Private Equity Investments in Financial Institutions: Evolving Standards and Regulatory Guidance

Abstract

The subject of private equity investments in banking and other financial entities has received increased attention in the press and among regulators in recent months. This article details the evolving standards and regulatory guidance for such investments. It covers key regulatory concerns, including the principal regulators and their roles, the Federal Reserve and OTS definitions of what constitutes “control,” and cases where prior approval is required and where it may not be required. It also covers key issues in structuring investments and summarizes the FDIC’s recent statement of policy on failed bank acquisitions.