Posted in Finance, Accounting and Economics Terms, Total Reads: 604
Definition: Double Leverage
Double holding is an indirect way for banks to have more access to debt financing. Thus when a bank holding company offers a debt to another subsidiary bank to acquire a large equity stake in the subsidiary, such a financing method is called double holding. Such debts are financed by the returns on the stocks held by the holding company.
Usually banks have a strict capital requirement structure which doesn’t allow them to hold debt more than a specified limit, thus double holding can be used as a way to provide them access to more capital to fulfill their requirements.