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2000 - Rules and Regulations
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PART 347—INTERNATIONAL BANKING
Subpart A—Foreign Banking and Investment by Insured State
Nonmember Banks
Sec.
347.101
Authority, purpose, and scope.
347.102
Definitions.
347.103
Effect of state law on actions taken under this subpart.
347.104
Insured state nonmember bank investment in foreign organizations.
347.105
Permissible financial activities outside the United States.
347.106
Going Concerns.
347.107
Joint ventures.
347.108
Portfolio investments.
347.109
Limitations on indirect investments in nonfinancial organizations.
347.110
Affiliate holdings.
347.111
Underwriting and dealing limits applicable to foreign organizations
held by insured state nonmember banks.
347.112
Restrictions applicable to foreign organizations that act as futures
commission merchants.
347.113
Restrictions applicable to activities by a foreign organization in the
United States.
347.114
Extensions of credit to foreign organizations held by insured state
nonmember banks; shares of foreign organizations held in connection
with debts previously contracted.
347.115
Permissible activities for a foreign branch of an insured state
nonmember bank.
347.116
Recordkeeping and supervision of the foreign activities of insured
state nonmember banks.
347.117
General consent.
347.118
Expedited processing.
347.119
Specific consent.
347.120
Computation of investment amounts.
347.121
Requirements for insured state nonmember bank to close a foreign
branch.
347.122
Limitations applicable to the authority provided in this subpart.
Subpart B—Foreign Banks
347.201
Authority, purpose, and scope.
347.202
Definitions.
347.203
Deposit insurance required for all branches of foreign banks engaged in
domestic retail deposit activity in the same state.
347.204
Commitment to be examined and provide information.
347.205
Record maintenance.
347.206
Domestic retail deposit activity requiring deposit insurance by U.S.
branch of a foreign bank.
347.207
Disclosure of supervisory information to foreign supervisors.
347.208
Assessment base deductions by insured branch.
347.209
Pledge of assets.
347.210
Asset maintenance.
347.211
Examination of branches of foreign banks.
347.212
FDIC approval to conduct activities that are not permissible for
federal branches.
347.213
Establishment or operation of noninsured foreign branch.
347.214
Branch established under section 5 of the International Banking Act.
347.215
Exemptions from deposit insurance requirement.
347.216
Depositor notification.
{{12-31-07 p.2846}}
Subpart C—International Lending
347.301
Purpose, authority, and scope.
347.302
Definitions.
347.303
Allocated transfer risk reserve.
347.304
Accounting for fees on international loans.
347.305
Reporting and disclosure of international assets.
Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828,
3103, 3104, 3105, 3108, 3109; Title IX, Pub. L. 98--181, 97 Stat. 1153.
SOURCE: The provisions of this Part 347 appear at
70
Fed. Reg. 17560 April 6, 2005, effective July 1, 2005, and 70
Fed. Reg. 20705, April 21, 2005, effective July 1, 2005 except as
otherwise noted.
§ 347.101 Authority, purpose, and scope.
(a) This subpart is issued pursuant to section 18(d) and
(l) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(d),
1828(l).
(b) The rules in subpart A address the FDIC's requirements for
insured state nonmember bank investments in foreign organizations,
permissible foreign financial activities, loans or extensions of credit
to or for the account of foreign organizations, and the FDIC's
recordkeeping, supervision, and approval requirements. The rules also
address the permissible activities for foreign branches of insured
state nonmember banks, as well as the FDIC's requirements for
establishing, operating, relocating and closing of branches in foreign
countries.
[Codified to 12 C.F.R. § 347.101]
§ 347.102
Definitions.
For the purpose of this subpart:
(a) An affiliate of an insured state nonmember bank
means:
(1) Any entity of which the insured state nonmember bank is a
direct or indirect subsidiary or which otherwise controls the insured
state nonmember bank;
(2) Any organization which is a direct or indirect subsidiary of
such entity or which is otherwise controlled by such entity; or
(3) Any other organization that is a direct or indirect
subsidiary of the insured state nonmember bank or is otherwise
controlled by the insured state nonmember bank.
(b) Control means the ability to
control in any manner the election of a majority of an organization's
directors or trustees; or the ability to exercise a controlling
influence over the management and policies of an organization. An
insured state nonmember bank is deemed to control an organization of
which it is a general partner or its affiliate is a general partner.
