Rule: International Banking Regulations Activities of Insured State Nonmember Banks Operating in Foreign Countries and Insured U.S. Branches of Foreign Banks

Wednesday,
April 6, 2005
Part III
Federal Deposit
Insurance
Corporation
12 CFR Parts 303, 325, 327, and 347
International Banking; Final Rule
VerDate jul<14>2003 18:30 Apr 05, 2005 Jkt 205001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\06APR2.SGM 06APR2
17550 Federal Register / Vol. 70, No. 65 / Wednesday, April 6, 2005 / Rules and Regulations
FEDERAL DEPOSIT INSURANCE Bliley Act of 1999 (12 U.S.C. 4809); addresses moving an insured branch of
CORPORATION addressing certain regulatory burden a foreign bank (‘‘grandfathered
issues raised in public comments as part branch’’),2 by specifying that expedited
12 CFR Parts 303, 325, 327, and 347 of the FDIC’s ongoing burden reduction processing could be provided for
RIN 3064–AC85 effort under the Economic Growth and applications involving intrastate
Regulatory Paperwork Reduction Act of relocations of eligible grandfathered
International Banking 1996 (EGRPRA)(12 U.S.C. 3311); branches. This amendment was added
maintaining parity with Regulation K, to address concerns expressed by the IIB
AGENCY: Federal Deposit Insurance which was amended by the Board of that grandfathered branches would be
Corporation (FDIC). Governors of the Federal Reserve precluded from moving or relocating
ACTION: Final rule. System (‘‘FRB’’) in October, 2001; and from their existing locations if their
updating and enhancing the FDIC’s proposed relocations were made subject
SUMMARY: The FDIC is amending its supervisory processes by revising to the ‘‘immediate neighborhood’’
international banking regulations in existing rules and proposing certain geographic relocation requirement
subpart J of part 303 and revising new rules. In addition, although no applied to proposed branch relocations
subparts A and B of part 347. The amendments were proposed regarding of state nonmember banks in section
amendments reorganize, clarify, and the topics, the FDIC requested 303.41(b). In their comments, the ABA
revise subparts A and B of part 347, and comments on whether deposits in and IIB expressed support for the
address various issues raised as part of wholesale U.S. branches of foreign proposed amendment but the IIB
the FDIC’s ongoing effort under the banks should be insured by the FDIC indicated that it assumed that the FDIC
Economic Growth and Regulatory and whether the accounting regulations would subject a proposed interstate
Paperwork Reduction Act of 1996 (12 contained in subpart C of part 347 relocation to standard processing and
U.S.C. 3311). Included in the revisions should be revised. requested that the FDIC clarify this
are amendments that address relocation The comment period closed on point in the final rule. The FDIC has
of insured U.S. branches of foreign September 17, 2004. Comments were considered the IIB request and has
banks within and outside the state received from the American Bankers added a new paragraph (e) to section
where such branches are presently Association (‘‘ABA’’), the Institute for 303.184 to address standard processing
located, adoption of a risk-based asset International Bankers (‘‘IIB’’), and the of applications to relocate a
pledge requirement for insured U.S. Conference of State Bank Supervisors grandfathered state branch to another
branches of foreign banks, and (‘‘CSBS’’) regarding issues addressed in state. In doing so, the FDIC believes it
information and examination the NPR. In addition, at the IIB’s is appropriate to address a state
requirements for foreign banks that own request, FDIC staff met with licensing issue raised by the IIB
branches or depository institution representatives of the IIB and comment letter and to ensure that the
subsidiaries seeking FDIC deposit representatives of its constituent foreign rule will only be utilized for legitimate
insurance. The FDIC has also decided to banks regarding the IIB’s EGRPRA relocations of existing grandfathered
maintain its existing position suggestions and issues addressed in its state branches and not simply to
concerning the availability of FDIC comment letter.1 No comments were recharacterize the establishment of a
deposit insurance for wholesale U.S. received regarding subpart C of part 347 new foreign branch in another state as
branches of foreign banks. and, therefore, none of the rules in that a ‘‘move’’ or ‘‘relocation’’ of a
DATES: These revisions are effective July subpart are being amended in the final grandfathered state branch to avoid
1, 2005. rule. compliance with the subsidiary
A discussion of the comments and requirement contained in section 6(d) of
FOR FURTHER INFORMATION CONTACT: John
changes to the proposal that are being the IBA. Therefore, under section
Di Clemente, Chief, International
adopted in this final rule are presented 303.184, as revised by this final rule, in
Section, Division of Supervision and
below. addition to satisfying the criteria
Consumer Protection, (202) 898–3540 or
contained in paragraph (d), a foreign
jdiclemente@fdic.gov or Rodney D. Ray, II. International Banking Procedural, bank proposing to relocate a
Counsel, Legal Division, (202) 898–3556 Capital Maintenance, Assessment Rules grandfathered state branch to another
or rray@fdic.gov, Federal Deposit state without affecting its grandfathered
Insurance Corporation, 550 17th Street, Subpart J of part 303 contains the
FDIC application procedures that status will be required, under paragraph
NW., Washington, DC 20429. (e), to comply with any applicable state
SUPPLEMENTARY INFORMATION:
implement the international banking
regulations in part 347, subparts A and laws and regulations of the states
I. Background B. Although the NPR contained several affected by the proposed relocation. In
amendments to the subpart J addition, because the foreign bank will
On July 19, 2004, the FDIC issued a be relocating its whole grandfathered
notice of proposed rulemaking (‘‘NPR’’) regulations, most of them consisted of
technical amendments because of the branch operation from one state to
in the Federal Register, with a 60 day another (not creating an additional out-
comment period, regarding proposed substantial restructuring being proposed
for the regulations in part 347. There of-state branch of the grandfathered
amendments to its international banking branch, which would not be allowed),
regulations contained in subpart J of were no comments on those
amendments and the FDIC is adopting the existing license of the branch in the
part 303, subpart B of part 325, subpart state from which it is moving may need
A of part 327, and subparts A and B of them as proposed.
In addition to the technical to be surrendered or cancelled and a
part 347 of title 12 of the Code of
Federal Regulations. (69 FR 43060). amendments, the FDIC proposed to 2 A grandfathered branch of a foreign bank is a
The proposed amendments were amend section 303.184, which U.S. branch of a foreign bank that obtained FDIC
intended to accomplish various goals. deposit insurance prior to December 19, 1991 and
1 A meeting summary and list of participants is is authorized to accept or maintain domestic retail
These included implementation of the available on the FDIC’s Web page at http:// deposit accounts pursuant to section 6(d)(2) of the
‘‘plain language’’ requirement contained www.fdic.gov/regulations/laws/federal/ International Banking Act (‘‘IBA’’)(12 U.S.C.
in section 722 of the Gramm-Leach- 04cMEETING.html. 3104(d)(2)).
Federal Register / Vol. 70, No. 65 / Wednesday, April 6, 2005 / Rules and Regulations 17551
new license obtained in the state to foreign branches and investments, and closely track the order of the activities
which the branch is relocating. To avoid 347.119 (specific consent). The listed as permissible for member banks
a ‘‘break’’ in the existence of the discussion that follows is provided to and their subsidiaries or foreign
grandfathered branch, which may create explain a few of the more significant branches of member banks under the
an issue regarding compliance with the amendments to the subpart. corresponding provision in Regulation
subsidiary requirement contained in The FDIC proposed to revise existing K. This revision will make the
section 6(d) of the IBA, the rule also sections 347.103 and 347.104 in the comparison easier between activities
specifies that the foreign bank must NPR to better address the interplay authorized under subpart A of part 347
obtain any required regulatory between the FDIC’s part 362 and part and those authorized under Regulation
approvals from the appropriate state 347. This revision was accomplished in K for branches of member banks or
licensing authority of the state to which two ways. First we separated the member banks and their subsidiaries.
the insured branch proposes to relocate substance of existing section 347.104(f), The FDIC also added paragraph (d) to
before relocating the existing branch dealing with direct and indirect proposed section 347.105 and paragraph
operations and surrendering its existing investments in foreign organizations, (h) to proposed section 347.115, for
license to the appropriate state licensing into section 347.104 in the proposed clarification, to generally address when
authority of the state from which the rule.3 Second, we created ‘‘permissible activities, other than those authorized
branch is relocating. activities’’ sections for state nonmember by the respective sections, may be
In addition to the amendments banks and their subsidiaries in section authorized by specific consent under
proposed in subpart J of part 303, the 347.105(b) out of existing section part 347 or when authorization for the
FDIC also proposed revisions to sections 347.104(a)–(b) and for foreign branches activities must be obtained under part
325.103 and 327.4, regarding capital of state nonmember banks in section 362 as well as subpart A of part 347.
maintenance and the annual assessment 347.115(a)–(g) out of existing section The ABA commented on the proposed
rate, respectively, for insured U.S. 347.103(a). In addition, the order and amendment to section 347.115,
branches of foreign banks. The list of activities authorized for state including another FDIC proposal
amendments were proposed to conform nonmember banks and their subsidiaries adopting the same definition of
those sections with proposed and foreign branches of state ‘‘investment grade’’ that had been
amendments to the FDIC’s asset pledge nonmember banks were revised to more adopted by the FRB and the OCC. In its
and asset maintenance requirements comment, the ABA noted that the
contained in subpart B of part 347. 3 Like existing section 347.104(f), section 347.104
adoption of the same approach to
Because the FDIC has decided to recognizes that the FDIC’s treatment of direct and
indirect investments by state nonmember banks in ‘‘investment grade’’ was a substantive
maintain the existing quarterly foreign organizations differs from the treatment improvement, which it supported. It
calculation methodology for asset such investments are provided in Regulation K for also expressed support for the addition
maintenance in the final rule, for the member banks. This is because of differences in the
underlying statutory provisions governing member of section 347.115(h), discussed above.
reasons discussed subsequently in
connection with section 347.210, the
and state nonmember banks. Unlike member banks, The FDIC also proposed to amend its
whose investments are constrained by the language authorization for ‘‘general consent’’ in
reference to the ‘‘insured branch’s daily of section 25 of the Federal Reserve Act (12 U.S.C.
third-party liabilities’’ has been 601), section 18(l) of the FDI Act permits state two ways. The first way was to allow
eliminated in the final rule. nonmember banks to invest in foreign ‘‘banks and insured state nonmember banks to
other entities,’’ to the extent authorized by state branch into a foreign country under
III. Foreign Banking and Investment by law. Thus, considering the legislative history of general consent in circumstances
section 18(l), and the language of the statute, the
Insured State Nonmember Banks FDIC has interpreted section 18(l) as not restricting covered by proposed section
Subpart A of part 347 primarily the types of foreign organizations in which a state 347.117(a)(1)(ii) or (iii). This change
addresses branching, investments, and nonmember bank can invest. would allow an eligible state
The ability of insured state nonmember banks to nonmember bank to establish additional
permissible activities of state invest in other types of foreign organizations,
nonmember banks in foreign countries. however, raises issues under section 24 of the FDI branches in a country in which the
The FDIC proposed various Act (12 U.S.C. 1831a) and part 362 because national bank’s holding company operates a
amendments in the NPR that banks are unable to invest directly in nonbank foreign bank subsidiary, or in which an
foreign organizations. Section 24 prohibits an affiliated bank or Edge or Agreement
reorganized the existing sections in the insured state nonmember bank from acquiring an
subpart and clarified their coverage. For equity investment that a national bank is not corporation operates one or more
example, the FDIC proposed to divide permitted to acquire. Such an investment may be foreign branches or foreign bank
particularly complex sections, such as made under section 24, subject to FDIC approval, subsidiaries and allow for an after-the-
however, if the investment is made through a
existing section 347.104 into sections majority-owned subsidiary of the bank. It may also
fact notification to the FDIC in those
347.104 through 347.110, which are less be made if a company becomes majority-owned by circumstances, rather than requiring
complex sections but accomplish a the bank as a result of the investment and the ‘‘as prior approval under expedited
similar result. The FDIC also proposed principal’’ activities of the company are ones in processing, as is presently required
which a subsidiary of a national bank could engage.
to move and consolidate existing Ownership of more than 50 percent of the equity
under section 347.103(c)(1). The second
sections based on the subject matter in a nonbank foreign organization makes that way was to grant general consent to
addressed to make the requirements organization a majority-owned subsidiary and, thus, invest in a foreign organization, under
easier to locate and understand. For no section 24 analysis is required because such a proposed section 347.117(b)(2), when at
subsidiary is authorized only to engage in the same
example, existing sections 347.103, activities that the FRB has authorized for least one insured state nonmember bank
addressing foreign branch powers and subsidiaries of member banks (and thus national operates a foreign branch in the relevant
FDIC consent requirements, and banks) under Regulation K. In addition, while it is foreign country where the organization
347.108, addressing FDIC consent unnecessary for insured state nonmember bank will be located because of the FDIC’s
investments of 50 percent or less of the equity of
requirements for foreign investments, a nonbank foreign organization to be held through familiarity with the banking laws and
were made sections 347.115 an intermediate foreign bank subsidiary or Edge practices of that country. The ABA
(permissible activities for foreign subsidiary as required under Regulation K, those commented on this amendment and
investments are required to be held through some
branches), and 347.117 (general consent form of U.S. or foreign majority-owned subsidiary
expressed support for the proposed
for foreign branches and investments), in order to comply with the requirements of section change in general consent for foreign
347.118 (expedited processing for 24 and part 362. branches.
Although the FDIC received no FDI Act and International Banking Act branches, of a foreign bank seeking
comments on the proposed revision for concerning insured and noninsured U.S. deposit insurance from the FDIC. It also
foreign investments, an additional branches of foreign banks. The FDIC would have required the foreign bank to
clarification to proposed section proposed reorganizing the subpart by provide the FDIC with a written
347.117(b)(2) is included in this final grouping the existing sections that were commitment (including the foreign
rule. As indicated in the discussion applicable to insured State and Federal bank’s consent to U.S. court jurisdiction
contained in the NPR, when the FDIC branches at the beginning of the subpart, and designation of agent for service of
amended its foreign banking regulations followed by the sections applicable to process, acceptable to the FDIC) to:
in 1998, it declined to adopt a only State branches. In addition to • Permit examination of the foreign
suggestion that the FDIC grant general several minor revisions to the existing bank and affiliates located outside the
consent to invest in a foreign sections, the FDIC also proposed more U.S.;
organization when at least one insured substantive amendments. These • Provide information regarding the
state nonmember bank operates a included revising its existing rules to foreign bank and affiliates located
foreign branch in the relevant foreign update its foreign examination and outside the U.S.; and
country. This was due to concerns that information rule and applying them to • Permit examination and provide
‘‘nameplate’’ branches being operated in U.S. banking subsidiaries of foreign information regarding the offices and
foreign countries might fall within the banks, addressing how a grandfathered affiliates of the foreign bank that are
scope of the authorization. In the branch could be transferred to a new located in the U.S.
discussion of the proposed amendment foreign bank owner and retain the In addition, the proposal would have
in the NPR, the FDIC indicated that it branch’s grandfathered status, adopting allowed the FDIC to waive the foreign
believed most nameplate branches a risk-based approach for its asset examination provision if the FRB had
would be operated in jurisdictions pledge rule, and revising its asset determined that the foreign bank was
where authority to invest in foreign maintenance rule to compute asset subject to comprehensive consolidated
organizations by general consent would maintenance requirements based on a supervision (‘‘CCS’’). It also would have
be inapplicable under section daily calculation of the third-party allowed for the FDIC, in its discretion
347.119(a). Although the FDIC believes assets and liabilities. Finally, the FDIC and subject to the requirements
the discussion in the NPR was correct, proposed a new rule to facilitate cross- specified in the regulation, to waive
it is concerned that the standard may be border supervision of insured U.S. some or all of the commitment
somewhat imprecise. Therefore, the text branches of foreign banks and insured requirements imposed by the section in
contained in section 347.117(b)(2) has U.S. bank subsidiaries by providing for
lieu of requiring its own separate
been revised in the final rule to clearly the sharing of supervisory information
commitment from the foreign bank.
