A special type of subsidiary of a US depository institution that is permitted to engage in certain financial activities that its parent depository institution is not permitted to engage in directly. Financial subsidiaries were created under the liberalizing reforms of the Gramm-Leach-Bliley Act. Like financial holding companies, they are permitted to engage in some activities deemed financial in nature or incidental to financial activities, including:

Financial subsidiaries are also permitted to engage in any banking activity that the parent depository institution is permitted to engage in directly.

Financial subsidiaries are, however, prohibited from engaging in certain other financial activities, including:

Depository institutions that invest in, control, or operate a financial subsidiary are subject to various regulatory restrictions and requirements (see, for example, 12 C.F.R. Subpart G (Financial Subsidiaries of State Member Banks)).