(c) Domestic means United States.
(d) Eligible insured state nonmember bank
means an eligible depository institution as defined in § 303.2(r) of
this chapter.
(e) Equity interest means any ownership
interest or rights in an organization, whether through an equity
security, contribution to capital, general or limited partnership
interest, debt or warrants convertible into ownership interests or
rights, loans providing profit participation, binding commitments to
acquire any such items, or some other form of business transaction.
(f) Equity security means voting or nonvoting
shares, stock, investment contracts, or other interests representing
ownership or participation in a company or similar enterprise, as well
as any instrument convertible to any such interest at the option of the
holder without payment of substantial additional consideration.
(g) FRB means the Board of Governors of the
Federal Reserve System.
(h) Foreign bank means an organization that
is organized under the laws of a foreign country, a territory of the
United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands
that:
(1) Is recognized as a bank by the bank supervisory or monetary
authority of the country of its organization or the country in which
its principal banking operations are located;
(2) Receives deposits to a substantial extent in the regular
course of its business; and
(3) Has the power to accept demand deposits.
{{4-29-05 p.2847}}
(i) Foreign banking organization means a foreign
organization that is formed for the sole purpose of either holding
shares of a foreign bank or performing nominee, fiduciary, or other
banking services incidental to the activities of a foreign branch or
foreign bank affiliate of the insured state nonmember bank.
(j) Foreign branch means an office or place of business
located outside the United States, its territories, Puerto Rico, Guam,
American Samoa, the Trust Territory of the Pacific Islands, or the
Virgin Islands, at which banking operations are conducted, but does not
include a representative office.
(k) Foreign country means any country other than the
United States and includes any territory, dependency, or possession of
any such country or of the United States.
(l) Foreign organization means an organization that is
organized under the laws of a foreign country.
(m) Insured state nonmember bank or bank
means a state bank, as defined by § 3(a)(2) of the Federal Deposit
Insurance Act (12 U.S.C.
1813(a)(2)), whose deposits are insured by the FDIC and that is
not a member of the Federal Reserve System.
(n) Indirectly means investments held or activities
conducted by a subsidiary of an organization.
(o) Investment grade means a security that is rated in
one of the four highest categories by:
(1) Two or more NRSROs; or
(2) One NRSRO if the security is rated by only one NRSRO.
(p) Loan or extension of credit means all direct and
indirect advances of funds to a person, government, or entity made on
the basis of any obligation of that person, government, or entity to
repay funds.
(q) Organization or entity means a corporation,
partnership, association, bank, or other similar entity.
(r) NRSRO means a nationally recognized statistical
rating organization as designated by the Securities and Exchange
Commission.
(s) Representative office means an office that engages
solely in representative functions such as soliciting new business for
its home office or acting as liaison between the home office and local
customers, but which has no authority to make business or contracting
decisions other than those relating to the personnel and premises of
the representative office.
(t) Subsidiary means any organization more than 50
percent of the voting equity interests of which are directly or
indirectly held by another organization.
(u) Tier 1 capital means Tier 1 capital as defined in
§ 325.2 of this chapter.
(v) Well capitalized means well capitalized as defined
in § 325.103 of this
chapter.
[Codified to 12 C.F.R. § 347.102]
§ 347.103 Effect of state law on actions taken under this
subpart.
A bank may acquire and retain equity interests in a foreign
organization or establish a foreign branch, subject to the requirements
of this subpart, if it is authorized to do so by the law of the state
in which the bank is chartered.
[Codified to 12 C.F.R. § 347.103]
§ 347.104 Insured state nonmember bank investments in foreign
organizations.
(a) Investment in foreign banks or foreign banking
organizations. A bank may directly or indirectly acquire and
retain equity interests in a foreign bank or foreign banking
organization.
(b) Investment in other foreign organizations. A bank
may only: (1) acquire and retain equity interests in foreign
organizations, other than foreign banks or foreign banking
organizations in amounts of 50 percent or less of the foreign
organization's voting equity interests, if the equity interest is held
through a domestic or foreign subsidiary; and
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(2) The bank meets its minimum capital requirements.
[Codified to 12 C.F.R. § 347.104]
§ 347.105 Permissible financial activities outside the United
States.