indicate that the existence of a ‘‘shell between the FDIC and foreign bank
There were two comments on
branch’’ (a term that the FDIC intends to regulatory or supervisory authorities
proposed section 347.204. The ABA
be synonymous with the term and addressing the confidentiality of
expressed support for the proposed
‘‘nameplate branch’’) in a foreign such information. These more
amendments to the section. The IIB
country will not provide a basis for substantive amendments are discussed
investment by general consent under in greater detail below. expressed concerns, however, about
section 347.117(b). Section 347.208 of the FDIC’s existing what it viewed as exertion of
Finally, the proposal contained a new rules addresses foreign bank agreements ‘‘extraterritorial’’ examination authority
section 347.122, which was intended to with the FDIC to be examined and over non-U.S. offices and affiliates of
enhance the FDIC’s existing supervisory provide information. The regulation foreign banks. The IIB also asserted that
authority. The section recognizes that implements section 10(b) of the FDI Act the proposal would reverse the FDIC’s
the FDIC may, under section 18(d)(2) (12 U.S.C. 1820(b)) and was initially longstanding position, dating back to
and 18(l) of the FDI Act, condition the issued in 1979. Although the regulation 1979, when the original rule was
authority granted under subpart A as it addresses foreign banks applying for adopted, when the FDIC recognized that
considers appropriate and provide for deposit insurance for U.S. branches, it despite its broad statutory authority to
termination of activities or divestiture of does not address deposit insurance conduct such examinations, home
investments permitted under the applications of U.S. depository country laws typically would prohibit
subpart, after giving the bank notice and institution subsidiaries of foreign the FDIC from doing so. Therefore, the
a reasonable opportunity to be heard, if banks.4 IIB observed, the FDIC adopted a
a bank is unable or fails to comply with To update the rule and enhance the compromise under which it asserted
the requirements of the subpart or any FDIC’s supervisory authority, the FDIC examination authority only over U.S.
conditions imposed by the FDIC proposed to redesignate the rule as branches and affiliates and required an
regarding transactions under the section 347.204 and substantially agreement to provide information
subpart. The only comment on the amend it to make it more useful. As concerning operations of non-U.S.
section was submitted by the ABA, envisioned in the proposal, the offices and affiliates. The IIB also felt
which expressed no opposition to the amended rule would have addressed that the proposed foreign examination
new section. several issues. It would have made the provision was largely unnecessary
After considering the proposed rule applicable to U.S. depository because the proposed rule contained
amendments contained in the NPR and institution subsidiaries, as well as U.S. waiver authority for foreign banks that
the comments submitted thereon, except had been determined to be subject to
as otherwise stated above, the FDIC is 4 The statute requires a foreign bank, in CCS. It noted that section 3 of the Bank
connection with obtaining deposit insurance for a Holding Company Act (12 U.S.C. 1842)
adopting all of the amendments to branch or depository institution subsidiary, to
subpart A of part 347 in this final rule submit a binding written commitment to the FDIC required a finding of comprehensive
as they were proposed. to permit any examination of the affairs of any consolidated supervision by the FRB
affiliate of the branch or depository institution before a foreign bank could acquire or
IV. Foreign Banks subsidiary to the extent necessary to determine: (1) establish a U.S. commercial bank
the relationship between the depository institution
The existing rules in part 347, subpart and the affiliate and (2) the effect of such subsidiary and that the acquisition by a
B primarily implement provisions of the relationship on such depository institution. foreign bank of control of a savings
association was subject to a CCS agency, or representative office. Because jurisdiction that are acceptable to the
determination by the OTS. the appropriate Federal banking FDIC; however, the consents are not
The FDIC has reviewed and agencies consider, as part of their CCS limited merely to court proceedings.7
considered the comments on proposed determination, whether the foreign Thus, the consent to jurisdiction and
section 347.204, as well as the bank’s home country supervisor designation of agent provisions have
information and an examination receives sufficient information on the been revised in the final rule to avoid
requirement contained in existing worldwide operations of the foreign giving the erroneous impression that
section 347.208, and has decided to bank to assess its overall financial consents to jurisdiction and
make several revisions to section condition and compliance with laws designations of agents that are limited to
347.204 in the final rule. and regulations, as specified in 12 CFR consent to jurisdiction of the U.S. courts
Although the IIB did not specifically 211.24(c)(ii), the FDIC believes and service of process in court
reference the 1979 statement mentioned acceptable commitments and assurances proceedings will be acceptable to the
in its comment, the FDIC believes that of cooperation by the foreign bank, FDIC.
the reference was to a comment coupled with appropriate supervisory Section 347.204(b)(3) of the proposal
contained in the preamble to the coordination and communication with has also been made paragraph (b) in the
proposed rule for the FDIC’s initial the home country regulator may be final rule and revised. Because the FDIC
foreign banking regulations. In that sufficient to satisfy the examination believes that an acceptable consent to
notice, the FDIC observed: commitment for a foreign bank and its U.S. jurisdiction and designation of
The FDIC is aware that most foreign banks affiliates outside the U.S. Thus, a CCS agent for service are essential
would be prohibited, or at least restricted, by determination from the appropriate components needed to obtain binding
law or policy of the country of the bank’s Federal banking agency should reduce commitments from the foreign bank, the
domicile from providing such a commitment. the need for foreign examination final rule clarifies that the consent to
Were the FDIC to require a commitment commitments. Therefore, the section has
allowing the FDIC to conduct a full jurisdiction and designation of agent for
been rewritten to eliminate the foreign service (and any limitations on the
examination of the bank, it is probable that
no foreign bank could operate an insured examination commitment requirement FDIC’s ability to utilize them) will be
branch. This result clearly is not intended. as a prerequisite for obtaining considered together with the
Thus, the FDIC proposes that a foreign bank consideration of a deposit insurance commitments provided by the foreign
agree to provide the FDIC with information application if the foreign bank has been bank. Additionally, as revised by the
regarding the affairs of the bank and its determined to be subject to CCS by the final rule, the section recognizes that the
affiliates which are located outside the appropriate Federal banking agency.6
United States. As to activities within the
FDIC also has discretion to consider any
The FDIC has also revised the final additional commitments or assurances
United States, the bank shall agree to allow rule to eliminate the waiver provisions
the FDIC to examine the affairs of the bank by the foreign bank, including that it
and its affiliates. 44 FR 23869, 23871 (April
contained in paragraph (b) of the will cooperate and assist the FDIC,
23, 1979). proposal. The first waiver provision including, without limitation, by
concerned the foreign examination seeking to obtain waivers and
The FDIC believes that this commitment, which is no longer
conservative approach may have been exemptions from applicable
addressed in paragraph (a) of the final confidentiality or secrecy restrictions or
prudent in the context of foreign banks rule. In addition, the other waiver
seeking deposit insurance for U.S. requirements to enable the foreign bank
provision, regarding waivers for or its affiliates to make such information
branches in the late 1970s but that the commitments provided to other Federal
approach has become somewhat available to the FDIC.
banking agencies, has been deleted.
outdated and the rule should be more Therefore, the FDIC is adopting
Although the latter provision was
reflective of the supervisory structure section 347.204, as revised in this final
intended to avoid the appearance of
that is currently in existence. In this rule, for application to deposit
duplication, the FDIC is concerned that
regard, it is noted that the underlying insurance applications of U.S. branches
such waivers may create the potential
statutory provision in the FDI Act and and depository institution subsidiaries
for uncertainty regarding the FDIC’s
the initial regulation preceded the of foreign banks.
authority under the commitments. Thus
failure of the Bank of Credit and Another issue addressed in the
the FDIC believes the potential
Commerce International (‘‘BCCI’’) in the proposal was an amendment contained
enforcement difficulties attendant to
early 1990s, which had an impact on such waivers outweigh the potential in proposed section 347.206(d),
certain insured depository institutions benefits of such waiver authority. concerning the transferability of
in the United States that had The FDIC also has revised the consent grandfathered branches to new foreign
undisclosed relationships with BCCI. to jurisdiction and designation of agent banks. As indicated in the proposal,
The underlying statutory provision and provisions in the final rule to clarify section 347.206 of the proposal is
initial regulation also preceded the those provisions by eliminating the largely derived from existing section
enactment of statutory amendments to ‘‘court’’ and ‘‘process’’ references. The 347.204(a)–(c) and implements section
the IBA, Bank Holding Company Act, FDIC presently requires that foreign 6(d) of the IBA (12 U.S.C. 3104(d)).8
and Home Owners Loan Act, as part of owners of insured depository As part of the EGRPRA process the IIB
the Foreign Bank Supervision and institutions, including foreign banks, requested that the FDIC adopt an
Enforcement Act of 1991,5 that require provide consents to personal interpretation of section 6(d) that would
comprehensive consolidated
7 The consents to jurisdiction and designation of
supervision determinations in certain 6 In the event that the FDIC receives an
agent that the FDIC presently uses also include
circumstances by the appropriate application for deposit insurance for a U.S. banking
subsidiary of a foreign bank that has not been consent to agency jurisdiction and investigations for
Federal banking agency under those determined to be subject to CCS by an appropriate various supervisory and enforcement purposes.
statutes, including the initial acquisition Federal banking agency, the FDIC expects the 8 Section 6(d) of the IBA allows any insured
of control or establishment of a U.S. foreign bank to provide the commitments required branches that were accepting or maintaining
by section 347.204 and it may also require the domestic retail deposit accounts on December 19,
bank, savings association, branch, foreign bank to provide the FDIC such additional 1991, to continue to operate as ‘‘grandfathered’’
commitments and assurances as the FDIC considers insured branches conducting domestic retail
5 Pub. L. 102–242, 105 Stat. 2236, 2286 (1991). necessary under the circumstances. deposit activities.
allow the grandfathered branch status of following the same process required for foreign banks with a competitive
an insured U.S. branch of a foreign bank domestic banks of establishing and advantage over domestic banks.
to survive the sale or transfer of the capitalizing a distinct corporate entity The IIB also noted that requiring a
branch from one foreign bank to another and applying for deposit insurance. specific proper motivation in a merger
foreign bank. As indicated in the The FDIC recognized, however, that and acquisition might even call into
proposal, the IIB’s view was that its existing regulations did not address question the survival of grandfathered
because the availability of the this issue and that there may be other status following a change in control of
grandfather exception appears to be situations, such as certain merger and the foreign parent bank. It suggested,
conditioned upon a single exception acquisition transactions, that are not regardless of the FDIC’s treatment of the
(that the branch was insured as of designed or motivated by the desire to broader transferability issue, that the
December 19, 1991), it was inconsistent obtain access to the domestic retail FDIC clarify that changes in control of
with the plain meaning of the statute to deposit market and avoid compliance the foreign parent bank will not
include an additional condition (that is, with the subsidiary requirement in terminate the grandfathered status of
the branch was not transferred after section 6(d) of the IBA, where the existing insured branches.
December 19, 1991). The IIB also grandfathered status of an insured The FDIC believes that it may be
observed that other grandfather branch should remain intact. Therefore, problematic to make a general statement
provisions enacted by Congress in the the FDIC proposed to address the issue such as that requested by the IIB in the
same statute expressly state that those by providing in section 347.206(d) of context of a rulemaking proceeding. The
grandfather rights terminate upon a the proposal that in certain FDIC believes that a change in
change in control. Therefore, the circumstances, such as certain merger ownership of a foreign bank that owns
absence of such a provision in the and acquisition transactions, which are an insured branch may affect the FDIC’s
grandfathered branch exception, it was not designed or motivated by the desire interest in the insured institution and
argued, indicates that Congress did not to obtain access to the domestic retail that the FDIC should have an
intend that an insured branch would deposit market and avoid compliance opportunity to evaluate the transaction
lose its grandfathered status upon its with the subsidiary requirement in before it is finalized. Therefore, since
sale or transfer. Additionally, the IIB section 6(d) of the IBA, the the universe of grandfathered insured
observed that permitting transfers of grandfathered status of an insured branches of foreign banks is very
grandfathered branches would provide branch should remain intact following limited, the FDIC believes that it is more
an option for other foreign banks that the transaction. appropriate for a foreign bank
would like to establish FDIC-insured The FDIC received comments from considering this type of transaction to
branches but are constrained from doing the ABA and IIB on the proposed discuss its planned structure with FDIC
amendment. The ABA indicated that it staff to evaluate whether the
so by the subsidiary requirement in
did not oppose the amendment, noting grandfathered status of the branch will
section 6(d) of the IBA. Finally, it was
that it appeared to state explicitly what remain intact following the proposed
observed that depositors would not lose
has been considered to be the law change in control of the existing foreign
the protections of deposit insurance
implicitly. The IIB, however, reiterated bank owner.
solely as a result of the sale or transfer Therefore, for the reasons previously
its previously expressed view that there
of an insured branch. stated, the FDIC is adopting section
was adequate legal authority for the
Having considered these points in the FDIC to permit, rather than prohibit, the 347.206, as proposed, in the final rule.
proposal, the FDIC observed that it had transferability of an insured branch to The FDIC also proposed to add a new
narrowly construed the exception in the another foreign bank without the loss of section 347.207 to the subpart to
past and that a broad reading of the its grandfathered status. It also facilitate cross-border supervision of
grandfather exception requested would suggested that permitting the insured U.S. branches and banking
be at odds with the distinct preference grandfathered status of the remaining 12 subsidiaries of foreign banks by
Congress stated in section 6(d) of the FDIC-insured branches to survive a providing for the sharing of supervisory
IBA of making foreign banks desiring to transfer of the branch would not be information between the FDIC and
engage in new domestic retail deposit fundamentally inconsistent with the foreign bank regulatory or supervisory
activities requiring deposit insurance 1991 Congressional determination that authorities. As indicated in the
after December 19, 1991 do so through foreign banks seeking to engage in new proposal, the section was patterned after
insured banking subsidiaries. The FDIC domestic retail activity do so through section 15 of the IBA (12 U.S.C. 3109)
also noted that it was a well recognized subsidiaries rather than branches. and 12 CFR 211.27. It also addressed the
rule of statutory construction that in As indicated earlier, the IIB’s legal confidentiality of such information,
ascertaining the plain meaning of a and policy arguments on the based upon the FDIC’s interpretation of
statute it is appropriate to look to the transferability issue were submitted section 8(v) of the FDI Act (12 U.S.C.
particular statutory language at issue, as prior to the issuance of the proposal and 1818(v)), by providing that the
well as the language and design of the were considered and discussed in the disclosure or transfer of such
statute as a whole. By reading the proposal. Although the FDIC recognizes information to a foreign bank regulatory
statute as a whole, rather than merely that it might be possible to make legal or supervisory authority will not waive
focusing on the precise language of the and policy arguments supporting the any privilege applicable to such
grandfathered branch exception, the IIB’s proposed broad reading of the information. The ABA’s comment
proposed broad reading of the exception grandfather exception, the FDIC indicated that it supported the addition
was contrary to the direction Congress continues to believe that the exception of the provision and it is being adopted
provided in section 6(a) of the IBA, should be construed narrowly, since it in the final rule without further
regarding implementation of the section, is contrary to Congress’ general amendment.
because purchasers of grandfathered direction that foreign banks only engage In amendments contained in section
branches could avoid forming and in retail deposit taking after December 347.209 of the proposal, the FDIC
capitalizing banking subsidiaries to 19, 1991, through banking subsidiaries proposed to revise the 5 percent asset
engage in domestic retail deposit with deposit insurance and that the pledge requirement, contained in
activity in the U.S., rather than statute not be construed to provide existing section 347.210, to make it
more risk-focused and take into not non-negotiable CDs with waivers of non-negotiable CDs with waivers of
consideration characteristics that may offset from their issuers, and U.S. offset had been considered acceptable
be unique to each insured branch. As Treasury bills would be considered collateral for over 20 years.
discussed in the proposal, under the eligible collateral under the rule. The FDIC has considered the
amended rule, the asset pledge All of the commenters discussed the comments and is making certain
requirement would be determined in a proposed amendments to this rule. The amendments to section 347.209 in the
manner similar to the approach the CSBS observed that the asset pledge and final rule. The FDIC asset pledge
FDIC has taken with its risk-based asset maintenance requirements were requirement was established to provide
deposit insurance assessment system. In extremely important and valuable the FDIC deposit insurance funds
addition, any newly insured branch supervisory tools. It also observed that, protection against losses on insured
would be subject to at least a 5 percent while the role of the state asset pledge deposit claims by depositors of U.S.
asset pledge requirement throughout the and asset maintenance requirements is branches of foreign banks. While the
first three years of its operations as an paramount for the protection of FDIC is aware that the level of assets
insured branch.9 After the first three creditors of uninsured branches, in the required to be pledged to the FDIC by
years of operations as an insured unique situation where retail deposits a foreign bank may have an economic
branch, the asset pledge amount would are insured by the FDIC, the major impact on the foreign bank, the FDIC’s
be adjusted by taking into consideration objective is the protection of depositors paramount interests are maintaining and
the percentage of assets maintained by and that certain states had taken the protecting the resources of the deposit
the insured branch, pursuant to section initiative to avoid the imposition of insurance funds that it administers and
347.210, and the supervisory double asset pledge requirements by honoring its deposit insurance
information relative to the branch at exempting FDIC insured branches from obligations to depositors of insured U.S.
