The Financial Stability Oversight Council made a
final decision to grant the appeal of ZB, N.A., under section 117 of the
Dodd-Frank Act, ruling that it will not be treated as a designated nonbank
financial company upon completion of its proposed merger with its parent bank
holding company, Zions Bancorporation. The FSOC determined that there is not a significant risk that Zions
could pose a threat to U.S. financial stability. The FSOC had made a proposed
decision to grant the appeal on July 18, 2018.
ZB is a national bank headquartered in Salt Lake
City, Utah, and a wholly owned subsidiary of Zions Bancorporation, a Utah
corporation and a registered bank holding company and financial holding company.
ZB has entered into an agreement with Zions Bancorporation pursuant to which
Zions Bancorporation will merge with and into ZB. Upon the completion of the
merger, ZB will succeed to all the assets and liabilities of Zions
Bancorporation. ZB’s assets comprise 99.7 percent of the total consolidated
assets of Zions Bancorporation, and ZB’s revenues account for 99.7 percent of
the revenues of Zions Bancorporation. Zions has $66 billion of total
consolidated assets and $59 billion of total liabilities.
If an entity subject to section 117 ceases to be
a bank holding company, it will be treated as a nonbank financial company
supervised by the Federal Reserve Board. That section applies to any entity that
was a bank holding company with total consolidated assets of at least $50
billion as of Jan. 1, 2010, and received financial assistance under or
participated in the Capital Purchase Plan established under the Troubled Asset
Relief Program. Section 117 also provides that an entity may appeal its
treatment as a designated nonbank financial company to the FSOC.
In its petition, ZB emphasized its relatively
small size, lack of complexity, and low levels of interconnectedness compared to
the U.S. global systemically important banks (G-SIBs) and other banks with $50
billion or more in total consolidated assets. ZB also described its role as a
source of credit for low-income, minority, or underserved communities; its
complexity and resolvability; assets under management; and the degree of
regulatory scrutiny to which it will be subject after consummation of the
merger.
According to Treasury Secretary Steven T. Mnuchin, "Zions
engages in limited capital markets activities, presents minimal fire sale risks,
uses a simple operational structure, and is subject to extensive regulation and
supervision. The Council determined that there is not a significant risk that
Zions could pose a threat to U.S. financial stability, and I am pleased that the
Council used its authority to promote regulatory efficiency."
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