong> hold any other assets or engage in any other activities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The term &#8220;solely&#8221; is <em>critical<\/em>. If the premises-holding company owns even a single non-real-property asset, or if any portion of the building is subleased to a third party such as a retail tenant or ATM operator, the exclusion is lost. At that point, the company becomes an affiliate, and any further dealings with it become covered transactions subject to quantitative limits and collateral requirements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This interpretation reflects the Board&#8217;s intent that this exclusion serve only the limited purpose of allowing banks to hold their own operating premises in a separate legal entity for liability or tax reasons.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>DM Tip:<\/strong> If your bank uses a separate entity to hold its premises, conduct a periodic audit to ensure the entity holds only bank premises, has no outside tenants, and engages in no other activities. Even a minor deviation, such as leasing parking spaces to a neighboring business, could disqualify the exclusion.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Regulation W excludes from the definition of &#8216;affiliate&#8217; any company that is engaged solely in holding the premises of the relevant bank. Under 12 CFR 223.2(b)(2), this exclusion allows banks to structure real property holdings through a separate entity without triggering affiliate transaction restrictions. But the exclusion is extremely narrow. To qualify for this exclusion, &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/blogs.duanemorris.com\/bankinglaw\/2026\/11\/04\/the-premises-holding-company-exclusion-under-regulation-w-a-narrow-but-useful-carve-out\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;The Premises-Holding Company Exclusion under Regulation W: A Narrow but Useful Carve-Out&#8221;<\/span><\/a><\/p>\n","protected":false},"author":693,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"ppma_author":[502],"class_list":["post-615","post","type-post","status-publish","format-standard","hentry","category-general"],"authors":[{"term_id":502,"user_id":693,"is_guest":0,"slug":"jsilvia","display_name":"Joseph E. Silvia","avatar_url":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-content\/uploads\/sites\/14\/2024\/09\/silviajoseph-100x100.jpg","author_category":"","last_name":"Silvia","first_name":"Joseph E.","job_title":"","user_url":"https:\/\/www.duanemorris.com\/attorneys\/josephsilvia.html","description":"<a href=\"https:\/\/www.duanemorris.com\/attorneys\/josephsilvia.html\">Read Joseph's bio.<\/a>"}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/posts\/615","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/users\/693"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/comments?post=615"}],"version-history":[{"count":1,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/posts\/615\/revisions"}],"predecessor-version":[{"id":616,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/posts\/615\/revisions\/616"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/media?parent=615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/categories?post=615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/tags?post=615"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/bankinglaw\/wp-json\/wp\/v2\/ppma_author?post=615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}