issue. It was also envisioned that the state asset pledge requirements. branches of foreign banks. Inherent in
most recent ROCA rating 10 for the Therefore, given the unique situation the asset pledge requirement, regardless
insured branch will be a focal point of posed by insured branches of foreign of asset maintenance requirements
such supervisory information but, as banks and lack of effect on state imposed on U.S. branches, is the
with the risk-based premium system, prerogatives, the CSBS indicated that it possibility that those U.S. branch assets
the FDIC could also consider other did not object to the proposed may not be sufficient to pay the claims
supervisory information that it amendments to the FDIC asset pledge of domestic creditors, including the
considered appropriate to fully evaluate and maintenance rules. FDIC. Therefore, the FDIC believes that
the potential risk posed by the insured The ABA expressed general support the proposed risk-based approach,
branch in determining the supervisory for the amendments but suggested that including the two percent minimum
additional financial instruments be requirement, represents the best
subgroup assignment for the branch.
added to the eligible collateral list in the compromise between the interest of the
The appropriate percentage of assets
rule. The ABA observed that the list of FDIC in assuring that the deposit
required to be pledged would then be
assets that foreign banks may pledge insurance funds that it administers are
determined based on the supervisory
under the existing rule includes certain protected and the financial interests of
risk subgroup assigned and the asset
negotiable CDs and bankers acceptances foreign banks in the pledged assets.
maintenance level applicable to the
issued by state and national banks, but For similar reasons, although the
branch. The amended section would
does not include the same types of FDIC may have allowed non-negotiable
generally permit the asset pledge to be
instruments issued by state and federal CDs to be treated as eligible collateral in
lowered to not less than 2 percent of
savings associations. The ABA also the past, the FDIC is concerned that
third-party liabilities for insured observed that eligible collateral, under
branches that were perceived to pose a considering non-negotiable certificates
the existing rule, includes notes issued
lower potential risk and up to 8 percent of deposit as the equivalent of
by banks and bank holding companies
of liabilities for insured branches that negotiable certificates of deposit, for
but not savings associations and thrift
were perceived to pose a higher asset pledge purposes, fails to take into
holding companies. The ABA believed
potential risk to the deposit insurance consideration the potentially decreased
that there was no reason to distinguish
fund. In addition, the FDIC’s ability to value of non-negotiable certificates of
between banks, savings associations,
require a higher percentage of pledged deposit in the event of a forced sale,
and their respective corporate parents in
assets in appropriate circumstances which is precisely the time the FDIC
this manner, since financial instruments
would remain unchanged. would be most concerned about their
provided by these other issuers also
The FDIC also proposed amendments value, because of their non-
would provide the same protection from
to the ‘‘eligible collateral’’ portion of the the FDIC. negotiability. Therefore, except as
rule to specify that ‘‘negotiable’’ The IIB supported adoption of a risk- provided in the final rule, the FDIC is
certificates of deposit (‘‘CDs’’) with based asset pledge requirement but adopting the proposal to allow only
waivers of offset from their issuers, but believed the proposed two percent negotiable CDs with waivers of offset to
minimum pledge amount should be be treated as eligible collateral for
9 The asset pledge requirement of newly insured
eliminated in favor of either (i) a purposes of section 347.209. A limited
branches has been revised in the final rule to exception is provided in the final rule,
provide that the pledge will be based on the completely risk-based requirement or
branch’s projection of its liabilities at the end of (ii) a smaller minimum. The IIB also however, to treat non-negotiable CDs
each year during the first three years of its disagreed with the FDIC’s proposal to that insured branches have pledged on
operations. This revision is intended to avoid amend the eligible collateral March 18, 2005 as eligible collateral
requiring a newly insured branch to pledge assets until those certificates of deposit mature
based on its third year projected liabilities, which requirement to require negotiable CDs
will likely reflect its largest liability balance, during with waivers of offset because of the according to the original terms of their
its first and second years of operations, when its practical burdens associated with existing deposit agreements.11 Finally,
projected liabilities will presumably be lower. requiring grandfathered branches to
10 The ROCA system represents the rating of risk 11 The FDIC recognizes that obtaining waivers of
management, operational controls, compliance, and

substitute negotiable CDs with waivers offset from issuers of negotiable certificates of
asset quality of a Foreign Banking Organization’s of offset for non-negotiable CDs with deposit may make the pledge of certificates of
U.S. operations. waivers of offset. It also observed that Continued
the FDIC agrees with the ABA’s branch’s third-party liabilities for the • A ‘‘plain meaning’’ construction of
recommendation concerning other types preceding quarter. In addition, section 5(b) permits ‘‘any branch’’—
of eligible collateral and the final rule appropriate conforming changes are also including a wholesale branch—to
has been amended to include those being made in the final rule to section become insured;
additional types of financial 347.210(d), based on revisions being • Congress expressly prohibited
instruments. made to paragraph (a). foreign banks from obtaining FDIC
The FDIC also proposed various There were no public comments on insurance for branches ‘‘engaged in
amendments relating to the asset the proposed amendments to subpart B, domestic retail deposit activities’’ but
maintenance calculation for insured other than those discussed above, and did not remove the statutory provisions
branches, in section 347.210 of the they are being adopted in the final rule, authorizing foreign banks to apply for
proposal, including a revision that with the revisions previously discussed. deposit insurance for wholesale
would have required insured branches branches;
to maintain eligible assets at a ratio of V. Deposit Insurance for Wholesale U.S. • The FDIC’s approach ignores
not less than 106 percent of the insured Branches of Foreign Banks significant changes in regulatory
branch’s daily third-party liabilities, The FDIC included a request for practices and structures that have
rather than based upon the preceding comments in the NPR concerning occurred since 1991 with regard to
quarter’s average book value of the whether the FDIC should revise its foreign banks; broader acceptance of the
insured branch’s liabilities. The existing views regarding the availability principle of ‘‘investor choice;’’ and
amendment was proposed to avoid of FDIC insurance for wholesale U.S. rejection of a broader policy to force
potential anomalies that could be branches of foreign banks. foreign banks to operate in the U.S. only
caused by using liability information As explained in the NPR, the IIB through subsidiaries;
from the preceding quarter, such as • Wholesale depositors often seek the
expressed the view that some foreign
instances where grandfathered branches benefits of FDIC insurance—even
banks with U.S. wholesale branches
that were winding down their though the full amount of their deposits
(i.e., branches that are not engaged in
operations needed to calculate their may not be insured. The ability to offer
domestic retail deposit activities that
asset maintenance on a daily basis to these benefits through a U.S. branch
require FDIC insurance) may be
maintain compliance with the rule. would provide a benefit to customers
interested in obtaining deposit
Two of the commenters addressed and increase a foreign bank’s funding
insurance but that certain statements the
this revision. The ABA expressed options;
FDIC made in the context of a 1998 final • Optional FDIC insurance is likely to
support for the amendment. The IIB,
rule may have had the effect of be attractive primarily to foreign banks
however, suggested that the mere
discouraging international banks from already operating FDIC-insured
change of the longstanding quarterly
applying for ‘‘optional’’ deposit branches and subsidiaries in the U.S.
calculation method would impose
insurance and that the FDIC should not and to a relatively small number of
systems and other burdens on insured
branches that it felt could be avoided by continue to discourage this effort. other foreign banks, especially those
the FDIC continuing to resolve such In that 1998 final rule (63 FR 17056), seeking to serve particular ethnic
situations on a case-by-case basis. The which accompanied the issuance of the markets. As a result, a more liberal
IIB also suggested that the FDIC might FDIC’s existing foreign banking rules in policy likely would have a minimal
consider a specific modification to the 1998, the FDIC observed that because effect on the deposit insurance fund;
existing asset maintenance requirement section 5(b) of the FDI Act (12 U.S.C. and
for branches that are winding down 1815(b)), addressing deposit insurance • Permitting wholesale branches to
their operations. applications for U.S. branches of foreign obtain deposit insurance is consistent
The FDIC has considered the banks, had not been repealed, it with the business model that has been
comments, as well as the IIB’s arguably may be possible for a U.S. followed by some major U.S. banks that
representations to FDIC staff that it is branch of a foreign bank that does not have retained insurance while focusing
less difficult to calculate asset engage in domestic retail deposit on wholesale markets.
maintenance, based on fixed liability activity to seek deposit insurance from Some of the arguments and
numbers, than based on the daily assets the FDIC. The FDIC also observed, observations countering the IIB’s
and liabilities of a branch, which can however, that as a practical matter, it arguments were:
fluctuate, and has decided to retain the did not foresee many circumstances in • Difficulty in reconciling the idea
substance of the asset maintenance which it could be appropriate for the that Congress imposed the subsidiary
requirements specified in existing FDIC’s Board of Directors to approve requirement with regard to domestic
section 347.211(a). In doing so, the FDIC such an application, but that the retail deposit activity requiring deposit
notes that the daily calculation method elimination of the optional insurance insurance for the protection of the FDIC
specified in the existing rule may be rule would not affect a foreign bank’s with the implicit assumption that
used to address situations where the ability to argue that it may make such Congress did not believe such
quarterly calculation method is an application under section 5(b) of the protection of the FDIC was needed with
considered inappropriate from a FDI Act. Finally, the FDIC noted that the regard to wholesale branches of foreign
supervisory perspective. This authority FDIC Board of Directors would have to banks because the first $100,000 of
may be utilized, in the FDIC’s determine whether to actually accept customer deposits in a wholesale branch
discretion, in instances where the and approve such an application, based would be insured to the same extent as
current third-party liabilities of a branch on its review of the facts and deposits maintained in any other FDIC
decline or increase substantially in circumstances involved, in addition to insured depository institution;
relation to the average book value of the the pertinent legal and policy • Unlike bank subsidiaries, branches
considerations. function as an integral part of the
deposit less attractive to foreign banks but there are Among the arguments the IIB foreign bank itself and do not have their
several other types of financial instruments advanced to support an expanded view own independent board of directors.
specified in the rule, besides certificates of deposit,
that can be pledged by foreign banks to meet the of the availability of deposit insurance Thus, the directors of a foreign bank are
collateral requirements. for wholesale branches were: not usually subject to the U.S.
jurisdiction, and domestic branch VI. Paperwork Reduction Act implement part 347. The rules in
personnel essential to explaining certain In accordance with the requirements subpart A of part 347 address issues
transactions could be transferred of the Paperwork Reduction Act of 1995 related to the international activities
beyond the reach of U.S. authorities; (44 U.S.C. 3501 et seq.), the FDIC may and investments of insured state
• Essential records could also be not conduct or sponsor, and the nonmember banks. In general, they
difficult to reach if they are kept at the respondent is not required to respond implement the FDIC’s statutory
head office or at branches in other to, an information collection unless it authority under section 18(d)(2) of the
countries; displays a currently valid Office of Federal Deposit Insurance Act (FDI Act)
• A U.S. branch could be subjected to Management and Budget (OMB) control (12 U.S.C. 1828(d)(2)), regarding
requirements under foreign laws or to number. The FDIC has two OMB- branches of insured state nonmember
political or economic decisions of a approved information collections banks in foreign countries, and section
foreign government which conflict with (3064–0125, Foreign Branching and 18(l) of the FDI Act, regarding insured
domestic bank regulatory policies; Investment by Insured State state nonmember bank investments in
Nonmember Banks, and 3064–0114, foreign entities. As of September 30,
• Operating through a branch, as 2004, there were approximately 4,800
opposed to subsidiary structure, allows Foreign Banks) that cover the paperwork
burden associated with subparts A and state nonmember commercial banks, but
foreign banks the ability to engage in fewer than 40 of those institutions
transactions with the home office B of part 347. The information
collections in 3064–0125 consist of report having foreign offices. Available
without significant operational information indicates that state
restrictions that might otherwise be applications related to establishing and
closing a foreign branch; applications nonmember banks with foreign
applied to transactions with affiliates of investments or foreign branches are not
insured U.S. banks; and related to acquiring stock of a foreign
organization; and records and reports small entities.
• Due to the operating relationship of The final rule also makes revisions to
a branch to its home office and which a nonmember bank must
maintain once it has established a update, reorganize, and clarify the
dependence on the home office for existing rules in subpart B of part 347,
financial support, the insolvency of a foreign branch or foreign organization.
The information collections in 3064– as well as additional revisions and
foreign bank with a multinational amendments that address supervisory
branch structure will result in the 0114 consist of applications to operate
as a noninsured state-licensed branch of issues. The rules in subpart B of part
insolvency of the branches and this may 347 principally address issues related to
pose complicated and time-consuming a foreign bank; applications from an
insured state-licensed branch of a insured and noninsured U.S. branches
issues regarding the resolution of the of foreign banks under section 6 of the
branch that could more likely be foreign bank to conduct activities which
are not permissible for a federally- International Banking Act (IBA) (12
avoided in situations involving banking U.S.C. 3104). As of December 31, 2004,
subsidiaries. licensed branch; internal recordkeeping
by insured branches of foreign banks; there were approximately 199 U.S.
The FDIC received two comments and reporting requirements related to an branches of foreign banks, including 12
concerning this section. The CSBS insured branch’s pledge of assets to the insured branches. Of this number, there
expressed support for the view that FDIC. This proposal to amend part 347, were approximately 90 U.S. branches of
‘‘optional insurance’’ is not specifically subparts A and B will not result in any foreign banks that appear to qualify as
authorized by statute. The IIB indicated change in the current estimated small entities, including 6 insured
that it continued to believe that the paperwork burden associated with the branches. The 12 insured branches are
FDIC’s concerns, such as those regulation, therefore no submission has presently subject to the FDIC’s asset
regarding the potential impact on the been made to OMB under the pledge requirement, which is revised in
FDIC insurance fund, were misplaced or Paperwork Reduction Act. section 347.209 of the final rule.
could be adequately addressed by other Although the revision of the asset
means. The IIB also requested that no VII. Regulatory Flexibility Act pledge requirement to implement a risk-
action be taken on its request to allow Under the Regulatory Flexibility Act based approach may result in an
it to continue to explore ways to address (RFA), an agency must either prepare a increase in the amount of assets pledged
the FDIC’s concerns. Final Regulatory Flexibility Analysis for insured branches with low
As the FDIC has indicated above, (FRFA) for a final rule or certify that the supervisory ratings, the FDIC does not
there are arguments that can be made for final rule will not have a significant believe this will affect the insured
providing deposit insurance coverage to economic impact on a substantial branches that qualify as small entities.
wholesale U.S. branches of foreign number of small entities. See 5 U.S.C. Other revisions to the rules affecting
banks, as well as compelling arguments 604, 605(b). For purposes of the analysis noninsured branches are not substantive
that can be made against providing such or certification, financial institutions and, thus, should have no significant
coverage. Therefore, the FDIC has with assets of $150 million or less are economic impact on noninsured
decided to maintain its previously considered ‘‘small entities.’’ The FDIC branches that qualify as small entities.
stated position that, as a practical has reviewed the impact of this final VIII. Assessment of Federal Regulations
matter, it does not foresee many rule on small banks and, for the reasons and Policies on Families
circumstances in which it could be provided below, certifies that the final
appropriate for the FDIC’s Board of rule will not have a significant The FDIC has determined that the
Directors to approve such an application economic impact on a substantial final rule will not affect family well-
and that the FDIC Board of Directors number of small entities. being within the meaning of section 654
would have to determine whether to The final rule makes primarily of the Treasury and General
actually accept and approve such an technical revisions to update, Government Appropriations Act,
application, based on its review of the reorganize, and clarify the existing rules enacted as part of the Omnibus
facts and circumstances involved, in in subpart A of part 347 and subpart J Consolidated and Emergency
addition to the pertinent legal and of part 303. Subpart J of part 303 Supplemental Appropriations Act of
policy considerations. contains the procedural rules that 1999 (Pub. L. 105–277, 112 Stat. 2681).