(a) Limitation on authorized activities. A bank may not
directly or indirectly acquire or hold equity interests in a foreign
organization that will result in the bank and its affiliates:
(1) Holding more than 50 percent, in the aggregate, of the voting
equity interest in such foreign organization; or
(2) Controlling such foreign organization, unless the activities
of a foreign organization are limited to those authorized under
paragraph (b) of this section.
(b) Authorized activities. The following financial
activities are authorized outside the United States:
(1) Commercial and other banking activities.
(2) Financing, including commercial financing, consumer
financing, mortgage banking, and factoring, subject to compliance with
any attendant restrictions contained in
12 CFR 225.28(b).
(3) Leasing real or personal property, acting as agent, broker or
advisor in leasing real or personal property, subject to compliance
with any attendant restrictions in 12 CFR 225.28(b).
(4) Acting as a fiduciary, subject to compliance with any
attendant restrictions in 12 CFR 225.28(b).
(5) Underwriting credit life, credit accident and credit health
insurance.
(6) Performing services for other direct or indirect operations
of a domestic banking organization, including representative functions,
sale of long-term debt, name saving, liquidating assets acquired to
prevent loss on a debt previously contracted in good faith, and other
activities that are permissible for a bank holding company under
sections 4(a)(2)(A) and
4(c)(1)(C) of the Bank Holding
Company Act.
(7) Holding the premises of a branch of an Edge corporation or
insured state nonmember bank or the premises of a direct or indirect
subsidiary, or holding or leasing the residence of an officer or
employee of a branch or a subsidiary.
(8) Providing investment, financial, or economic services,
subject to compliance with any attendant restrictions in 12 CFR
225.28(b).
(9) General insurance agency and brokerage.
(10) Data processing.
(11) Organizing, sponsoring, and managing a mutual fund if the
fund's shares are not sold or distributed in the United States or to
U.S. residents and the fund does not exercise management control over
the firms in which it invests.
(12) Performing management consulting services, provided that
such services when rendered with respect to the domestic market must be
restricted to the initial entry.
(13) Underwriting, distributing, and dealing in debt securities
outside the United States.
(14) With the prior approval of the FDIC under section
347.119(d), underwriting, distributing, and dealing in equity
securities outside the United States.
(15) Operating a travel agency in connection with financial
services offered outside the United States by the bank or others.
(16) Providing futures commission merchant services, subject to
compliance with any attendant restrictions in 12 CFR 225.28(b).
(17) Engaging in activities that the FRB has determined in
Regulation Y (12 CFR 225.28(b)) are closely related to banking under
section 4(c)(8) of the Bank Holding Company Act.
(18) Engaging in other activities with the prior approval of the
FDIC.
(c) Limitation on activities authorized under Regulation Y.
If a bank relies solely on the cross-reference to Regulation Y
contained in paragraph (b)(17) of this section as
authority
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compliance with any attendant restrictions on the activity that are
contained in 12 CFR 225.28(b) is required.
(d) Approval of other activities. Activities that are
not specifically authorized by this section, but that are authorized by
12 CFR 211.10 or FRB
interpretations of activities authorized by that section, may be
authorized by specific consent of the FDIC on an individual basis and
upon such terms and conditions as the FDIC may consider appropriate.
Activities that will be engaged in as principal (defined by reference
to section 362.1(b) of this
chapter), and that are not authorized by 12 CFR 211.10 or FRB
interpretations of activities authorized under that section, must
satisfy the requirements of part
362 of this chapter and be approved by the FDIC under this part
as well as part 362 of this chapter.
[Codified to 12 C.F.R. § 347.105]
§ 347.106 Going concerns.
Going concerns. If a bank acquires an equity interest in
a foreign organization that is a going concern, no more than 5 percent
of either the consolidated assets or revenues of the foreign
organization may be attributable to activities that are not permissible
under § 347.105(b).
[Codified to 12 C.F.R.
§ 347.106]
§ 347.107 Joint ventures.
(a) Joint ventures. If a bank, directly or indirectly,
acquires or holds an equity interest in a foreign organization that is
a joint venture, and the bank or its affiliates do not control the
foreign organization, no more than 10 percent of either the
consolidated assets or revenues of the foreign organization may be
attributable to activities that are not permissible under
§ 347.105(b).
