In compliance with the Anti-tying regulations:
The bank can give you a discounted loan rate if you have a deposit balance with the bank.
The insurance company subsidiary can offer a discount if you have both your car and homeowner's insurance through them.

Here is my question, can the bank give a discounted loan rate if you have your homeowner's insurance through the insurance subsidiary
and vice versa the insurance subsidiary give you a discount on the homeowner's insurance if you have your loan through the bank?

I know that we can not condition the approval of the loan on the requirement of insurance through the subsidiary but can we give the discount as an incentive?

Thanks!

I believe the answer is yes, but I haven't looked at this in quite some time. Hopefully this will help. It is from FRB Transmittal 168, 02-95.

Bank Holding Companies

The Board amended the anti-tying provisions of Regulation Y to permit a bank holding company or its nonbank subsidiary to offer a discount on its product or service on condition that a customer obtain any other product or service from that company or from any of its nonbank affiliates. This amendment generally removes Board-imposed restrictions on tying when no bank is involved and the products are separately available for purchase by the customer. Section 225.7 was amended by the addition of paragraph (b)(3) and the revision of paragraph (c)(2) (at 4-017.2), effective January 23, 1995.

and from 163:

The Board amended the anti-tying provisions of Regulation Y to allow both bank and nonbank affiliates of bank holding companies to offer package discounts on traditional bank products. The amendment also permits bank holding company affiliates to offer a discount on securities brokerage services on the condition that the customer obtain a traditional bank product from the holding company or one of its affiliates. Effective September 2, 1994, section 225.4(d) (previously at 4-015) is deleted and section 225.7 is added (at 4-017.1).

225.7(b)(1) is a cite, but I saw better details a a search for "anti-tying".

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 09-05-2001).]