IX. Plain Language Requirement § 303.182 Establishing, moving or closing processing will be acknowledged in
a foreign branch of an insured state writing by the FDIC and will receive
Section 722 of the Gramm-Leach- nonmember bank. expedited processing, unless the
Bliley Act (GLBA) (12 U.S.C. 4809), (a) Notice procedures for general applicant is notified in writing to the
requires banking agencies to use plain consent. Notice in the form of a letter contrary and provided with the basis for
language in all proposed and final rules from an eligible depository institution that decision. The FDIC may remove the
published after January 1, 2000. The establishing or relocating a foreign application from expedited processing
proposed rule requested comments on branch pursuant to § 347.117(a) of this for any of the reasons set forth in
how the rule might be changed to reflect chapter must be provided to the § 303.11(c)(2) of this part. Absent such
the requirements of GLBA. No GLBA appropriate FDIC office no later than 30 removal, an application processed
comments were received. days after taking such action. The notice under expedited processing is deemed
X. Small Business Regulatory must include the location of the foreign approved 45 days after receipt of a
Enforcement Fairness Act branch, including a street address, and substantially complete application by
a statement that the foreign branch has the FDIC, or on such earlier date
The Office of Management and Budget not been located on a site on the World authorized by the FDIC in writing.
has determined that the final rule is not Heritage List or on the foreign country’s (2) Standard processing. For those
a ‘‘major rule’’ within the meaning of equivalent of the National Register of applications that are not processed
the relevant sections of the Small Historic Places (National Register), in pursuant to the expedited procedures,
Business Regulatory Enforcement accordance with section 402 of the the FDIC will provide the applicant
Fairness Act of 1996 (SBREFA) (5 U.S.C. National Historic Preservation Act with written notification of the final
801 et seq.). As required by SBREFA, Amendments of 1980 (NHPA action when the decision is rendered.
the FDIC will file the appropriate Amendments Act) (16 U.S.C. 470a–2). (d) Closing. Notices of branch closing
reports with Congress and the General The FDIC will provide written under § 347.121 of this chapter, in the
Accounting Office so that the final rule acknowledgment of receipt of the form of a letter including the name,
may be reviewed. notice. location, and date of closing of the
List of Subjects (b) Filing procedures for other branch closed branch, shall be filed with the
establishments—(1) Where to file. An appropriate FDIC office no later than 30
12 CFR Part 303 applicant seeking to establish a foreign days after the branch is closed.
Administrative practice and branch other than under § 347.117(a) of ■ 3. Amend § 303.183 by revising the
procedure, Authority delegations this chapter shall submit an application section heading and paragraphs (a),
(Government agencies), Bank deposit to the appropriate FDIC office. (b)(1), and (c)(1) to read as follows:
insurance, Banks, banking, Reporting (2) Content of filing. A complete letter
application must include the following § 303.183 Investment by insured state
and recordkeeping requirements, nonmember banks in foreign organization.
Savings associations. information:
(i) The exact location of the proposed (a) Notice procedures for general
12 CFR Part 325 foreign branch, including the street consent. Notice in the form of a letter
address, and a statement whether the from an eligible depository institution
Banks, banking, Reporting and making direct or indirect investments in
recordkeeping requirements. foreign branch will be located on a site
on the World Heritage List or on the a foreign organization pursuant to
12 CFR Part 327 foreign country’s equivalent of the § 347.117(b) of this chapter shall be
National Register, in accordance with provided to the appropriate FDIC office
Bank deposit insurance, Banks, no later than 30 days after taking such
banking, Savings associations. section 402 of the NHPA Amendments
Act; action. The FDIC will provide written
12 CFR Part 347 (ii) Details concerning any acknowledgment of receipt of the
involvement in the proposal by an notice.
Authority delegations (Government (b) Filing procedures for other
insider of the applicant, as defined in
agencies), Bank deposit insurance, investments—(1) Where to file. An
§ 303.2(u) of this part, including any
Banks, banking, Credit, Foreign banking, applicant seeking to make a foreign
financial arrangements relating to fees,
Investments, Reporting and investment other than under
the acquisition of property, leasing of
recordkeeping requirements, United § 347.117(b) of this chapter shall submit
property, and construction contracts;
States investments abroad. (iii) A brief description of the an application to the appropriate FDIC
■ For the reasons set forth above and applicant’s business plan with respect office.
under the authority of 12 U.S.C. 1819(a) to the foreign branch; and * * * * *
(Tenth), the FDIC Board of Directors (iv) A brief description of the (c) Processing—(1) Expedited
hereby amends 12 CFR chapter III as proposed activities of the branch and, to processing for eligible depository
follows: the extent any of the proposed activities institutions. An application filed under
are not authorized by § 347.115 of this § 347.118(b) of this chapter by an
PART 303—FILING PROCEDURES chapter, the applicant’s reasons why eligible depository institution as defined
they should be approved. in § 303.2(r) of this part seeking to make
Subpart J—International Banking (3) Additional information. The FDIC direct or indirect investments in a
■ 1. The authority citation for part 303 is may request additional information to foreign organization will be
revised to read as follows: complete processing. acknowledged in writing by the FDIC
(c) Processing—(1) Expedited and will receive expedited processing,
Authority: 12 U.S.C. 378, 1813, 1815, 1817, processing for eligible depository unless the applicant is notified in
1818, 1819 (Seventh and Tenth), 1820, 1823, institutions. An application filed under writing to the contrary and provided
1828, 1831a, 1831e, 1831o, 1831p–1, 1831w, § 347.118(a) of this chapter by an with the basis for that decision. The
1835a, 1843(l), 3104, 3105, 3108, 3207; 15 eligible depository institution as defined FDIC may remove the application from
U.S.C. 1601–1607.
in § 303.2(r) of this part seeking to expedited processing for any of the
■ 2. Revise § 303.182 to read as follows: establish a foreign branch by expedited reasons set forth in § 303.11(c)(2) of this
part. Absent such removal, an § 303.186 Exemptions from insurance (ii) Maintains the eligible assets
application processed under expedited requirements for a state branch of a foreign prescribed under § 347.210 of this
processing is deemed approved 45 days bank. chapter at 108 percent or more of the
after receipt of a substantially complete (a) Filing procedures— (1) Where to preceding quarter’s average book value
application by the FDIC, or on such file. An application by a foreign bank for of the insured branch’s third-party
earlier date authorized by the FDIC in consent to operate as a noninsured state liabilities; and
writing. branch, as permitted by § 347.215(b) of (iii) Has not received written
* * * * * this chapter, shall be submitted in notification from:
writing to the appropriate FDIC office. (A) The OCC to increase its capital
■ 4. Amend § 303.184 to revise equivalency deposit pursuant to 12 CFR
* * * * *
paragraph (b)(1) and add paragraph (e) to ■ 6. Amend § 303.187 to revise the 28.15(b), or to comply with asset
read as follows: section heading and paragraphs (a)(1), maintenance requirements pursuant to
§ 303.184 Moving an insured branch of a (a)(2)(iv) and (b)(1) to read as follows: 12 CFR 28.20; or
foreign bank. (B) The FDIC to pledge additional
§ 303.187 Approval for an insured state assets pursuant to § 347.209 of this
* * * * * branch of a foreign bank to conduct chapter or to maintain a higher ratio of
(b) Processing—(1) Expedited activities not permissible for federal eligible assets pursuant to § 347.210 of
branches.
processing for eligible insured branches. this chapter.
An application filed by an eligible (a) Filing procedures—(1) Where to (2) Adequately capitalized if the
insured branch as defined in file. An application by an insured state insured branch:
§ 303.181(c) of this part will be branch seeking approval to conduct (i) Maintains the pledge of assets
acknowledged in writing by the FDIC activities not permissible for a federal required under § 347.209 of this chapter;
and will receive expedited processing if branch, as required by § 347.212(a) of and
the applicant is proposing to move this chapter, shall be submitted in (ii) Maintains the eligible assets
within the same state, unless the writing to the appropriate FDIC office. prescribed under § 347.210 of this
applicant is notified to the contrary and (2) * * * chapter at 106 percent or more of the
provided with the basis for that (iv) A statement by the applicant of preceding quarter’s average book value
decision. The FDIC may remove an whether it is in compliance with of the insured branch’s third-party
application from expedited processing sections 347.209 and 347.210 of this liabilities; and
for any of the reasons set forth in chapter; (iii) Does not meet the definition of a
§ 303.11(c)(2) of this part. Absent such * * * * * well capitalized insured branch.
removal, an application processed (b) Divestiture or cessation—(1) (3) Undercapitalized if the insured
under expedited processing will be Where To file. Divestiture plans branch:
deemed approved on the latest of the necessitated by a change in law or other (i) Fails to maintain the pledge of
following: authority, as required by § 347.212(e) of assets required under § 347.209 of this
this chapter, shall be submitted in chapter; or
(i) The 21st day after the FDIC’s (ii) Fails to maintain the eligible
writing to the appropriate FDIC office.
receipt of a substantially complete assets prescribed under § 347.210 of this
application; or * * * * *
chapter at 106 percent or more of the
(ii) The 5th day after expiration of the PART 325—CAPITAL MAINTENANCE preceding quarter’s average book value
comment period described in paragraph of the insured branch’s third-party
(c) of this section. ■ 7. The authority citation for part 325 liabilities.
continues to read as follows: (4) Significantly undercapitalized if it
* * * * *
Authority: 12 U.S.C. 1815(a), 1815(b), fails to maintain the eligible assets
(e) Relocation of insured branch from 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819 prescribed under § 347.210 of this
one state to another. If the foreign bank (Tenth), 1828(c), 1828(d), 1828(i), 1828(n), chapter at 104 percent or more of the
proposes to relocate an insured state 1828(o), 1831o, 1835, 3907, 3909, 4808; Pub. preceding quarter’s average book value
branch to a state that is outside the state L. 102–233, 105 Stat. 1761, 1789, 1790 (12 of the insured branch’s third-party
where the branch is presently located, U.S.C. 1831n note); Pub. L. 102–242, 105 liabilities.
in addition to meeting the approval Stat. 2236, 2355, as amended by Pub. L. 103– (5) Critically undercapitalized if it
criteria contained in paragraph (d) of 325, 108 Stat. 2160, 2233 (12 U.S.C. 1828
note); Pub. L. 102–242, 105 Stat. 2236, 2386,
fails to maintain the eligible assets
this section, the foreign bank must: prescribed under § 347.210 of this
as amended by Pub. L. 102–550, 106 Stat.
(i) Comply with any applicable state 3672, 4089 (12 U.S.C. 1828 note). chapter at 102 percent or more of the
laws or regulations of the states affected ■ 8. Amend § 325.103 to revise preceding quarter’s average book value
by the proposed relocation; and paragraph (c) to read as follows: of the insured branch’s third-party
(ii) Obtain any required regulatory liabilities.
§ 325.103 Capital measures and capital * * * * *
approvals from the appropriate state
category definitions.
licensing authority of the state to which
the insured branch proposes to relocate * * * * * PART 327—ASSESSMENTS
before relocating the existing branch (c) Capital categories for insured
■ 9. The authority citation for part 327
operations and surrendering its existing branches of foreign banks. For purposes
continues to read as follows:
license to the appropriate state licensing of the provisions of section 38 and this
subpart, an insured branch of a foreign Authority: 12 U.S.C. 1441, 1441b, 1813,
authority of the state from which the 1815, 1817–1819; Pub. L. 104–208, 110 Stat.
branch is relocating. bank shall be deemed to be:
(1) Well capitalized if the insured 3009–479 (12 U.S.C. 1821).
* * * * * branch: ■ 10. In § 327.4, revise paragraphs
■ 5. Amend § 303.186 to revise the (i) Maintains the pledge of assets (a)(1)(i)(B)(1), (a)(1)(i)(B)(2),
section heading and paragraph (a)(1) to required under § 347.209 of this chapter; (a)(1)(ii)(B)(1), and (a)(1)(ii)(B)(2) to read
read as follows: and as follows:
§ 327.4 Annual assessment rate. 347.116 Recordkeeping and supervision of nonmember banks, as well as the FDIC’s
(a) * * * the foreign activities of insured state requirements for establishing, operating,
(1) * * * nonmember banks. relocating and closing of branches in
347.117 General consent. foreign countries.
(i) * * * 347.118 Expedited processing.
(B) * * * 347.119 Specific consent. § 347.102 Definitions.
(1) Maintains the pledge of assets 347.120 Computation of investment
required under § 347.209 of this chapter; amounts.
For the purposes of this subpart:
and 347.121 Requirements for insured state (a) An affiliate of an insured state
(2) Maintains the eligible assets nonmember bank to close a foreign nonmember bank means:
prescribed under § 347.210 of this branch. (1) Any entity of which the insured
chapter at 108 percent or more of the 347.122 Limitations applicable to the state nonmember bank is a direct or
average book value of the insured authority provided in this subpart. indirect subsidiary or which otherwise
branch’s third-party liabilities for the controls the insured state nonmember
Subpart B—Foreign Banks
quarter ending on the report date bank;
347.201 Authority, purpose, and scope. (2) Any organization which is a direct
specified in paragraph (a)(1) of this 347.202 Definitions.
section. or indirect subsidiary of such entity or
347.203 Deposit insurance required for all
(ii) * * * branches of foreign banks engaged in
which is otherwise controlled by such
(B) * * * domestic retail deposit activity in the entity; or
same state. (3) Any other organization that is a
(1) Maintains the pledge of assets
347.204 Commitment to be examined and direct or indirect subsidiary of the
required under § 347.209 of this chapter;
provide information. insured state nonmember bank or is
and
347.205 Record maintenance. otherwise controlled by the insured
(2) Maintains the eligible assets 347.206 Domestic retail deposit activity state nonmember bank.
prescribed under § 347.210 of this requiring deposit insurance by U.S. (b) Control means the ability to
chapter at 106 percent or more of the branch of a foreign bank. control in any manner the election of a
average book value of the insured 347.207 Disclosure of supervisory majority of an organization’s directors or
branch’s third-party liabilities for the information to foreign supervisors.
347.208 Assessment base deductions by
trustees; or the ability to exercise a
quarter ending on the report date
insured branch. controlling influence over the
specified in paragraph (a)(1) of this
347.209 Pledge of assets. management and policies of an
section; and
347.210 Asset maintenance. organization. An insured state
* * * * * 347.211 Examination of branches of foreign nonmember bank is deemed to control
■ 11. Revise part 347 to read as follows: banks. an organization of which it is a general
347.212 FDIC approval to conduct activities partner or its affiliate is a general
PART 347—INTERNATIONAL that are not permissible for federal partner.
BANKING branches. (c) Domestic means United States.
347.213 Establishment or operation of (d) Eligible insured state nonmember
Subpart A—Foreign Banking and noninsured foreign branch.
Investment by Insured State 347.214 Branch established under section 5
bank means an eligible depository
Nonmember Banks of the International Banking Act. institution as defined in § 303.2(r) of
347.215 Exemptions from deposit insurance this chapter.
Sec. requirement. (e) Equity interest means any
347.101 Authority, purpose, and scope. 347.216 Depositor notification. ownership interest or rights in an
347.102 Definitions. organization, whether through an equity
347.103 Effect of state law on actions taken Subpart C—International Lending
security, contribution to capital, general
under this subpart. 347.301 Purpose, authority, and scope. or limited partnership interest, debt or
347.104 Insured state nonmember bank 347.302 Definitions.
investment in foreign organizations. 347.303 Allocated transfer risk reserve.
warrants convertible into ownership
347.105 Permissible financial activities 347.304 Accounting for fees on interests or rights, loans providing profit
outside the United States. international loans. participation, binding commitments to
347.106 Going concerns. 347.305 Reporting and disclosure of acquire any such items, or some other
347.107 Joint ventures. international assets. form of business transaction.
347.108 Portfolio investments. Authority: 12 U.S.C. 1813, 1815, 1817, (f) Equity security means voting or
347.109 Limitations on indirect nonvoting shares, stock, investment
1819, 1820, 1828, 3103, 3104, 3105, 3108,
investments in nonfinancial contracts, or other interests representing
3109; Title IX, Pub. L. 98—181, 97 Stat. 1153.
organizations. ownership or participation in a
347.110 Affiliate holdings. § 347.101 Authority, purpose, and scope. company or similar enterprise, as well
347.111 Underwriting and dealing limits
applicable to foreign organizations held
(a) This subpart is issued pursuant to as any instrument convertible to any
by insured state nonmember banks. section 18(d) and (l) of the Federal such interest at the option of the holder
347.112 Restrictions applicable to foreign Deposit Insurance Act (12 U.S.C. without payment of substantial
organizations that act as futures 1828(d), 1828(l)). additional consideration.
commission merchants. (b) The rules in subpart A address the (g) FRB means the Board of Governors
347.113 Restrictions applicable to activities FDIC’s requirements for insured state of the Federal Reserve System.
by a foreign organization in the United nonmember bank investments in foreign (h) Foreign bank means an
States. organizations, permissible foreign organization that is organized under the
347.114 Extensions of credit to foreign financial activities, loans or extensions laws of a foreign country, a territory of
organizations held by insured state of credit to or for the account of foreign the United States, Puerto Rico, Guam,
nonmember banks; shares of foreign
organizations held in connection with
organizations, and the FDIC’s American Samoa, or the Virgin Islands
debts previously contracted. recordkeeping, supervision, and that:
347.115 Permissible activities for a foreign approval requirements. The rules also (1) Is recognized as a bank by the bank
branch of an insured state nonmember address the permissible activities for supervisory or monetary authority of the
bank. foreign branches of insured state country of its organization or the
country in which its principal banking than those relating to the personnel and to compliance with any attendant
operations are located; premises of the representative office. restrictions in 12 CFR 225.28(b).