(b) Joint venture defined. For purposes of this section,
the term "joint venture" means any organization in which 20
percent or more but not in excess of 50 percent of the voting equity
interests, in the aggregate, are directly or indirectly held by a bank
or its affiliates.
[Codified to 12 C.F.R.
§ 347.107]
§ 347.108 Portfolio investments.
(a) Portfolio investments. If a bank, directly or
indirectly, acquires or holds an equity interest in a foreign
organization as a portfolio investment and the foreign organization is
not controlled, directly or indirectly, by the bank or its affiliates:
(1) No more than 10 percent of either the consolidated assets or
revenues of the foreign organization may be attributable to activities
that are not permissible under § 347.105(b); and
(2) Any loans or extensions of credit made by the bank and its
affiliates to the foreign organization must be on substantially the
same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions between the
bank or its affiliates and nonaffiliated organizations.
(b) Portfolio investment defined. For purposes of this
section, the term "portfolio investment" means an investment in
an organization in which less than 20 percent of the voting equity
interests, in the aggregate, are directly or indirectly held by a bank
or its affiliates.
[Codified to 12 C.F.R. § 347.108]
§ 347.109 Limitations on indirect investments in nonfinancial
foreign organizations.
(a) A bank may, through a subsidiary authorized by §§ 347.105 or
347.106, or an Edge corporation if also authorized by the FRB, acquire
and hold equity interests in foreign organizations that are not foreign
banks or foreign banking organizations and that engage generally in
activities beyond those listed in § 347.105(b), subject to the
following:
{{4-29-05 p.2850}}
(1) The amount of the investment does not exceed 15 percent of
the bank's Tier 1 capital:
(2) The aggregate holding of voting equity interests of one
foreign organization by the bank and its affiliates must be less than:
(i) 20 percent of the foreign organization's voting equity
interests; and
(ii) 40 percent of the foreign organization's voting and
nonvoting equity interests;
(3) The bank or its affiliates must not otherwise control the
foreign organization; and
(4) Loans or extensions of credit made by the bank and its
affiliates to the foreign organization must be on substantially the
same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions between the
bank or its affiliates and nonaffiliated organizations.
(b) Reserved.
[Codified to 12 C.F.R.
§ 347.109]
§ 347.110 Affiliate holdings.
References in §§ 347.107, 347.108, and 347.109 to equity
interests of foreign organizations held by an affiliate of a bank
include equity interests held in connection with an underwriting or for
distribution or dealing by an affiliate permitted to do so by
§§ 362.8 or
362.18 of this chapter or
section 4(c)(8) of the Bank Holding Company Act
(12 U.S.C. 1843(c)(8)).
[Codified to 12 C.F.R.
§ 346.110]
§ 347.111 Underwriting and dealing limits applicable to foreign
organizations held by insured state nonmember banks.
A bank that holds an equity interest in one or more foreign
organizations which underwrite, deal, or distribute equity securities
outside the United States as authorized by § 347.105(b)(14) is
subject to the following limitations:
(a) Underwriting commitment limits.
(1) The aggregate underwriting commitments by the foreign
organizations for the equity securities of a single entity, taken
together with underwriting commitments by any affiliate of the bank
under the authority of 12 CFR
211.10(b), may not exceed the lesser of $60 million or 25
percent of the bank's Tier 1 capital, except as otherwise provided in
this paragraph.
(2) Underwriting commitments in excess of this limit must be
either:
(i) Covered by binding commitments from subunderwriters or
purchasers; or
(ii) Deducted from the capital of the bank, with at least 50
percent of the deduction being taken from Tier 1 capital, with the bank
remaining well capitalized after this deduction.
