Banking Practice Exam

The correct response highlights the establishment of one-bank holding companies by insurance firms seeking to expand their financial service offerings through banking operations. One-bank holding companies are structures that allow an entity, such as an insurance company, to own and operate a single bank. This framework is advantageous as it provides a straightforward regulatory framework and facilitates the integration of banking services within their existing insurance operations. Understanding why this choice is appropriate requires recognizing the role of other types of holding companies. Multibank holding companies typically own and manage multiple banks, which would not apply to an insurance company seeking to operate just one bank. Retail subsidiaries could refer to branches within a bank or retail operations rather than a holding structure specific to insurance. Financial holding companies, on the other hand, encompass a broader range of financial activities, including banking, but do not specifically indicate the scenario of a single bank operation linked directly to insurance companies. Hence, the focus on a one-bank holding company aligns with the specific strategy of insurance companies wanting to create a banking entity under their financial service umbrella.