(2) Receives deposits to a substantial (t) Subsidiary means any organization (4) Acting as a fiduciary, subject to
extent in the regular course of its more than 50 percent of the voting compliance with any attendant
business; and equity interests of which are directly or restrictions in 12 CFR 225.28(b).
(3) Has the power to accept demand indirectly held by another organization. (5) Underwriting credit life, credit
deposits. (u) Tier 1 capital means Tier 1 capital accident and credit health insurance.
(i) Foreign banking organization as defined in § 325.2 of this chapter. (6) Performing services for other
means a foreign organization that is (v) Well capitalized means well direct or indirect operations of a
formed for the sole purpose of either capitalized as defined in § 325.103 of domestic banking organization,
holding shares of a foreign bank or this chapter. including representative functions, sale
performing nominee, fiduciary, or other of long-term debt, name saving,
§ 347.103 Effect of state law on actions
banking services incidental to the liquidating assets acquired to prevent
taken under this subpart.
activities of a foreign branch or foreign loss on a debt previously contracted in
bank affiliate of the insured state A bank may acquire and retain equity good faith, and other activities that are
nonmember bank. interests in a foreign organization or permissible for a bank holding company
(j) Foreign branch means an office or establish a foreign branch, subject to the under sections 4(a)(2)(A) and 4(c)(1)(C)
place of business located outside the requirements of this subpart, if it is of the Bank Holding Company Act.
United States, its territories, Puerto authorized to do so by the law of the (7) Holding the premises of a branch
Rico, Guam, American Samoa, the Trust state in which the bank is chartered. of an Edge corporation or insured state
Territory of the Pacific Islands, or the § 347.104 Insured state nonmember bank nonmember bank or the premises of a
Virgin Islands, at which banking investments in foreign organizations. direct or indirect subsidiary, or holding
operations are conducted, but does not (a) Investment in foreign banks or or leasing the residence of an officer or
include a representative office. foreign banking organizations. A bank employee of a branch or a subsidiary.
(k) Foreign country means any may directly or indirectly acquire and (8) Providing investment, financial, or
country other than the United States retain equity interests in a foreign bank economic services, subject to
and includes any territory, dependency, or foreign banking organization. compliance with any attendant
or possession of any such country or of (b) Investment in other foreign restrictions in 12 CFR 225.28(b).
the United States. organizations. A bank may only: (1) (9) General insurance agency and
(l) Foreign organization means an acquire and retain equity interests in brokerage.
organization that is organized under the foreign organizations, other than foreign (10) Data processing.
laws of a foreign country. banks or foreign banking organizations (11) Organizing, sponsoring, and
(m) Insured state nonmember bank or in amounts of 50 percent or less of the managing a mutual fund if the fund’s
bank means a state bank, as defined by foreign organization’s voting equity shares are not sold or distributed in the
§ 3(a)(2) of the Federal Deposit interests, if the equity interest is held United States or to U.S. residents and
Insurance Act (12 U.S.C. 1813(a)(2)), through a domestic or foreign the fund does not exercise management
whose deposits are insured by the FDIC subsidiary; and control over the firms in which it
and that is not a member of the Federal (2) The bank meets its minimum invests.
Reserve System. capital requirements. (12) Performing management
(n) Indirectly means investments held consulting services, provided that such
or activities conducted by a subsidiary § 347.105 Permissible financial activities services when rendered with respect to
of an organization. outside the United States. the domestic market must be restricted
(o) Investment grade means a security (a) Limitation on authorized activities. to the initial entry.
that is rated in one of the four highest A bank may not directly or indirectly (13) Underwriting, distributing, and
categories by: acquire or hold equity interests in a dealing in debt securities outside the
(1) Two or more NRSROs; or foreign organization that will result in United States.
(2) One NRSRO if the security is rated the bank and its affiliates: (14) With the prior approval of the
by only one NRSRO. (1) Holding more than 50 percent, in FDIC under section 347.119(d),
(p) Loan or extension of credit means the aggregate, of the voting equity underwriting, distributing, and dealing
all direct and indirect advances of funds interest in such foreign organization; or in equity securities outside the United
to a person, government, or entity made (2) Controlling such foreign States.
on the basis of any obligation of that organization, unless the activities of a (15) Operating a travel agency in
person, government, or entity to repay foreign organization are limited to those connection with financial services
funds. authorized under paragraph (b) of this offered outside the United States by the
(q) Organization or entity means a section. bank or others.
corporation, partnership, association, (b) Authorized activities. The (16) Providing futures commission
bank, or other similar entity. following financial activities are merchant services, subject to
(r) NRSRO means a nationally authorized outside the United States: compliance with any attendant
recognized statistical rating organization (1) Commercial and other banking restrictions in 12 CFR 225.28(b).
as designated by the Securities and activities. (17) Engaging in activities that the
Exchange Commission. (2) Financing, including commercial FRB has determined in Regulation Y (12
(s) Representative office means an financing, consumer financing, CFR 225.28(b)) are closely related to
office that engages solely in mortgage banking, and factoring, subject banking under section 4(c)(8) of the
representative functions such as to compliance with any attendant Bank Holding Company Act.
soliciting new business for its home restrictions contained in 12 CFR (18) Engaging in other activities, with
office or acting as liaison between the 225.28(b). the prior approval of the FDIC.
home office and local customers, but (3) Leasing real or personal property, (c) Limitation on activities authorized
which has no authority to make acting as agent, broker or advisor in under Regulation Y. If a bank relies
business or contracting decisions other leasing real or personal property, subject solely on the cross-reference to
Regulation Y contained in paragraph foreign organization must be on which underwrite, deal, or distribute
(b)(17) of this section as authority to substantially the same terms, including equity securities outside the United
engage in an activity, compliance with interest rates and collateral, as those States as authorized by § 347.105(b)(14)
any attendant restrictions on the activity prevailing at the same time for is subject to the following limitations:
that are contained in 12 CFR 225.28(b) comparable transactions between the (a) Underwriting commitment limits.
is required. bank or its affiliates and nonaffiliated (1) The aggregate underwriting
(d) Approval of other activities. organizations. commitments by the foreign
Activities that are not specifically (b) Portfolio investment defined. For organizations for the equity securities of
authorized by this section, but that are purposes of this section, the term a single entity, taken together with
authorized by 12 CFR 211.10 or FRB ‘‘portfolio investment’’ means an underwriting commitments by any
interpretations of activities authorized investment in an organization in which affiliate of the bank under the authority
by that section, may be authorized by less than 20 percent of the voting equity of 12 CFR 211.10(b), may not exceed the
specific consent of the FDIC on an interests, in the aggregate, are directly or lesser of $60 million or 25 percent of the
individual basis and upon such terms indirectly held by a bank or its affiliates. bank’s Tier 1 capital, except as
and conditions as the FDIC may otherwise provided in this paragraph.
§ 347.109 Limitations on indirect (2) Underwriting commitments in
consider appropriate. Activities that
investments in nonfinancial foreign
will be engaged in as principal (defined excess of this limit must be either:
organizations.
by reference to section 362.1(b) of this (i) Covered by binding commitments
(a) A bank may, through a subsidiary from subunderwriters or purchasers; or
chapter), and that are not authorized by
authorized by §§ 347.105 or 347.106, or (ii) Deducted from the capital of the
12 CFR 211.10 or FRB interpretations of
an Edge corporation if also authorized bank, with at least 50 percent of the
activities authorized under that section,
by the FRB, acquire and hold equity deduction being taken from Tier 1
must satisfy the requirements of part
interests in foreign organizations that capital, with the bank remaining well
362 of this chapter and be approved by
are not foreign banks or foreign banking capitalized after this deduction.
the FDIC under this part as well as part
organizations and that engage generally (b) Distribution and dealing limits.
362 of this chapter.
in activities beyond those listed in The equity securities of any single entity
§ 347.106 Going concerns. § 347.105(b), subject to the following: held for distribution or dealing by the
Going concerns. If a bank acquires an (1) The amount of the investment foreign organizations, taken together
equity interest in a foreign organization does not exceed 15 percent of the bank’s with equity securities held for
that is a going concern, no more than 5 Tier 1 capital; distribution or dealing by any affiliate of
(2) The aggregate holding of voting the bank under the authority of 12 CFR
percent of either the consolidated assets
equity interests of one foreign 211.10:
or revenues of the foreign organization
organization by the bank and its (1) May not exceed the lesser of $30
may be attributable to activities that are
affiliates must be less than: million or 5 percent of the bank’s Tier
not permissible under § 347.105(b).
(i) 20 percent of the foreign 1 capital, subject to the following:
§ 347.107 Joint ventures. organization’s voting equity interests; (i) Any equity securities acquired
(a) Joint ventures. If a bank, directly and pursuant to any underwriting
or indirectly, acquires or holds an (ii) 40 percent of the foreign commitment extending up to 90 days
equity interest in a foreign organization organization’s voting and nonvoting after the payment date for the
that is a joint venture, and the bank or equity interests; underwriting may be excluded from this
(b) The bank or its affiliates must not limit;
its affiliates do not control the foreign
otherwise control the foreign (ii) Any equity securities of the entity
organization, no more than 10 percent of
organization; and held under the authority of §§ 347.105
either the consolidated assets or (c) Loans or extensions of credit made
revenues of the foreign organization through 347.109 or 12 CFR 211.10 for
by the bank and its affiliates to the purposes other than distribution or
may be attributable to activities that are foreign organization must be on
not permissible under § 347.105(b). dealing must be included in this limit;
substantially the same terms, including and
(b) Joint venture defined. For
interest rates and collateral, as those (iii) Up to 75 percent of the position
purposes of this section, the term ‘‘joint
prevailing at the same time for in an equity security may be reduced by
venture’’ means any organization in
comparable transactions between the netting long and short positions in the
which 20 percent or more but not in
bank or its affiliates and nonaffiliated same security, or offsetting cash
excess of 50 percent of the voting equity
organizations. positions against derivative instruments
interests, in the aggregate, are directly or
indirectly held by a bank or its affiliates. § 347.110 Affiliate holdings. referenced to the same security so long
References in §§ 347.107, 347.108, as the derivatives are part of a prudent
§ 347.108 Portfolio investments. hedging strategy; and
and 347.109 to equity interests of
(a) Portfolio investments. If a bank, foreign organizations held by an affiliate (2) Must be included in calculating
directly or indirectly, acquires or holds of a bank include equity interests held the general consent limits under
an equity interest in a foreign in connection with an underwriting or § 347.117(b)(3) if the bank relies on the
organization as a portfolio investment for distribution or dealing by an affiliate general consent provisions as authority
and the foreign organization is not permitted to do so by §§ 362.8 or 362.18 to acquire equity interests of the same
controlled, directly or indirectly, by the of this chapter or section 4(c)(8) of the foreign entity for investment or trading.
bank or its affiliates: (c) Additional distribution and
Bank Holding Company Act (12 U.S.C.
(1) No more than 10 percent of either dealing limits. With the exception of
1843(c)(8)).
the consolidated assets or revenues of equity securities acquired pursuant to
the foreign organization may be § 347.111 Underwriting and dealing limits any underwriting commitment
attributable to activities that are not applicable to foreign organizations held by extending up to 90 days after the
permissible under § 347.105(b); and insured state nonmember banks. payment date for the underwriting,
(2) Any loans or extensions of credit A bank that holds an equity interest equity securities of a single entity held
made by the bank and its affiliates to the in one or more foreign organizations for distribution or dealing by all
affiliates of the bank (this includes § 347.113 Restrictions applicable to (a) Guarantees. Guarantee debts, or
shares held in connection with an activities by a foreign organization in the otherwise agree to make payments on
underwriting or for distribution or United States. the occurrence of readily ascertainable
dealing by an affiliate permitted to do so (a) A bank, acting under the authority events including, without limitation,
by §§ 362.8 or 362.18 of this chapter or provided in this subpart, may not nonpayment of taxes, rentals, customs
section 4(c)(8) of the Bank Holding directly or indirectly hold: duties, or costs of transport and loss or
Company Act), combined with any (1) Equity interests of any foreign nonconformance of shipping
equity interests held for investment or organization that engages in the general documents, if:
trading purposes by all affiliates of the business of buying or selling goods, (1) The guarantee or agreement
bank, must conform to the limits of wares, merchandise, or commodities in specifies a maximum monetary liability;
§§ 347.105 through 347.109. the United States; or and
(d) Combined limits. The aggregate of (2) More than 5 percent of the equity (2) To the extent the guarantee or
the following may not exceed 25 percent interests of any foreign organization that agreement is not subject to a separate
of the bank’s Tier 1 capital: engages in activities in the United States amount limit under state or federal law,
(1) All equity interests of foreign unless any activities in which the the amount of the guarantee or
organizations held for investment or foreign organization engages in the agreement is combined with loans and
trading under § 347.109 or by an affiliate United States are incidental to its other obligations for purposes of
of the bank under the corresponding international or foreign business. applying any legal lending limits.
paragraph of 12 CFR 211.10. (b) For purposes of this section: (b) Government obligations. Engage in
(2) All underwriting commitments (1) A foreign organization is not the following types of transactions with
under paragraph (a) of this section, engaged in any business or activities in respect to the obligations of foreign
taken together with all underwriting the United States unless it maintains an countries, so long as aggregate
commitments by any affiliate of the office in the United States other than a investments, securities held in
bank under the authority of 12 CFR representative office. connection with distribution and
211.10, after excluding the amount of (2) The following activities are dealing, and underwriting commitments
any underwriting commitment: incidental to international or foreign do not exceed ten percent of the bank’s
(i) Covered by binding commitments business: Tier 1 capital:
from subunderwriters or purchasers (i) Activities that are permissible for (1) Underwrite, distribute and deal,
under paragraph (a)(1) of this section or an Edge corporation in the United States invest in, or trade obligations of:
the comparable provision of 12 CFR under 12 CFR 211.6; or (i) The national government of the
211.10; or (ii) Other activities approved by the country in which the branch is located
(ii) Already deducted from the bank’s FDIC. or its political subdivisions; and
capital under paragraph (a)(2) of this (ii) An agency or instrumentality of
§ 347.114 Extensions of credit to foreign such national government if supported
section, or the appropriate affiliate’s organizations held by insured state
capital under the comparable provisions by the taxing authority, guarantee, or
nonmember banks; shares of foreign full faith and credit of the national
of 12 CFR 211.10; and organizations held in connection with debts
(3) All equity securities held for previously contracted.
government.
