Is Bank of America Part of Citigroup?
No, Bank of America (BoFA) and Citigroup are separate entities, although they share some historical and regulatory similarities. This article explores the relationship between the two banks and how they differ under the regulatory framework of the Edge Act Corporations.
Historical and Regulatory Background
Banks such as Bank of America and Citigroup are not directly affiliated, despite some historical and regulatory similarities. Citigroup, for example, is headquartered in Ireland and operates as an Edge Act Corporation. This status provides a unique regulatory framework that allows Edge Act Corporations to conduct certain types of international financial operations.
The origins of Edge Act Corporations date back to the 1910s, specifically with the enactment of Section 25a of the Federal Reserve Act in 1919. This section, now covered under 12 CFR ยง 250.143, allowed for national banks to invest in federally chartered international or foreign banking corporations. These corporations, known as Edge Act Corporations, were empowered to engage in international or foreign banking or other financial operations in dependencies or insular possessions of the United States.
Structuring and Operational Differences
Ideally, BoFA and Citigroup operate independently under the regulatory structure of the Edge Act Corporations, despite some overlap. Citigroup's Edge Act Corporation status is particularly relevant, as it allows the bank to conduct specific financial activities without direct involvement in the U.S. market. This structure is designed to ensure that these banks can engage in broader international financial operations while adhering to U.S. regulatory frameworks.
BoFA, on the other hand, is primarily a U.S.-based bank with a significant domestic presence. Its European subsidiaries, while part of the holding company structure, are not Edge Act Corporations and must adhere to the specific regulatory requirements of their respective countries.
It is worth noting that even if there were considerations for merging the two entities, such a move would likely be blocked due to the competitive landscape and regulatory restrictions. The sheer size of Bank of America's deposit share in the U.S. market would make it challenging for such a merger to gain approval.
Conclusion
In summary, while Bank of America and Citigroup share some historical and regulatory similarities as Edge Act Corporations, they remain distinct entities. The regulatory framework surrounding Edge Act Corporations allows these banks to operate under specific constraints, ensuring they can engage in international financial activities while maintaining their status as U.S.-based financial institutions. Despite these similarities, the different regulatory and operational structures mean they remain independent entities.