Picpay: holding company/bank/bank holding
A bank is a business that borrows from its customers on current accounts repayable to its customers' cheques and collects cheques for its customers' accounts. Banks may also issue bank notes, and lend money to customers on current account (called overdraft), accept term deposits and make term loans and provide other financial services. Banks that issue notes are called Banks of Issue.
Currently in most jurisdictions the business of banking is regulated and banks require a licence. Banking licenses are granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank, a so called non-banking financial company.
A holding company or parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.
Strictly speaking, the term "holding company" might be used to describe any company that owns a majority of shares in another company however this may only apply if that corporations only reason for existence is to hold stock in other companies. Usually, though, the term signifies a company which does not produce goods or services itself, but, rather, whose only purpose is owning shares of other companies (or owning other companies outright). Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.
Berkshire Hathaway is one of the largest publicly traded holding companies; it owns numerous insurance companies, manufacturing businesses, retailers, and other companies. Another large holding company of note is UAL Corporation, a publicly traded holding company whose primary purpose is to wholly own United Airlines.
New or smaller banks often convert themselves into bank holding companies to take advantage of the greater financial flexibility this designation affords them.
Becoming a bank holding company makes it easier for the firm to raise capital than if it remained a traditional bank. It can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater ease. It also has a greater legal authority to repurchase its own stock once issued.
The downside includes greater levels of regulation, especially if there are more than 300 shareholders, at which point the bank holding company is forced to file with the Securities and Exchange Commission. There also added expenses of operating an extra layer of administration. This is usually offset by the fact that BHCs are often exempt from many of the state regulations and fees that a traditional bank would face.
Picpay the Holding Company: issued notes called Picpay currency and will find it difficult to prove they only fall into one of these definitions. Unless Picpay currency is backed by gold, then they didn't issue notes per se, but receipts for gold.
So the question remains: Is Picpay a holding company, a bank or a bank holding company? At the time this all started, the Marsdens were restructuring and opening a bank.