(b) Distribution and dealing limits. The equity
securities of any single entity held for distribution or dealing by the
foreign organizations, taken together with equity securities held for
distribution or dealing by any affiliate of the bank under the
authority of 12 CFR 211.10:
(1) May not exceed the lesser of $30 million or 5 percent of the
bank's Tier 1 capital, subject to the following:
(i) Any equity securities acquired pursuant to any underwriting
commitment extending up to 90 days after the payment date for the
underwriting may be excluded from this limit;
(ii) Any equity securities of the entity held under the authority
of §§ 347.105 through 347.109 or 12 CFR 211.10 for purposes other
than distribution or dealing must be included in this limit; and
(iii) Up to 75 percent of the position in an equity security may
be reduced by netting long and short positions in the same security, or
offsetting cash positions against derivative instruments referenced to
the same security so long as the derivatives are part of a prudent
hedging strategy; and
{{4-29-05 p.2851}}
(2) Must be included in calculating the general consent limits
under § 347.117(b)(3) if the bank relies on the general consent
provisions as authority to acquire equity interests of the same foreign
entity for investment or trading.
(c) Additional distribution and dealing limits. With the
exception of equity securities acquired pursuant to any underwriting
commitment extending up to 90 days after the payment date for the
underwriting, equity securities of a single entity held for
distribution or dealing by all affiliates of the bank (this includes
shares held in connection with an underwriting or for distribution or
dealing by an affiliate permitted to do so by
§§ 362.8 or
362.18 of this chapter or
section 4(c)(8) of the Bank
Holding Company Act), combined with any equity interests held for
investment or trading purposes by all affiliates of the bank, must
conform to the limits of §§ 347.105 through 347.109.
(d) Combined limits. The aggregate of the following may
not exceed 25 percent of the bank's Tier 1 capital:
(1) All equity interests of foreign organizations held for
investment or trading under § 347.109 or by an affiliate of the bank
under the corresponding paragraph of 12 CFR 211.10.
(2) All underwriting commitments under paragraph (a) of this
section, taken together with all underwriting commitments by any
affiliate of the bank under the authority of 12 CFR 211.10, after
excluding the amount of any underwriting commitment:
(i) Covered by binding commitments from subunderwriters or
purchasers under paragraph (a)(1) of this section or the comparable
provision of 12 CFR 211.10; or
(ii) Already deducted from the bank's capital under paragraph
(a)(2) of this section, or the appropriate affiliate's capital, under
the comparable provisions of 12 CFR 211.10; and
(3) All equity securities held for distribution or dealing under
paragraph (b) of this section, taken together with all equity
securities held for distribution or dealing by any affiliate of the
bank under the authority of 12 CFR 211.10, after reducing by up to 75
percent the position in any equity security by netting and offset, as
permitted by paragraph (b)(1)(iii) of this section or the comparable
provision of 12 CFR 211.10.
[Codified to 12 C.F.R.
§ 347.111]
§ 347.112 Restrictions applicable to foreign organizations that
act as futures commission merchants.
(a) If a bank acquires or retains an equity interest in a foreign
organization that acts as a futures commission merchant pursuant to
§ 347.105(b)(16), the foreign organization may not be a member of an
exchange or clearing association that requires members to guarantee or
otherwise contract to cover losses suffered by other members unless
the:
(1) Foreign organization's liability does not exceed two percent
of the bank's Tier 1 capital, or
(2) Bank has obtained the prior approval of the FDIC under
§ 347.120(d).
(b) Reserved.
[Codified to 12 C.F.R.
§ 347.112]
§ 347.113 Restrictions applicable to activities by a foreign
organization in the United States.
(a) A bank, acting under the authority provided in this subpart,
may not directly or indirectly hold:
(1) Equity interests of any foreign organization that engages in
the general business of buying or selling goods, wares, merchandise, or
commodities in the United States; or
(2) More than 5 percent of the equity interests of any foreign
organization that engages in activities in the United States unless any
activities in which the foreign organization engages in the United
States are incidental to its international or foreign
business.
{{4-29-05 p.2852}}
(b) For purposes of this section:
(1) A foreign organization is not engaged in any business or
activities in the United States unless it maintains an office in the
United States other than a representative office.
(2) The following activities are incidental to international or
foreign business:
(i) Activities that are permissible for an Edge corporation in
the United States under 12 CFR
211.6; or
(ii) Other activities approved by the FDIC.
[Codified to 12 C.F.R.
§ 347.113]
§ 347.114 Extensions of credit to foreign organizations held by
insured state nonmember banks; shares of foreign organizations held in
connection with debts previously contracted.
(a) Loans or extensions of credit. A bank that directly
or indirectly holds equity interests in a foreign organization pursuant
to the authority of this subpart may make loans or extensions of credit
to or for the accounts of the organization without regard to the
provisions of section 18(j) of the FDI Act
(12 U.S.C. 1828(j)).
