The owner of a big Las Vegas bank says it will take an almost $400 million hit because a law that targets risky trading will force it to shed investments.
Zions Bancorporation, parent company of Nevada State Bank, said in a news release today that many of its investment securities will be considered “disallowed” under the so-called Volcker Rule, which regulators approved last week.
The rule forces banks to shed collateralized debt obligations by July 2015, although regulators can grant a two-year extension, Zions said. Still, the company said it will have to sell many of its CDOs, forcing it to take a $387 million non-cash charge to earnings.
CDOs are complex securities — made up of bonds, loans and other assets — that can be sliced up and sold to investors.
According to Bloomberg News, the $387 million charge is more than Zions earned for any calendar year since 2007.
A spokesperson for the Salt Lake City company could not be reached to find out how, or if, the charge would affect subsidiary Nevada State Bank.
Based in Las Vegas, Nevada State Bank has about $4 billion in assets and 50 branches statewide. As of June 30, the bank held $2.4 billion in deposits in Clark County, according to Federal Deposit Insurance Corp. records.
The Volcker Rule, part of the Dodd-Frank Act of 2010, aims to stop banks from making risky investments that might cause them to hemorrhage money and collapse.
The rule took three years to write and is named for former Federal Reserve Chairman Paul Volcker, who sought the trading ban.