(2) Underwrite, distribute and deal,
distribution or dealing under paragraph (a) Loans or extensions of credit. A invest in or trade obligations 1 rated as
(b) of this section, taken together with bank that directly or indirectly holds
all equity securities held for distribution investment grade of:
equity interests in a foreign organization (i) The national government of any
or dealing by any affiliate of the bank pursuant to the authority of this subpart foreign country or its political
under the authority of 12 CFR 211.10, may make loans or extensions of credit subdivisions, to the extent permissible
after reducing by up to 75 percent the to or for the accounts of the organization under the law of the issuing foreign
position in any equity security by without regard to the provisions of country; and
netting and offset, as permitted by section 18(j) of the FDI Act (12 U.S.C. (ii) An agency or instrumentality of
paragraph (b)(1)(iii) of this section or the 1828(j)). the national government of any foreign
comparable provision of 12 CFR 211.10. (b) Debts previously contracted. country to the extent permissible under
§ 347.112 Restrictions applicable to Equity interests acquired to prevent a the law of the issuing foreign country,
foreign organizations that act as futures loss upon a debt previously contracted if supported by the taxing authority,
commission merchants. in good faith are not subject to the guarantee, or full faith and credit of the
(a) If a bank acquires or retains an limitations or procedures of this national government.
equity interest in a foreign organization subpart; however, they must be (c) Local investments. (1) Acquire and
that acts as a futures commission disposed of promptly but in no event hold local investments in:
merchant pursuant to § 347.105(b)(16), later than two years after their (i) Equity securities of the central
the foreign organization may not be a acquisition, unless the FDIC authorizes bank, clearinghouses, governmental
member of an exchange or clearing retention for a longer period. entities, and government sponsored
association that requires members to § 347.115 Permissible activities for a development banks of the country in
guarantee or otherwise contract to cover foreign branch of an insured state which the branch is located;
losses suffered by other members unless nonmember bank. (ii) Other debt securities eligible to
the: In addition to its general banking meet local reserve or similar
(1) Foreign organization’s liability powers and if permitted by the law of requirements; and
does not exceed two percent of the the state in which the bank is chartered, (iii) Shares of automated electronic
bank’s Tier 1 capital, or a foreign branch of a bank may conduct payment networks, professional
(2) Bank has obtained the prior the following activities to the extent that 1 If the obligation is an equity interest, it must be
approval of the FDIC under they are consistent with banking held through a subsidiary of the foreign branch and
§ 347.120(d). practices in a foreign country where the the insured state nonmember bank must meet its
(b) [Reserved] bank maintains a branch: minimum capital requirements.
societies, schools, and similar entities of risk assets, including loans and other the FDIC by the bank for examination
necessary to the business of the branch. extensions of credit. Coverage should and other supervisory purposes.
(2) Aggregate local investments (other extend to a substantial proportion of the (2) The FDIC may from time to time
than those required by the law of the risk assets in the branch or foreign require a bank to make and submit such
foreign country or permissible under organization, and include the status of reports and information as may be
section 5136 of the Revised Statutes (12 all large credit lines and of credits to necessary to implement and enforce the
U.S.C. 24 (Seventh)) by all the bank’s customers also borrowing from other provisions of this subpart, and the bank
branches in a single foreign country offices or affiliates of the bank. shall submit an annual report of
must not exceed 1 percent of the total Appropriate information on risk assets condition for each foreign branch
deposits in all the bank’s branches in may include: pursuant to instructions provided by the
that country as reported in the (i) A recent financial statement of the FDIC.
preceding year-end Report of Income borrower or obligee and current § 347.117 General consent.
and Condition (Call Report): 2 information on the borrower’s or
(d) Insurance. Act as an insurance (a) General consent to establish or
obligee’s financial condition;
agent or broker. relocate a foreign branch. General
(ii) Terms, conditions, and collateral;
(e) Employee benefits program. Pay to consent of the FDIC is granted, subject
(iii) Data on any guarantors; to the written notification requirement
an employee of a branch, as part of an (iv) Payment history; and
employee benefits program, a greater contained in section 303.182(a) and
(v) Status of corrective measures consistent with the requirements of this
rate of interest than that paid to other employed.
depositors of the branch. subpart, for an:
(2) Liquidity. To enable assessment of (1) Eligible bank to establish a foreign
(f) Repurchase agreements. Engage in
local management’s ability to meet its branch conducting activities authorized
repurchase agreements involving
obligations from available resources, by section 347.115 of this section in any
securities and commodities that are the
reports should identify the general foreign country in which:
functional equivalents of extensions of
sources and character of the deposits, (i) The bank already operates one or
credit.
(g) Other activities. Engage in other borrowing, and other funding sources more foreign branches or foreign bank
activities, with the prior approval of the employed in the branch or foreign subsidiaries;
FDIC. organization with special reference to (ii) The bank’s holding company
(h) Approval of other activities. their terms and volatility. Information operates a foreign bank subsidiary; or
Activities that are not specifically should be available on sources of (iii) An affiliated bank or Edge or
authorized by this section, but that are liquidity—cash, balances with banks, Agreement corporation operates one or
authorized by 12 CFR 211.4 or FRB marketable securities, and repayment more foreign branches or foreign bank
interpretations of activities authorized flows—such as will reveal their subsidiaries.
by that section, may be authorized by accessibility in time and any risk (2) Insured state nonmember bank to
elements involved. relocate an existing foreign branch
specific consent of the FDIC on an
(3) Contingencies. Data on the volume within a foreign country.
individual basis and upon such terms
and nature of contingent items such as (b) General consent to invest in a
and conditions as the FDIC may foreign organization. General consent of
consider appropriate. Activities that loan commitments and guarantees or
their equivalents that permit analysis of the FDIC is granted, subject to the
will be engaged in as principal (defined written notification requirement
by reference to section 362.1(b) of this potential risk exposure and liquidity
requirements. contained in section 303.183(a) (unless
chapter), and that are not authorized by no notification is required because the
12 CFR 211.4 or FRB interpretations of (4) Controls. Reports on the internal
and external audits of the branch or investment is acquired for trading
activities authorized under that section, purposes) and consistent with the
must satisfy the requirements of part foreign organization in sufficient detail
to permit determination of conformance requirements of this subpart, for an
362 of this chapter and be approved by eligible bank to make investments in
the FDIC under this part as well as part to auditing guidelines. Appropriate
audit reports may include coverage of: foreign organizations, directly or
362 of this chapter. indirectly, if:
(i) Verification and identification of
§ 347.116 Recordkeeping and supervision entries on financial statements; (1) The bank operates at least one
of foreign activities of insured state foreign bank subsidiary or foreign
(ii) Income and expense accounts,
nonmember banks. branch, an affiliated bank or Edge or
including descriptions of significant
(a) Records, controls and reports. A Agreement corporation operates at least
chargeoffs and recoveries;
bank with any foreign branch, any one foreign bank subsidiary or foreign
(iii) Operations and dual-control
investment in a foreign organization of branch, or the bank’s holding company
procedures and other internal controls;
20 percent or more of the organization’s operates at least one foreign bank
(iv) Conformance to head office
voting equity interests, or control of a subsidiary in the country where the
guidelines on loans, deposits, foreign foreign organization will be located;
foreign organization must maintain a exchange activities, accounting
system of records, controls and reports (2) In any instance where the bank
procedures in compliance with and its affiliates will hold 20 percent or
that, at minimum, provide for the applicable accounting standards, and
following: more of the foreign organization’s voting
discretionary authority of local equity interests or control the foreign
(1) Risk assets. To permit assessment management;
of exposure to loss, information organization, at least one state
(v) Compliance with local laws and nonmember bank has a foreign bank
furnished or available to the main office regulations; and
should be sufficient to permit periodic subsidiary or foreign branch (other than
(vi) Compliance with applicable U.S. a shell branch) in the country where the
and systematic appraisals of the quality laws and regulations. foreign organization will be located; 3
2 If a branch has recently been acquired by the
(b) Availability of information to and
bank and the branch was not previously required
examiners; reports. (1) Information
to file a Call Report, branch deposits as of the about foreign branches or foreign 3 A list of these countries can be obtained from
acquisition date must be used. organizations must be made available to the FDIC’s Internet Web Site at http://www.fdic.gov.
(3) The investment is within one of (i) A bank would hold 20 percent or U.S.C. 1815(c) and 1820(b)(4)) and
the following limits: more of the voting equity interests of a sections 6, 7, and 15 of the International
(i) The investment is acquired at net foreign organization or control such Banking Act of 1978 (IBA)(12 U.S.C.
asset value from an affiliate; organization as a result of a foreign 3104, 3105, and 3109).
(ii) The investment is a reinvestment investment; or (b) This subpart implements the
of cash dividends received from the (ii) A bank would be establishing a insured branch asset pledge and
same foreign organization during the foreign branch. examination commitment requirement
preceding 12 months; or (b) World Heritage site. A foreign for foreign banks in the FDI Act. It also
(iii) The total investment, directly or branch of a bank would be located on implements the deposit insurance,
indirectly, in a single foreign a site on the World Heritage List or on permissible activity, and cross-border
organization in any transaction or series the foreign country’s equivalent of the cooperation provisions of the IBA
of transactions during a twelve-month National Register of Historic Places, in regarding the FDIC. Sections 347.203–
period does not exceed 2 percent of the accordance with section 403 of the 347.211 apply to state and federal
bank’s Tier 1 capital, and such National Historic Preservation Act branches whose deposits are insured.
investments in all foreign organizations Amendments of 1980 (16 U.S.C. 470a– Sections 347.204 and 347.207 are
in the aggregate do not exceed: 2). applicable to depository institution
(A) 5 percent of the bank’s Tier 1 (c) Modification or suspension of subsidiaries of a foreign bank. Section
capital during a 12-month period; and general consent or expedited processing. 347.212 applies to insured state
(B) Up to an additional 5 percent of The FDIC at any time notifies the bank branches and §§ 347.213–347.216 apply
the bank’s Tier 1 capital if the that the FDIC is modifying or to state branches whose deposits are not
investments are acquired for trading suspending its general consent or insured by the FDIC.
purposes. expedited processing procedure.
(d) Specific consent. Direct or indirect § 347.202 Definitions.
§ 347.118 Expedited processing. investments in or activities of foreign For the purposes of this subpart:
(a) Expedited processing of branch organizations by banks, the (a) Affiliate means any entity that
applications. An eligible bank may establishment of foreign branches or controls, is controlled by, or is under
establish a foreign branch conducting issues regarding the types or amounts of common control with another entity. An
activities authorized by § 347.115 in an activity that can be engaged in by entity shall be deemed to ‘‘control’’
additional foreign country, after foreign branches, which are not another entity if the entity directly or
complying with the expedited authorized under §§ 347.117 or 347.118 indirectly owns, controls, or has the
processing requirements contained in require prior review and specific power to vote 25 percent or more of any
§ 303.182(b) and (c)(1), if any of the consent of the FDIC. class of voting securities of the other
following are located in two or more entity or controls in any manner the
foreign countries: § 347.120 Computation of investment election of a majority of the directors or
(1) Foreign branches or foreign bank amounts. trustees of the other entity.
subsidiaries of the eligible bank; In computing the amount that may be (b) Branch means any office or place
(2) Foreign branches or foreign bank invested in any foreign organization of business of a foreign bank located in
subsidiaries of banks and Edge or under §§ 347.117 through 347.119, any any state of the United States at which
Agreement corporations affiliated with investments held by an affiliate of a deposits are received. The term does not
the eligible bank; and bank must be included. include any office or place of business
(3) Foreign bank subsidiaries of the deemed by the state licensing authority
§ 347.121 Requirements for insured state
eligible bank’s holding company. nonmember bank to close a foreign branch. or the Comptroller of the Currency to be
(b) Expedited processing of an agency.
A bank must comply with the written (c) Deposit has the same meaning as
applications for investment in foreign
notification requirement contained in that term in section 3(l) of the Federal
organizations. An investment that does
§ 303.182(d) when it closes a foreign Deposit Insurance Act (12 U.S.C.
not qualify for general consent but is
branch. 1813(l)).
otherwise in conformity with the limits
and requirements of this subpart may be § 347.122 Limitations applicable to the (d) Depository means any insured
made 45 days after an eligible bank files authority provided in this subpart. state bank, national bank, or insured
a substantially complete application The FDIC may impose such branch.
with the FDIC in compliance with the conditions on authority granted in this (e) Domestic retail deposit activity
expedited processing requirements subpart as it considers appropriate. If a means the acceptance by a federal or
contained in § 303.183(b) and (c)(1), or bank is unable or fails to comply with state branch of any initial deposit of less
within such earlier time as authorized the requirements of this subpart or any than $100,000.
by the FDIC. conditions imposed by the FDIC (f) Federal branch means a branch of
regarding transactions under this a foreign bank established and operating
§ 347.119 Specific consent. under the provisions of section 4 of the
subpart, the FDIC may require
General consent and expedited termination of any activities or International Banking Act of 1978 (12
processing under this subpart do not divestiture of investments permitted U.S.C. 3102).
apply in the following circumstances: (g) Foreign bank means any company
under this subpart after giving the bank
(a) Limitation on access to organized under the laws of a foreign
notice and a reasonable opportunity to
supervisory information in foreign country, any territory of the United
be heard on the matter.
country. States, Puerto Rico, Guam, American
(1) Applicable law or practice in the Subpart B—Foreign Banks Samoa, the Northern Mariana Islands, or
foreign country where the foreign the Virgin Islands, which engages in the
organization or foreign branch would be § 347.201 Authority, purpose, and scope. business of banking. The term includes
located would limit the FDIC’s access to (a) This subpart is issued pursuant to foreign commercial banks, foreign
information for supervisory purposes; sections 5(c) and 10(b)(4) of the Federal merchant banks and other foreign
and Deposit Insurance Act (FDI Act)(12 institutions that engage in banking
activities usual in connection with the foundation or trust which is organized shall provide binding written
business of banking in the countries under the laws of the United States or commitments (including a consent to
where such foreign institutions are any state thereof, and: U.S. jurisdiction and designation of
organized and operating. Except as (1) Whose securities are registered on agent for service, acceptable to the
otherwise specifically provided by the a national securities exchange or quoted FDIC) to the following terms:
Federal Deposit Insurance Corporation, on the National Association of (1) The FDIC will be provided with
banks organized under the laws of a Securities Dealers Automated Quotation any information about the foreign bank
foreign country, any territory of the System; or and its affiliates located outside of the
United States, Puerto Rico, Guam, (2) Has annual gross revenues in United States that the FDIC requests to
American Samoa, the Northern Mariana excess of $1,000,000 for the fiscal year determine:
Islands, or the Virgin Islands which are immediately preceding the initial (i) The relationship between the U.S.
insured banks other than by reason of deposit. branch or depository institution
having an insured branch are not (q) A majority owned subsidiary subsidiary and its affiliates; and
considered to be foreign banks for means a company the voting stock of (ii) The effect of such relationship on
purposes of §§ 347.204, 347.205, which is more than 50 percent owned such U.S. branch or depository
347.209, and 347.210. or controlled by another company. institution subsidiary;
(h) Foreign business means any entity (r) Noninsured branch means a branch (2) The FDIC will be allowed to
including, but not limited to, a of a foreign bank deposits of which examine the affairs of any office, agency,
corporation, partnership, sole branch are not insured in accordance branch or affiliate of the foreign bank
proprietorship, association, foundation with the provisions of the Federal located in the United States and will be
or trust, which is organized under the Deposit Insurance Act. provided any information requested to
laws of a foreign country or any United (s) OCC means the Office of the determine:
States entity which is owned or (i) The relationship between the U.S.
Comptroller of the Currency.
controlled by an entity which is branch or depository institution
(t) Person means an individual, bank,
organized under the laws of a foreign subsidiary and such offices, agencies,
corporation, partnership, trust,
country or a foreign national. branches or affiliates; and
association, foundation, joint venture, (ii) The effect of such relationship on
(i) Foreign country means any country pool, syndicate, sole proprietorship,
other than the United States and such U.S. branch or depository
unincorporated organization, or any institution subsidiary.
includes any colony, dependency or other form of entity.
possession of any such country. (3) The FDIC will not process a
(u) Significant risk to the deposit deposit insurance application for any
(j) FRB means the Board of Governors insurance fund shall be understood to
of the Federal Reserve System. U.S. branch or depository institution
be present whenever there is a high subsidiary of a foreign bank if the
(k) Home state of a foreign bank probability that the Bank Insurance
means the state so determined by the foreign bank fails to provide the written
Fund administered by the FDIC may commitments, consent to U.S.
election of the foreign bank, or in suffer a loss.
default of such election, by the Board of jurisdiction, and designation of agent for
(v) State means any state of the United service required by this section.
Governors of the Federal Reserve States or the District of Columbia.
System. (b) The FDIC will consider the
(w) State branch means a branch of a existence and extent of any prohibition
(l) Immediate family member of a
foreign bank established and operating or restrictions, if any, on its ability to
natural person means the spouse, father,
under the laws of any state. utilize the commitments, consent to
mother, brother, sister, son or daughter
(x) Wholly owned subsidiary means a U.S. jurisdiction, and designation of
of that natural person.
