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2000 - Rules and Regulations
Subpart C—International Lending
§ 347.301 Purpose, authority, and scope.
Under the International Lending Supervision Act of 1983 (Title IX,
Pub. L. 98--181, 97 Stat. 1153) (12
U.S.C. 3901 et seq.) (ILSA), the Federal Deposit
Insurance Corporation prescribes the regulations in this subpart
relating to international lending activities of banks. processing loan
documents; and an allocable portion of salaries and related benefits of
employees engaged in the international lending function. No portion of
supervisory and administrative expenses or other indirect expenses such
as occupancy and other similar overhead costs shall be included.
[Codified to 12 C.F.R.
§ 347.301]
§ 347.302 Definitions.
For the purposes of this subpart:
(a) Administrative cost means those costs which are
specifically identified with negotiating, processing and consummating
the loan. These costs include, but are not necessarily limited to:
legal fees; costs of preparing and
(b) Banking institution means an insured state nonmember
bank.
(c) Federal banking agencies means the Board of
Governors of the Federal Reserve System, the Office of the Comptroller
of the Currency, and the Federal Deposit Insurance Corporation.
(d) International assets means those assets required to
be included in banking institutions' "Country Exposure Report"
form (FFIEC No. 009).
(e) International loan means a loan as defined in the
instructions to the "Report of Condition and Income" for the
respective banking institution (FFIEC Nos. 031, 032, 033 and 034) and
made to a foreign government, or to an individual, a corporation, or
other entity not a citizen of, resident in, or organized or
incorporated in the United States.
{{4-29-05 p.2864.05}}
(f) Restructured international loan means a loan that
meets the following criteria:
(1) The borrower is unable to service the existing loan according
to its terms and is a resident of a foreign country in which there is a
generalized inability of public and private sector obligors to meet
their external debt obligations on a timely basis because of a lack of,
or restraints on the availability of, needed foreign exchange in the
country; and
(2) Either;
(i) The terms of the existing loan are amended to reduce stated
interest or extend the schedule of payments; or
(ii) A new loan is made to, or for the benefit of, the borrower,
enabling the borrower to service or refinance the existing debt.
(g) Transfer risk means the possibility that an asset
cannot be serviced in the currency of payment because of a lack of, or
restraints on the availability of, needed foreign exchange in the
country of the obligor.
[Codified to 12 C.F.R.
§ 347.302]
§ 347.303 Allocated transfer risk reserve.
(a) Establishment of Allocated Transfer Risk Reserve. A
banking institution shall establish an allocated transfer risk reserve
(ATRR) for specified international assets when required by the FDIC in
accordance with this section.
(b) Procedures and standards--(1) Joint agency
determination. At least annually, the federal banking agencies
shall determine jointly, based on the standards set forth in paragraph
(b)(2) of this section, the following:
(i) Which international assets subject to transfer risk warrant
establishment of an ATRR;
(ii) The amount of the ATRR for the specified assets; and
(iii) Whether an ATRR established for specified assets may be
reduced.
(2) Standards for requiring
ATRR--(i) Evaluation of assets. The federal banking
agencies shall apply the following criteria in determining whether an
ATRR is required for particular international assets:
(A) Whether the quality of a banking institution's assets has
been impaired by a protracted inability of public or private obligors
in a foreign country to make payments on their external indebtedness as
indicated by such factors, among others, as whether:
(1) Such obligors have failed to make full interest
payments on external indebtedness; or
(2) Such obligors have failed to comply with the terms
of any restructured indebtedness; or
(3) A foreign country has failed to comply with any
International Monetary Fund or other suitable adjustment program; or
(B) Whether no definite prospects exist for the orderly
restoration of debt service.
(ii) Determination of amount of ATRR. (A) In
determining the amount of the ATRR, the federal banking agencies shall
consider:
(1) The length of time the quality of the asset has
been impaired;
(2) Recent actions taken to restore debt service
capability;
(3) Prospects for restored asset quality; and
(4) Such other factors as the federal banking agencies
may consider relevant to the quality of the asset.
