Which statement correctly describes a subsidiary bank?

Which statement correctly describes a subsidiary bank?

• A. It is owned and controlled by a parent bank.
• B. It is partially owned but not controlled.
• C. It operates independently with no parent.
• D. It is owned by the government.

Answer: (A)

A subsidiary bank is owned and controlled by a parent bank, with the parent typically holding a majority of voting shares and directing major decisions. The subsidiary remains a separate legal entity with its own charter, but its financial results are usually consolidated into the parent’s statements. This structure lets a parent expand its banking footprint while maintaining risk management and capital oversight at the group level. If a bank is only partially owned and not controlled, that would be a different relationship (an associate or affiliate). A bank that operates independently with no parent isn’t a subsidiary, and a government-owned bank is owned by the state, not a private parent.

A subsidiary bank is owned and controlled by a parent bank, with the parent typically holding a majority of voting shares and directing major decisions. The subsidiary remains a separate legal entity with its own charter, but its financial results are usually consolidated into the parent’s statements. This structure lets a parent expand its banking footprint while maintaining risk management and capital oversight at the group level. If a bank is only partially owned and not controlled, that would be a different relationship (an associate or affiliate). A bank that operates independently with no parent isn’t a subsidiary, and a government-owned bank is owned by the state, not a private parent.