(m) Initial deposit means the first company the voting stock of which is agent for service required by this
deposit transaction between a depositor 100 percent owned or controlled by section, in determining whether to grant
and the branch where there is no another company except for a nominal or deny a deposit insurance application
existing deposit relationship. The initial number of directors’ shares. for the U.S. branch or depository
deposit may be placed into different § 347.203 Deposit insurance required for institution subsidiary of the foreign
deposit accounts or into different kinds all branches of foreign banks engaged in bank. In addition, the FDIC may
of deposit accounts, such as demand, domestic retail deposit activity in the same consider any additional assurances or
savings or time. Deposit accounts that State. commitments provided by the foreign
are held by a depositor in the same right The FDIC will not insure deposits in bank, including that it will cooperate
and capacity may be added together for any branch of a foreign bank unless the and assist the FDIC, without limitation,
the purposes of determining the dollar foreign bank agrees that every branch by seeking to obtain waivers and
amount of the initial deposit. established or operated by the foreign exemptions from applicable
(n) Insured bank means any bank, bank in the same state that engages in confidentiality or secrecy restrictions or
including a foreign bank with an domestic retail deposit activity will be requirements to enable the foreign bank
insured branch, the deposits of which an insured branch. or its affiliates to make information
are insured in accordance with the about the foreign bank and its affiliates
provisions of the Federal Deposit § 347.204 Commitment to be examined located outside of the United States
Insurance Act. and provide information. available to the FDIC for review.
(o) Insured branch means a branch of (a) In connection with an application (c) The foreign bank’s commitments,
a foreign bank any deposits of which for deposit insurance for a U.S. branch consent to U.S. jurisdiction, and
branch are insured in accordance with or depository institution subsidiary of a designation of agent for service shall be
the provisions of the Federal Deposit foreign bank that has been determined signed by an officer of the foreign bank
Insurance Act. to be subject to comprehensive who has been so authorized by the
(p) Large United States business consolidated supervision by the foreign bank’s board of directors and in
means any entity including, but not appropriate Federal banking agency, as all instances will be executed in a
limited to, a corporation, partnership, defined in section 3(q) of the FDI Act manner acceptable to the FDIC and shall
sole proprietorship, association, (12 U.S.C. 1813(q)), the foreign bank be included with the branch or
depository institution application for balances of less than $100,000 that § 347.208 Assessment base deductions by
insurance. Any documents that are not require deposit insurance protection insured branch.
in English shall be accompanied by an may be accepted or maintained in an Deposits in an insured branch to the
English translation. insured branch of a foreign bank only if credit of the foreign bank or any of its
such branch was an insured branch on offices, branches, agencies, or wholly
§ 347.205 Record maintenance.
December 19, 1991. owned subsidiaries may be deducted
The records of each insured branch
shall be kept as though it were a (d) Change in ownership of from the assessment base of the insured
separate entity, with its assets and grandfathered insured branch. The branch.
liabilities separate from the other grandfathered status of an insured
§ 347.209 Pledge of assets.
operations of the head office, other branch may not be transferred, except in
branches or agencies of the foreign bank certain merger and acquisition (a) Purpose. A foreign bank that has
and its subsidiaries or affiliates. Each transactions that the FDIC determines an insured branch must pledge assets
insured branch must keep a set of are not designed, or motivated by the for the benefit of the FDIC or its
accounts and records in the words and desire, to avoid compliance with section designee(s). Whenever the FDIC is
figures of the English language that 6(d)(1) of the International Banking Act obligated under section 11(f) of the
accurately reflects the business (12 U.S.C. 3104(d)(1)). Federal Deposit Insurance Act (12
transactions of the insured branch on a U.S.C. 1821(f)) to pay the insured
§ 347.207 Disclosure of supervisory deposits of an insured branch, the assets
daily basis. A foreign bank that has information to foreign supervisors.
more than one insured branch in a state pledged under this section must become
may treat such insured branches as one (a) Disclosure by the FDIC. The FDIC the property of the FDIC and be used to
entity for record-keeping purposes and may disclose information obtained in the extent necessary to protect the
may designate one branch to maintain the course of exercising its supervisory deposit insurance fund.
records for all the branches in the state. or examination authority to a foreign (b) Amount of assets to be pledged. (1)
bank regulatory or supervisory For a newly insured branch, a foreign
§ 347.206 Domestic retail deposit activity authority, if the FDIC determines that bank must pledge assets equal to at least
requiring deposit insurance by U.S. branch
disclosure is appropriate for bank 5 percent of the liabilities of the branch,
of a foreign bank.
supervisory or regulatory purposes and based on the branch’s projection of its
(a) Domestic retail deposit activity. To will not prejudice the interests of the liabilities at the end of each of the first
initiate or conduct domestic retail United States. three years of operations. For all other
deposit activity requiring deposit
(b) Confidentiality. Before making any insured branches, a foreign bank must
insurance protection in any state after
disclosure of information pursuant to pledge assets equal to the appropriate
December 19, 1991, a foreign bank must
paragraph (a) of this section, the FDIC percentage applicable to the insured
establish one or more insured U.S. bank
subsidiaries for that purpose. will obtain, to the extent necessary, the branch, as determined by reference to
(b) Exception. Paragraph (a) of this agreement of the foreign bank regulatory the risk-based assessment schedule
section does not apply to any bank or supervisory authority to maintain the contained in this paragraph, of the
organized under the laws of any confidentiality of such information to insured branch’s average liabilities for
territory of the United States, Puerto the extent possible under applicable the last 30 days of the most recent
Rico, Guam, American Samoa, or the law. The disclosure or transfer of calendar quarter.4
Virgin Islands the deposits of which are information to a foreign bank regulatory (2) Risk-based assessment schedule.
insured by the FDIC pursuant to the or supervisory authority under this The risk-based asset pledge required by
Federal Deposit Insurance Act. section will not waive any privilege paragraph (b)(1) will be determined by
(c) Grandfathered insured branches. applicable to the information that is utilizing the following risk-based
Domestic retail deposit accounts with disclosed or transferred. assessment schedule:
Supervisory risk subgroup

Asset maintenance level
A (%) B (%) C (%)
Equal to or greater than 108% ................................................................................................................ 2 3 4

Equal to or greater than 106% ................................................................................................................ 4 5 6
Less than 106% ....................................................................................................................................... 6 7 8
The appropriate asset pledge three subgroups based on consideration addition, the FDIC will take into
percentage will be determined based on by the FDIC of supervisory evaluations consideration such other information
the supervisory risk subgroup and asset provided by the primary federal (such as state examination findings, if
maintenance level applicable to the regulator for the insured branch. The appropriate) as it determines to be
insured branch. supervisory evaluations include the relevant to the financial condition and
(3) Supervisory risk factors. For results of examination findings by the the risk posed to the deposit insurance
purposes of this section, within each primary federal regulator, as well as fund. The three supervisory subgroups
asset maintenance group, each other information the primary federal are:
institution will be assigned to one of regulator determines to be relevant. In
4 This average must be computed by using the previous business day are to be used in determining on the lesser of the principal amount (par value) or
sum of the close of business figures for the 30 its average liabilities. In determining its average market value of such assets at the time of the
calendar days of the most recent calendar quarter, liabilities, the insured branch may exclude original pledge and thereafter as of the last day of
ending with and including the last day of the liabilities to other offices, agencies, branches, and the most recent calendar quarter.
calendar quarter, divided by 30. For days on which wholly owned subsidiaries of the foreign bank. The
the branch is closed, however, balances from the value of the pledged assets must be computed based
(i) Subgroup ‘‘A’’. This subgroup be denominated in United States rating resolved in favor of the lower
consists of financially sound dollars. A foreign bank shall be deemed rating);
institutions with only a few minor to have pledged any such assets for the (6) Obligations of the African
weaknesses; benefit of the FDIC or its designee at Development Bank, Asian Development
(ii) Subgroup ‘‘B’’. This subgroup such time as any such asset is placed Bank, Inter-American Development
consists of institutions that demonstrate with the depository, as follows: Bank, and the International Bank for
weaknesses which, if not corrected, (1)(i) Negotiable certificates of deposit Reconstruction and Development;
could result in significant deterioration that are payable in the United States and (7) Notes issued by bank and thrift
of the institution and increased risk of that are issued by any state bank, holding companies, banks, or savings
loss to the deposit insurance fund; and national bank, state or federal savings associations organized under the laws of
(iii) Subgroup ‘‘C’’. This subgroup association, or branch of a foreign bank the United States or any state thereof or
consists of institutions that pose a which has executed a valid waiver of notes issued by United States branches
substantial probability of loss to the offset agreement or similar debt or agencies of foreign banks, provided,
deposit insurance fund. instruments that are payable in the that the notes have a credit rating within
(4) The FDIC may require a foreign United States and that are issued by any the top two rating bands of a nationally
bank to pledge additional assets or to agency of a foreign bank which has recognized rating service (with any
compute its pledge on a daily basis executed a valid waiver of offset conflict in a rating resolved in favor of
whenever the FDIC determines that the agreement; provided, that the maturity the lower rating) and that they are
condition of the foreign bank or the of any certificate or issuance is not payable in the United States, and
insured branch is such that the assets greater than one year; and provided provided further, that the issuer is not
pledged under this section will not further, that the issuing branch or an affiliate of the foreign bank pledging
adequately protect the deposit insurance agency of a foreign bank is not an the note; or
fund. In requiring a foreign bank to affiliate of the pledging bank or from the (8) Any other asset determined by the
pledge additional assets, the FDIC will same country as the pledging bank’s FDIC to be acceptable.
consult with the primary regulator for domicile; (e) Pledge agreement. A foreign bank
the insured branch. Among the factors (ii) Non-negotiable certificates of shall not pledge any assets unless a
to be considered in imposing these deposit, subject to the terms specified in pledge agreement in form and substance
requirements are the concentration of paragraph (d)(1)(i) of this section other satisfactory to the FDIC has been
risk to any one borrower or group of than the requirement of negotiability, executed by the foreign bank and the
related borrowers, the concentration of that were pledged as collateral to the depository. The agreement, in addition
transfer risk related to any one country, FDIC on March 18, 2005, until maturity to other terms not inconsistent with this
including the country in which the according to the original terms of the paragraph (e), shall give effect to the
foreign bank’s head office is located or existing deposit agreement. following terms:
any other factor the FDIC determines is (2) Treasury bills, interest bearing (1) Original pledge. The foreign bank
relevant. bonds, notes, debentures, or other direct shall place with the depository assets of
(5) Each insured branch must obligations of or obligations fully the kind described in paragraph (d) of
separately comply with the guaranteed as to principal and interest this section, having an aggregate value
requirements of this section. A foreign by the United States or any agency or in the amount as required pursuant to
bank which has more than one insured instrumentality thereof; paragraph (b) of this section.
branch in a state may, however, treat all (3) Commercial paper that is rated P– (2) Additional assets required to be
of its insured branches in the same state 1 or P–2, or their equivalent by a pledged. Whenever the foreign bank is
as one entity and will designate one nationally recognized rating service; required to pledge additional assets for
insured branch to be responsible for provided, that any conflict in a rating the benefit of the FDIC or its designees
compliance with this section. shall be resolved in favor of the lower pursuant to paragraph (b)(4) of this
(c) Depository. A foreign bank must rating; section, it shall deliver (within two
place pledged assets for safekeeping at (4) Banker’s acceptances that are business days after the last day of the
any depository which is located in any payable in the United States and that are most recent calendar quarter, unless
state. However, a depository may not be issued by any state bank, national bank, otherwise ordered) additional assets of
an affiliate of the foreign bank whose state or federal savings association, or the kind described in paragraph (d) of
insured branch is seeking to use the branch or agency of a foreign bank; this section, having an aggregate value
depository. A foreign bank must obtain provided, that the maturity of any in the amount required by the FDIC.
the FDIC’s prior written approval of the acceptance is not greater than 180 days; (3) Substitution of assets. The foreign
depository selected, and such approval and provided further, that the branch or bank, at any time, may substitute any
may be revoked and dismissal of the agency issuing the acceptance is not an assets for pledged assets, and, upon
depository required whenever the affiliate of the pledging bank or from the such substitution, the depository shall
depository does not fulfill any one of its same country as the pledging bank’s promptly release any such assets to the
obligations under the pledge agreement. domicile; foreign bank; provided, that:
A foreign bank shall appoint and (5) General obligations of any state of (i) The foreign bank pledges assets of
constitute the depository as its attorney the United States, or any county or the kind described in paragraph (d) of
in fact for the sole purpose of municipality of any state of the United this section having an aggregate value
transferring title to pledged assets to the States, or any agency, instrumentality, not less than the value of the pledged
FDIC as may be required to effectuate or political subdivision of the foregoing assets for which they are substituted
the provisions of paragraph (a) of this or any obligation guaranteed by a state and certified as such by the foreign
section. of the United States or any county or bank; and
(d) Assets that may be pledged. municipality of any state of the United (ii) The FDIC has not by written
Subject to the right of the FDIC to States; provided, that such obligations notification to the foreign bank, a copy
require substitution, a foreign bank may have a credit rating within the top two of which shall be provided to the
pledge any of the kinds of assets listed rating bands of a nationally recognized depository, suspended or terminated the
in this paragraph (d); such assets must rating service (with any conflict in a foreign bank’s right of substitution.
(4) Delivery of other documents. (ii) Quarterly reports. Within ten (9) Release to the FDIC. Whenever the
Concurrently with the pledge of any calendar days after the end of the most FDIC is obligated under section 11(f) of
assets, the foreign bank will deliver to recent calendar quarter: the Federal Deposit Insurance Act to
the depository all documents and (A) The depository shall provide to pay insured deposits of an insured
instruments necessary or advisable to the appropriate regional director a branch, the FDIC by written certification
effectuate the transfer of title to any written report specifying in reasonable shall so inform the depository; and the
such assets and thereafter, from time to detail with respect to each asset depository, upon receipt of such
time, at the request of the FDIC, deliver currently pledged (including any asset certification, shall thereupon promptly
to the depository any such additional pledged to satisfy the requirements of release and transfer title to any pledged
documents or instruments. The foreign paragraph (b)(4) of this section and assets to the FDIC or release such assets
bank shall provide copies of all such identified as such), as of two business to the foreign bank, as specified in the
documents described in this paragraph days after the end of the most recent certification. Upon release and transfer
(e)(4) to the appropriate regional calendar quarter, the complete title, of title to all pledged assets specified in
director concurrently with their delivery interest rate, series, serial number (if the certification, the depository shall be
to the depository. any), principal amount (par value), discharged from any further obligation
(5) Acceptance and safekeeping maturity date, and call date, provided, under the pledge agreement.
responsibilities of the depository. (i) that if no substitution of any asset has (10) Interest earned on assets. The
The depository will accept and hold any occurred during the reporting period, foreign bank may retain any interest
assets pledged by the foreign bank the reporting need only specify that no earned with respect to the assets
pursuant to the pledge agreement for substitution of assets has occurred; and currently pledged unless the FDIC by
safekeeping free and clear of any lien, (B) The foreign bank shall provide as written notice prohibits retention of
charge, right of offset, credit, or of two business days after the end of the interest by the foreign bank, in which
preference in connection with any claim most recent calendar quarter to the case the notice shall specify the
the depository may assert against the appropriate regional director a written disposition of any such interest.
foreign bank and shall designate any report certified as correct by the foreign (11) Expenses of agreement. The FDIC
such assets as a special pledge for the bank which sets forth the value of each shall not be required to pay any fees,
benefit of the FDIC or its designee. The pledged asset and the aggregate value of costs, or expenses for services provided
depository shall not accept the pledge of all such assets, which states that the by the depository to the foreign bank
any such assets unless, concurrently aggregate value of all such assets is at pursuant to, or in connection with, the
with such pledge, the foreign bank least equal to the amount required pledge agreement.
delivers to the depository the pursuant to paragraph (b) of this section (12) Substitution of depository. The
documents and instruments necessary depository may resign, or the foreign
and that all such assets are of the kind
for the transfer of title thereto as bank may discharge the depository,
described in paragraph (d) of this
provided in this part. from its duties and obligations under
(ii) The depository shall hold any section, and which states the average of
the liabilities of each insured branch of the pledge agreement by giving at least
such assets separate from all other assets 60 days’ written notice thereof to the
of the foreign bank or the depository. the foreign bank computed in the
manner and for the period prescribed in other party and to the appropriate
Such assets may be held in book-entry regional director. The FDIC, upon 30
form but must at all times be segregated paragraph (b) of this section.