(B) The initial year's provision for the ATRR shall be ten
percent of the principal amount of each specified international asset,
or such greater or lesser percentage determined by the federal banking
agencies. Additional provision, if any, for the ATRR in subsequent
years shall be fifteen percent of the principal amount of each
specified international asset, or such greater or lesser percentage
determined by the federal banking agencies.
{{4-29-05 p.2864.06}}
(3) FDIC notification. Based on the joint agency
determinations under paragraph (b)(1) of this section, the FDIC shall
notify each banking institution holding assets subject to an ATRR:
(i) Of the amount of the ATRR to be established by the
institution for specified international assets; and
(ii) That an ATRR established for specified assets may be
reduced.
(c) Accounting treatment of ATRR--(1) Charge to
current income. A banking institution shall establish an ATRR by a
charge to current income and the amounts so charged shall not be
included in the banking institution's capital or surplus.
(2) Separate accounting. A banking institution shall
account for an ATRR separately from the Allowance for Loan and Lease
Losses, and shall deduct the ATRR from "gross loans and leases"
to arrive at "net loans and leases." The ATRR must be established
for each asset subject to the ATRR in the percentage amount specified.
(3) Consolidation. A banking institution shall
establish an ATRR, as required, on a consolidated basis. For banks,
consolidation should be in accordance with the procedures and tests of
significance set forth in the instructions for preparation of
Consolidated Reports of Condition and Income (FFIEC Nos. 031, 032, 033
and 034).
(4) Alternative accounting treatment. A banking
institution need not establish an ATRR if it writes down in the period
in which the ATRR is required, or has written down in prior periods,
the value of the specified international assets in the requisite amount
for each such asset. For purposes of this paragraph (c)(4),
international assets may be written down by a charge to the Allowance
for Loan and Lease Losses or a reduction in the principal amount of the
asset by application of interest payments or other collections on the
asset; provided, that only those international assets that may be
charged to the Allowance for Loan and Lease Losses pursuant to
generally accepted accounting principles may be written down by a
charge to the Allowance for Loan and Lease Losses. However, the
Allowance for Loan and Lease Losses must be replenished in such amount
necessary to restore it to a level which adequately provides for the
estimated losses inherent in the banking institution's loan and lease
portfolio.
(5) Reduction of ATRR. A banking institution may
reduce an ATRR when notified by the FDIC or, at any time, by writing
down such amount of the international asset for which the ATRR was
established.
[Codified to 12 C.F.R.
§ 347.303]
§ 347.304 Accounting for fees on international loans.
(a) Restrictions on fees for restructured international
loans. No banking institution shall charge, in connection with the
restructuring of an international loan, any fee exceeding the
administrative cost of the restructuring unless it amortizes the amount
of the fee exceeding the administrative cost over the effective life of
the loan.
(b) Accounting treatment. Subject to paragraph (a) of
this section, banking institutions shall account for fees on
international loans in accordance with generally accepted accounting
principles.
[Codified to 12 C.F.R.
§ 347.304]
§ 347.305 Reporting and disclosure of international assets.
(a) Requirements. (1) Pursuant to section
907(a) of ILSA, a banking
institution shall submit to the FDIC, at least quarterly, information
regarding the amounts and composition of its holdings of international
assets.
(2) Pursuant to section 907(b) of ILSA, a banking institution
shall submit to the FDIC information regarding concentrations in its
holdings of international assets that are
{{4-29-05 p.2864.07}}material in relation to total
assets and to capital of the institution, such information to be made
publicly available by the FDIC on request.
(b) Procedures. The format, content and reporting and
filing dates of the reports required under paragraph (a) of this
section shall be determined jointly by the federal banking agencies.
The requirements to be prescribed by the federal banking agencies may
include changes to existing forms (such as revisions to the Country
Exposure Report, Form FFIEC No. 009) or such other requirements as the
federal banking agencies deem appropriate. The federal banking agencies
also may determine to exempt from the requirements of paragraph (a) of
this section banking institutions that, in the federal banking
agencies' judgment, have de minimis holdings of
international assets.
(c) Reservation of Authority. Nothing contained in this
subpart shall preclude the FDIC from requiring from a banking
institution such additional or more frequent information on the
institution's holdings of international assets as the agency may
consider necessary.
[Codified to 12 C.F.R. § 347.305]
[The page following this is 2865.]
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