(b) Debts previously contracted. Equity interests
acquired to prevent a loss upon a debt previously contracted in good
faith are not subject to the limitations or procedures of this subpart;
however, they must be disposed of promptly but in no event later than
two years after their acquisition, unless the FDIC authorizes retention
for a longer period.
[Codified to 12 C.F.R.
§ 347.114]
§ 347.115 Permissible activities for a foreign branch of an
insured state nonmember bank.
In addition to its general banking powers and if permitted by the
law of the state in which the bank is chartered, a foreign branch of a
bank may conduct the following activities to the extent that they are
consistent with banking practices in a foreign country where the bank
maintains a branch:
(a) Guarantees. Guarantee debts, or otherwise agree to
make payments on the occurrence of readily ascertainable events
including, without limitation, nonpayment of taxes, rentals, customs
duties, or costs of transport and loss or nonconformance of shipping
documents, if:
(1) The guarantee or agreement specifies a maximum monetary
liability; and
(2) To the extent the guarantee or agreement is not subject to a
separate amount limit under state or federal law, the amount of the
guarantee or agreement is combined with loans and other obligations for
purposes of applying any legal lending limits.
(b) Government obligations. Engages in the following
types of transactions with respect to the obligations of foreign
countries, so long as aggregate investments, securities held in
connection with distribution and dealing, and underwriting commitments
do not exceed ten percent of the bank's Tier 1 capital:
(1) Underwrite, distribute and deal, invest in, or trade
obligations of:
(i) The national government of the country in which the branch is
located or its political subdivisions; and
(ii) An agency or instrumentality of such national government if
supported by the taxing authority, guarantee, or full faith and credit
of the national government.
(2) Underwrite, distribute and deal, invest in or trade
obligations 1
rated as investment grade of:
(i) The national government of any foreign country or its
political subdivisions, to the extent permissible under the law of the
issuing foreign country; and
(ii) An agency or instrumentality of the national government of
any foreign country to the extent permissible under the law of the
issuing foreign country, if supported by the taxing authority,
guarantee, or full faith and credit of the national
government.
{{4-29-05 p.2853}}
(c) Local investments. (1) Acquire and hold local
investments in:
(i) Equity securities of the central bank, clearinghouses,
governmental entities, and government sponsored development banks of
the country in which the branch is located;
(ii) Other debt securities eligible to meet local reserve or
similar requirements; and
(iii) Shares of automated electronic payment networks
professional societies, schools, and similar entities necessary to the
business of the branch.
(2) Aggregate local investments (other than those required by the
law of the foreign country or permissible under section 5136 of the
Revised Statutes (12 U.S.C. 24 (Seventh) by all the bank's branches in
a single foreign country must not exceed 1 percent of the total
deposits in all the bank's branches in that country as reported in the
preceding year-end Report of Income and Condition (Call
Report). 2
(d) Insurance. Act as an insurance agent or broker.
(c) Employee benefits program. Pay to an employee of a
branch, as part of an employee benefits program, a greater rate of
interest than that paid to other depositors of the branch.
(f) Repurchase agreements. Engage in repurchase
agreements involving securities and commodities that are the functional
equivalents of extensions of credit.
(g) Other activities. Engage in other activities, with
the prior approval of the FDIC.
(h) Approval of other activities. Activities that are
not specifically authorized by this section, but that are authorized by
12 CFR 211.4 or FRB
interpretations of activities authorized by that section, may be
authorized by specific consent of the FDIC on an individual basis and
upon such terms and conditions as the FDIC may consider appropriate.
Activities that will be engaged in as principal (defined by reference
to section 362.1(b) of this
chapter), and that are not authorized by
12 CFR 211.4 or FRB
interpretations of activities authorized under this section, must
satisfy the requirements of part 362 of this chapter and be approved by
the FDIC under this part as well as part 362 of this chapter.
[Codified to 12 C.F.R.
§ 347.115]
§ 347.116 Recordkeeping and supervision of foreign activities
of insured state nonmember banks.