(iii) Additional reports. The foreign days’ written notice to the foreign bank
on the records of the depository and and the depository, may require the
clearly identified as assets subject to the bank shall, from time to time, as may be
required, provide to the appropriate foreign bank to dismiss the depository if
pledge agreement. the FDIC in its discretion determines
(6) Reporting requirements of the regional director a written report in the
form specified containing the that the depository is in breach of the
insured branch and the depository. (i) pledge agreement. The depository shall
Initial reports. Upon the original pledge information requested with respect to
any asset then currently pledged. continue to function as such until the
of assets as provided in paragraph (e)(1) appointment of a successor depository
of this section: (7) Access to assets. With respect to
any asset pledged pursuant to the becomes effective and the depository
(A) The depository shall provide to
pledge agreement, the depository will has released to the successor depository
the foreign bank and to the appropriate
provide representatives of the FDIC or the pledged assets and documents and
FDIC regional director a written report
the foreign bank with access (during instruments to effectuate transfer of title
in the form of a receipt identifying each
regular business hours of the depository in accordance with the written
asset pledged and specifying in
and at the location where any such asset instructions of the foreign bank as
reasonable detail with respect to each
is held, without other limitation or approved by the FDIC. The appointment
such asset the complete title, interest
qualification) to all original instruments, by the foreign bank of a successor
rate, series, serial number (if any),
documents, books, and records depository shall not be effective until:
principal amount (par value), maturity (i) The FDIC has approved in writing
date and call date; and evidencing or pertaining to any such
the successor depository; and
(B) The foreign bank shall provide to asset. (ii) A pledge agreement in form and
the appropriate regional director a (8) Release upon the order of the substance satisfactory to the FDIC has
written report certified as correct by the FDIC. The depository shall release to the been executed.
foreign bank which sets forth the value foreign bank any pledged assets, as (13) Waiver of terms. The FDIC may
of each pledged asset and the aggregate specified in a written notification of the by written order waive compliance by
value of all such assets, and which appropriate regional director, upon the the foreign bank or the depository with
states that the aggregate value of all such terms and conditions provided in such any term or condition of the pledge
assets is at least equal to the amount notification, including without agreement.
required pursuant to paragraph (b) of limitation the waiver of any requirement
this section and that all such assets are that any assets be pledged by the foreign § 347.210 Asset maintenance.
of the kind described in paragraph (d) bank in substitution of any released (a) An insured branch of a foreign
of this section. assets. bank shall maintain on a daily basis
eligible assets in an amount not less cases, copies of periodic memoranda § 347.211 Examination of branches of
than 106 percent of the preceding that include an analysis of the foreign banks.
quarter’s average book value of the borrower’s recent financial statements (a) Frequency of on-site examination.
insured branch’s liabilities or, in the and a report on recent developments in Each branch or agency of a foreign bank
case of a newly-established insured the borrower’s operations and shall be examined on-site at least once
branch, the estimated book value of its borrowing relationships with the foreign during each 12-month period (beginning
liabilities at the end of the first full bank generally would constitute on the date the most recent examination
quarter of operation, exclusive of sufficient information. For other of the office ended) by:
liabilities due to the foreign bank’s head borrowers, periodic memoranda must be (1) The FRB;
office, other branches, agencies, offices, supplemented by information such as (2) The FDIC, if an insured branch;
or wholly owned subsidiaries. The copies of recent financial statements, (3) The OCC, if the branch or agency
Director of the Division of Supervision recent correspondence concerning the of the foreign bank is licensed by the
and Consumer Protection or his borrower’s financial condition and OCC; or
designee may impose a computation of repayment history, credit terms and (4) The state supervisor, if the office
total liabilities on a daily basis in those collateral, data on any guarantors, and of the foreign bank is licensed or
instances where it is found necessary for where necessary, the status of any chartered by the state.
supervisory purposes. The FDIC Board corrective measures being employed; (b) 18-month cycle for certain small
of Directors, after consulting with the institutions. (1) Mandatory standards.
insured branch’s primary regulator, may (ii) Subsequent to the determination
that an asset lacks sufficient credit The FDIC may conduct a full-scope, on-
require that a higher ratio of eligible site examination at least once during
assets be maintained if the financial information, an insured branch may not
include the amount of that asset among each 18-month period, rather than each
condition of the insured branch 12-month period as provided in
warrants such action. Among the factors eligible assets until the FDIC determines
that sufficient documentation exists. paragraph (a) of this section, if the
which will be considered in requiring a insured branch:
higher ratio of eligible assets are the Such a determination may be made
either at the next federal examination, (i) Has total assets of $250 million or
concentration of risk to any one less;
borrower or group of related borrowers, or upon request of the insured branch,
by the appropriate regional director; (ii) Has received a composite ROCA
the concentration of transfer risk to any supervisory rating (which rates risk
one country, including the country in (5) Any asset not in the insured management, operational controls,
which the foreign bank’s head office is branch’s actual possession unless the compliance, and asset quality) of 1 or 2
located or any other factor the FDIC insured branch holds title to such asset at its most recent examination;
determines is relevant. Eligible assets and the insured branch maintains (iii) Satisfies the requirement of either
shall be payable in United States records sufficient to enable independent the following paragraph (b)(iii)(A) or
dollars. verification of the insured branch’s (B):
(b) In determining eligible assets for ownership of the asset, as determined at (A) The foreign bank’s most recently
the purposes of compliance with the most recent state or federal reported capital adequacy position
paragraph (a) of this section, the insured examination; consists of, or is equivalent to, Tier 1
branch shall exclude the following:
(1) Any asset due from the foreign (6) Any intangible asset; and total risk-based capital ratios of at
bank’s head office, or its other branches, (7) Any other asset not considered least 6 percent and 10 percent,
agencies, offices or affiliates; bankable by the FDIC. respectively, on a consolidated basis; or
(2) Any asset classified ‘‘Value (B) The insured branch has
(c) A foreign bank which has more maintained on a daily basis, over the
Impaired,’’ to the extent of the required than one insured branch in a state may
Allocated Transfer Risk Reserves or past three quarters, eligible assets in an
treat all of its insured branches in the amount not less than 108 percent of the
equivalent write down, or ‘‘Loss’’ in the same state as one entity for purposes of
most recent state or federal examination preceding quarter’s average third party
compliance with paragraph (a) of this liabilities (determined consistent with
report; section and shall designate one insured
(3) Any deposit of the insured branch applicable federal and state law) and
branch to be responsible for maintaining sufficient liquidity is currently available
in a bank unless the bank has executed
the records of the insured branches’ to meet its obligations to third parties;
a valid waiver of offset agreement;
(4) Any asset not supported by compliance with this section. (iv) Is not subject to a formal
sufficient credit information to allow a (d) The average book value of the enforcement action or order by the FRB,
review of the asset’s credit quality, as insured branch’s liabilities for a quarter FDIC, or the OCC; and
determined at the most recent state or shall be, at the insured branch’s option, (v) Has not experienced a change in
federal examination, as follows: either an average of the balances as of control during the preceding 12-month
(i) Whether an asset has sufficient the close of business for each day of the period in which a full-scope, on-site
credit information will be a function of quarter or an average of the balances as examination would have been required
the size of the borrower and the location of the close of business on each but for this section.
within the foreign bank of the Wednesday during the quarter. Quarters (2) Discretionary standards. In
responsibility for authorizing and end on March 31, June 30, September determining whether an insured branch
monitoring extensions of credit to the 30, and December 31 of any given year. that meets the standards of paragraph
borrower. For large, well known For days on which the insured branch (b)(1) of this section should not be
companies, when credit responsibility is is closed, balances from the previous eligible for an 18-month examination
located in an office of the foreign bank business day are to be used. cycle pursuant to this paragraph (b), the
outside the insured branch, the insured Calculations of the average book value FDIC may consider additional factors,
branch must have adequate of the insured branch’s liabilities for a including whether:
documentation to show that the asset is quarter shall be retained by the insured (i) Any of the individual components
of good quality and is being supervised branch until the next federal of the ROCA supervisory rating of an
adequately by the foreign bank. In such examination. insured branch is rated ‘‘3’’ or worse;
(ii) The results of any off-site requirements contained in §§ 347.209 § 347.215 Exemptions from deposit
monitoring indicate a deterioration in and 347.210. insurance requirement.
the condition of the insured branch; (2) In the case of an application to (a) Deposit activities not requiring
(iii) The size, relative importance, and initially engage in an activity, as insurance. A state branch will not be
role of a particular insured branch when opposed to an application to continue to considered to be engaged in domestic
reviewed in the context of the foreign conduct an activity, the insured state retail deposit activity that requires the
bank’s entire U.S. operations otherwise branch shall not commence the activity foreign bank parent to establish an
necessitate an annual examination; and until it has been approved in writing by insured U.S. bank subsidiary if the state
(iv) The condition of the parent the FDIC pursuant to this part and the branch accepts initial deposits only in
foreign bank gives rise to such a need. FRB, and any and all conditions an amount of less than $100,000 that are
(c) Authority to conduct more imposed in such approvals have been derived solely from the following:
frequent examinations. Nothing in (1) Individuals who are not citizens or
satisfied.
paragraphs (a) and (b) of this section residents of the United States at the time
(e) Divestiture or cessation. (1) If an of the initial deposit;
limits the authority of the FDIC to application for permission to continue (2) Individuals who:
examine any insured branch as to conduct an activity is not approved (i) Are not citizens of the United
frequently as it deems necessary. by the FDIC or the FRB, the applicant States;
§ 347.212 FDIC approval to conduct shall submit a plan of divestiture or (ii) Are residents of the United States;
activities that are not permissible for federal cessation of the activity to the and
branches. appropriate regional director. (iii) Are employed by a foreign bank,
foreign business, foreign government, or
(a) Scope. A foreign bank operating an (2) A foreign bank operating an
recognized international organization;
insured state branch which desires to insured state branch which elects not to
(3) Persons (including immediate
engage in or continue to engage in any apply to the FDIC for permission to family members of natural persons) to
type of activity that is not permissible continue to conduct an activity which is whom the branch or foreign bank
for a federal branch, pursuant to the rendered impermissible by any change (including any affiliate thereof) has
National Bank Act (12 U.S.C. 21 et seq.) in statute, regulation, official bulletin or extended credit or provided other
or any other federal statute, regulation, circular, written order or interpretation, nondeposit banking services within the
official bulletin or circular, written or decision of a court of competent past twelve months or has entered into
order or interpretation, or decision of a jurisdiction shall submit a plan of a written agreement to provide such
court of competent jurisdiction, must divestiture or cessation to the services within the next twelve months;
file a written application for permission appropriate regional director. (4) Foreign businesses, large United
to conduct such activity with the FDIC. (3) All plans of divestitures or States businesses, and persons from
(b) Exceptions. If the FDIC has already cessation required by this paragraph whom an Edge or agreement corporation
determined, pursuant to part 362 of this must be completed within one year from may accept deposits under 12 CFR
chapter, ‘‘Activities and Investment of the date of the disapproval, or within 211.6(a)(1);
Insured State Banks,’’ that an activity such shorter period as the FDIC may (5) Any governmental unit, including
does not present a significant risk to the direct. the United States government, any state
affected deposit insurance fund, no government, any foreign government
(f) Procedures. Procedures for
application is required under paragraph and any political subdivision or agency
applications under this section are set
(a) of this section for a foreign bank of any of the foregoing, and recognized
out in section 303.187.
operating an insured branch to engage international organizations;
or continue to engage in the same § 347.213 Establishment or operation of (6) Persons who are depositing funds
activity. noninsured foreign branch. in connection with the issuance of a
(c) Agency activities. A foreign bank financial instrument by the branch for
(a) A foreign bank may establish or
operating an insured state branch is not the transmission of funds or the
operate a state branch, as provided by
required to submit an application transmission of such funds by any
state law, without federal deposit electronic means; and
pursuant to paragraph (a) of this section insurance whenever:
to engage in or continue engaging in an (7) Any other depositor, but only if:
activity conducted as agent if the (1) The branch only accepts initial (i) The branch’s average deposits
activity is: deposits in an amount of $100,000 or under this paragraph (a)(7) do not
(1) permissible agency activity for a greater; or exceed one percent of the branch’s
state-chartered bank located in the state (2) The branch meets the criteria set average total deposits, as calculated
which the state-licensed insured branch forth in §§ 347.214 or 347.215. under paragraph (a)(7)(ii) if this section
of the foreign bank is located; (de minimis exception).
(b) [Reserved] (ii) For purposes of calculating this
(2) permissible agency activity for a
§ 347.214 Branch established under exception:
state-licensed branch of a foreign bank (A) The branch’s average deposits
located in that state; and section 5 of the International Banking Act.
under this paragraph and the average
(3) permissible pursuant to any other A foreign bank may operate any state total deposits must be computed by
applicable federal law or regulation. branch as a noninsured branch summing the close of business figures
(d) Conditions of approval. (1) whenever the foreign bank has entered for each of the last 30 calendar days,
Approval of such an application into an agreement with the FRB to ending with and including the last day
required by paragraph (a) of this section accept at that branch only those of the calendar quarter, and dividing the
may be conditioned on the agreement by deposits as would be permissible for a resulting sum by 30;
the foreign bank and its insured state corporation organized under section (B) For days on which the branch is
branch to conduct the activity subject to 25(a) of the Federal Reserve Act (12 closed, balances from the last previous
specific limitations, which may include U.S.C. 611 et seq.) and implementing business day are to be used;
pledging of assets in excess of the asset rules and regulations administered by (C) The branch may exclude deposits
pledge and asset maintenance the FRB (12 CFR 211). in the branch of other offices, branches,
agencies or wholly owned subsidiaries and improving the availability of credit usually accepted a sign stating that
of the bank to determine its average to all sectors of the United States deposits are not insured by the FDIC;
deposits; economy, including the international and
(D) The branch must not solicit trade finance sector of the United States (b) Include in bold face conspicuous
deposits from the general public by economy, whether the exemption would
advertising, display of signs, or similar type on each signature card, passbook,
give the foreign bank an unfair
activity designed to attract the attention and instrument evidencing a deposit the
competitive advantage over United
of the general public; and statement ‘‘This deposit is not insured
States banking organizations, and any
(E) A foreign bank that has more than other relevant factors in making this by the FDIC’’; or require each depositor
one state branch in the same state may determination. to execute a statement which
aggregate deposits in such branches (2) Procedures for applications under acknowledges that the initial deposit
(excluding deposits of other branches, this section are set out in § 303.186. and all future deposits at the branch are
agencies or wholly owned subsidiaries (c) Transition period. A noninsured not insured by the FDIC. This
of the bank) for the purpose of this state branch may maintain a retail acknowledgment shall be retained by
paragraph (a)(7). deposit lawfully accepted prior to April the branch so long as the depositor
(b) Application for an exemption. (1) 1, 1996 pursuant to regulations in effect maintains any deposit with the branch.
Whenever a foreign bank proposes to prior to July 1, 1998: This provision applies to any negotiable
accept at a state branch initial deposits (1) If the deposit qualifies pursuant to certificates of deposit made in a branch
of less than $100,000 and such deposits paragraph (a) or (b) of this section; or on or after July 6, 1989, as well as to any
are not otherwise exempted under (2) If the deposit does not qualify renewals of such deposits which
paragraph (a) of this section, the foreign pursuant to paragraph (a) or (b) of this become effective on or after July 6, 1989.
bank may apply to the FDIC for consent section, in the case of a time deposit, no
to operate the branch as a noninsured later than the first maturity date of the By order of the Board of Directors.
branch. The Board of Directors may time deposit after April 1, 1996. Dated at Washington, DC, this 18th day of
exempt the branch from the insurance March, 2005.
requirement if the branch is not engaged § 347.216 Depositor notification. Federal Deposit Insurance Corporation.
in domestic retail deposit activities Any state branch that is exempt from Valerie J. Best,
requiring insurance protection. The the insurance requirement pursuant to
Assistant Executive Secretary.
Board of Directors will consider the size § 347.215 shall:
and nature of depositors and deposit (a) Display conspicuously at each [FR Doc. 05–6295 Filed 4–5–05; 8:45 am]
accounts, the importance of maintaining window or place where deposits are BILLING CODE 6714–01–P

Rule: International Banking Regulations Activities of Insured State Nonmember Banks Operating in Foreign Countries and Insured U.S. Branches of Foreign Banks

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Rule: International Banking Regulations Activities of Insured State Nonmember Banks Operating in Foreign Countries and Insured U.S. Branches of Foreign Banks

Încărcat de

Drepturi de autor:

Formate disponibile

Wednesday,

management, operational controls, compliance, and

Supervisory risk subgroup

Equal to or greater than 108% ................................................................................................................ 2 3 4

S-ar putea să vă placă și