Scott Alvarez

Sovereign wealth funds have recently made significant investments in U.S. financial institutions, thereby improving the capital position of these firms and demonstrating confidence in the viability of these U.S. firms.  These investments have also attracted much attention and there is no doubt that sovereign wealth funds are growing in size and number and are making increasingly significant investments in financial services organizations worldwide.  But foreign government-owned entities, including sovereign wealth funds, have owned foreign banks with U.S. operations for many years.  The Board has long taken the position that while foreign governments themselves are not companies subject to the BHC Act, foreign government-owned corporations such as sovereign wealth funds are companies.  Thus any proposed controlling investment in a U.S. bank or bank holding company by a sovereign wealth fund would be subject to Federal Reserve approval.

Sovereign wealth funds, like private investment funds, U.S. state investment vehicles, hedge funds, private equity firms, and many other investors, have generally made investments at levels that are not large enough to trigger the thresholds for review and approval by the federal banking agencies under the federal banking laws.