(a) Records, controls and reports. A bank with any
foreign branch, any investment in a foreign organization of 20 percent
or more of the organization's voting equity interests, or control of a
foreign organization must maintain a system of records, controls and
reports that, at minimum, provide for the following:
(1) Risk assets. To permit assessment of exposure to
loss, information furnished or available to the main office should be
sufficient to permit periodic and systematic appraisals of the quality
of risk assets, including loans and other extensions of credit.
Coverage should extend to a substantial proportion of the risk assets
in the branch or foreign organization, and include the statues of all
large credit lines and of credits to customers also borrowing from
other offices or affiliates of the bank. Appropriate information on
risk assets may include:
(i) A recent financial statement of the borrower or obligee and
current information on the borrower's or obligee's financial
condition;
(ii) Terms, conditions, and collateral;
(iii) Data on any guarantors;
(iv) Payment history; and
(v) Status of corrective measures employed.
(2) Liquidity. To enable assessment of local
management's ability to meet its obligations from available resources,
reports should identify the general sources and character of the
deposits, borrowing, and other funding sources employed in the branch
or foreign organization with special reference to their terms and
volatility. Information should
{{4-29-05 p.2854}}be available on sources of
liquidity--cash, balances with banks, marketable securities, and
repayment flows--such as will reveal their accessibility in time and
any risk elements involved.
(3) Contingencies. Data on the volume and nature of
contingent items such as loan commitments and guarantees or their
equivalents that permit analysis of potential risk exposure and
liquidity requirements.
(4) Controls. Reports on the internal and external
audits of the branch or foreign organization in sufficient detail to
permit determination of conformance to auditing guidelines. Appropriate
audit reports may include coverage of:
(i) Verification and identification of entries on financial
statements;
(ii) Income and expense accounts, including descriptions of
significant chargeoffs and recoveries;
(iii) Operations and dual-control procedures and other internal
controls;
(iv) Conformance to head office guidelines on loans, deposits,
foreign exchange activities, accounting procedures in compliance with
applicable accounting standards, and discretionary authority of local
management;
(v) Compliance with local laws and regulations; and
(vi) Compliance with applicable U.S. laws and regulations.
(b) Availability of information to examiners; reports.
(1) Information about foreign branches or foreign organizations
must be made available to the FDIC by the bank for examination and
other supervisory purposes.
(2) The FDIC may from time to time require a bank to make and
submit such reports and information as may be necessary to implement
and enforce the provisions of this subpart, and the bank shall submit
an annual report of condition for each foreign branch pursuant to
instructions provided by the FDIC.
[Codified to 12 C.F.R.
§ 347.116]
§ 347.117 General consent.
(a) General consent to establish or relocate a foreign branch.
General consent of the FDIC is granted, subject to the written
notification requirement contained in
section 303.182(a) and
consistent with the requirements of this subpart, for an:
(1) Eligible bank to establish a foreign branch conducting
activities authorized by section 347.115 of this section in any foreign
country in which:
(i) The bank already operates one or more foreign branches or
foreign bank subsidiaries;
(ii) The bank's holding company operates a foreign bank,
subsidiary; or
(iii) An affiliated bank or Edge or Agreement corporation
operates one or more foreign branches or foreign bank subsidiaries.
(2) Insured state nonmember bank to relocate an existing foreign
branch within a foreign country.
(b) General consent to invest in a foreign organization.
General consent of the FDIC is granted, subject to the written
notification requirement contained in section
303.183(a) (unless no
notification is required because the investment is acquired for trading
purposes) and consistent with the requirements of this subpart, for an
eligible bank to make investments in foreign organizations, directly or
indirectly, if:
(1) The bank operates at least one foreign bank subsidiary or
foreign branch, an affiliated bank or Edge or Agreement corporation
operates at least one foreign bank subsidiary or foreign branch, or the
bank's holding company operates at least one foreign bank subsidiary
in the country where the foreign organization will be located;
(2) In any instance where the bank and its affiliates will hold
20 percent or more of the foreign organization's voting equity
interests or control the foreign organization, at least one state
nonmember bank has a foreign bank subsidiary or foreign branch (other
than a shell branch) in the country where the foreign organization will
be located; 3
and
{{4-29-05 p.2855}}
(3) The investment is within one of the following limits:
(i) The investment is acquired at net asset value from an
affiliate;
(ii) the investment is a reinvestment of cash dividends received
from the same foreign organization during the preceding 12 months; or
(iii) The total investment, directly or indirectly, in a single
foreign organization in any transaction or series of transactions
during a twelve-month period does not exceed 2 percent of the bank's
Tier 1 capital and such investments in all foreign organizations in the
aggregate do not exceed:
(A) 5 percent of the bank's Tier 1 capital during a 12-month
period; and
(B) Up to an additional 5 percent of the bank's Tier 1 capital
if the investments are acquired for trading purposes.
