More Banks Could See Activist Attention Under Fed Proposal

May 20, 2019, 9:31 AM

Banks could face more shareholder activism thanks to a Federal Reserve proposal for determining if investors hold controlling stakes in financial institutions.

The Fed proposed rule changes April 23 that would create room for investors to own more stock and occupy more board seats at banks without triggering holding company status, which brings increased regulatory oversight. That could spur heightened shareholder activism in the banking industry, particularly among smaller institutions.

“This proposal takes a step that could make activism more likely in smaller banks,” said Jeremy Kress, a former Fed attorney who now teaches at the University of Michigan Ross ...

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