[Codified to 12 C.F.R.
§ 347.117]
§ 347.118 Expedited processing.
(a) Expedited processing of branch applications. An
eligible bank may establish a foreign branch conducting activities
authorized by § 347.115 in an additional foreign country, after
complying with the expedited processing requirements contained in
§ 303.182(b) and
(c)(1), if any of the following are located in two or more foreign
countries:
(1) Foreign branches or foreign bank subsidiaries of the eligible
bank;
(2) Foreign branches or foreign bank subsidiaries of banks and
Edge or Agreement corporations affiliated with the eligible bank; and
(3) Foreign bank subsidiaries of the eligible bank's holding
company.
(b) Expedited processing of applications for investment in
foreign organizations. An investment that does not qualify for
general consent but is otherwise in conformity with the limits and
requirements of this subpart may be made 45 days after an eligible bank
files a substantially complete application with the FDIC in compliance
with the expedited processing requirements contained in
§ 303.183(b) and
(c)(1), or within such earlier time as authorized by the FDIC.
[Codified to 12 C.F.R.
§ 347.118]
§347.119 Specific consent.
General consent and expedited processing under this subpart do not
apply in the following circumstances:
(a) Limitation on access to supervisory information in
foreign country.
(1) Applicable law or practice in the foreign country where the
foreign organization or foreign branch would be located would limit the
FDIC's access to information for supervisory purposes; and
(i) A bank would hold 20 percent or more of the voting equity
interests of a foreign organization or control such organization as a
result of a foreign investment; or
(ii) A bank would be establishing a foreign branch.
(b) World Heritage site. A foreign branch of a bank
would be located on a site on the World Heritage List or on the foreign
country's equivalent of the National Register of Historic Places, in
accordance with section 403 of the National Historic Preservation Act
Amendments of 1980 (16 U.S.C. 470a--2).
(c) Modification or suspension of general consent or
expedited processing. The FDIC at any time notifies the bank that
the FDIC is modifying or suspending its general consent or expedited
processing procedure.
(d) Specific consent. Direct or indirect investments in
or activities of foreign organizations by banks, the establishment of
foreign branches or issues regarding the types or amounts of activity
that can be engaged in by foreign branches, which are not authorized
under §§ 347.117 or 347.118 require prior review and specific
consent of the FDIC.
[Codified to 12 C.F.R. § 347.119]
{{4-29-05 p.2856}}
§ 347.120 Computation of investment amounts.
In computing the amount that may be invested in any foreign
organization under §§ 347.117 through 347.119, any investments held
by an affiliate of a bank must be included.
[Codified to 12 C.F.R.
§ 347.120]
§ 347.121 Requirements for insured state nonmember bank to
close a foreign branch.
A bank must comply with the written notification requirement
contained in
§ 303.182(d) when it
closes a foreign branch.
[Codified to 12 C.F.R.
§ 347.121]
§ 347.122 Limitations applicable to the authority provided in
this subpart.
The FDIC may impose such conditions on authority granted in this
subpart as it considers appropriate. If a bank is unable or fails to
comply with the requirements of this subpart or any conditions imposed
by the FDIC regarding transactions under this subpart, the FDIC may
require termination of any activities or divestiture of investments
permitted under this subpart after giving the bank notice and a
reasonable opportunity to be heard on the matter.
[Codified to 12 C.F.R. § 347.122]
1 If the obligation is an equity interest, it must be held
through a subsidiary of the foreign branch and the insured state
nonmember bank must meet its minimum capital requirements. Go Back to Text
2 If a branch has recently been acquired by the bank and the
branch was not previously required to file a Call Report, branch
deposits as of the acquisition date must be used. Go Back to Text
3 A list of these countries can be obtained from the FDIC's
Internet Web Site at http://www.fdic.gov. Go Back to Text
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