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Federal R eser v e bank OF DALLAS WILLIAM H. WALLACE F IR S T V IC E P R E S ID E N T December 2, 1986 DALLAS, TEXAS 7 5 2 2 2 Circular 86-101 TO: The Chief Executive Officer of all member banks, bank holding companies, Edge corporations, and others concerned in the Eleventh Federal Reserve District SUBJECT Proposal to charge fe es fo r processing certa in ap p lication s and for supervision o f Edge corporations DETAILS The Board of Governors of the Federal Reserve System has issued for public comment a proposal to charge fees for the processing of applications and for the supervision and general oversight of Edge corporations. Under the Board's proposal, fixed fees would be imposed to the costs for the processing of bank holding company, international and other applications. The proposal also calls for a schedule of assessments for the supervision of Edge corporations based on their assets. recover banking, annual total The Board is seeking public comment on whether such a system of fees should be imposed, whether the proposed fee schedules are equitable and appropriate, and whether the Board should consider charging for bank holding company inspections. Comments on the proposal should be addressed to Mr. William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. All correspondence should refer to Docket No. R-0584, and must be received on or before January 5, 1987. ATTACH ENTS M The material as published in the Federal Register is attached. For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - MORE INFORMATION Questions pertaining to this proposal should be directed to David W. Dixon of this Bank's Legal Department at (214) 651-6228 or to the following Supervision and Regulation Department personnel: Applications: Gayle Teague (214) 651-6481 Supervision of Edge Corporations: Linda M. Myers (214) 651-6670 Uzziah Anderson (214) 651-6275 Sincerely yours, Federal Register / Vol. 51, No. 223 / Wednesday, November 19, 1986 / Proposed Rules FEDERAL RESERVE SYSTEM 12CFR Parts 211 and 262 [D ocket No. R -0584] Rules of Procedure; Assessment of Fees for Supervision of Edge Corporations and for Processing Applications Board of Governors of the Federal Reserve System. a c tio n : Proposed rulemaking. agency: The Board of Governors of the Federal Reserve System, as p art of an ongoing program of budgetary restraint, has decided to seek public com ment on a limited proposal to assess fees for certain of its supervisory services. The Board is advancing this proposal as a possible revenue enhancing m easure to supplem ent prior Board actions to stream line operations and eliminate unnecessary functions. This proposal is designed to recover part of the identifiable costs for certain supervisory functions. The Board is seeking com ment on w hether such a system of fees should be im posed and, if so, w hether the proposed fee schedules are equitable an d appropriate. The Board has proposed th at fees be assessed for supervision of Edge corporations and for a variety of final applications that are filed by bank holding com panies, state m em ber banks, and com panies or individuals seeking to acquire control of such banking organizations. The Board h as proposed to assess fees for general supervision an d inspection o n ly in the case of Edge corporations in an effort to avoid duplicating assessm ents by other bank regulatory agencies. In addition, the Board h as proposed fixed fee schedules that are limited to recovering costs for the supervisory activities and the processing of applications on an average basis rather than a variable fee schedule b ased upon costs in an individual case. DATE: Comments m ust be received by January 5,1987. a d d r e s s : All comments, w hich should refer to D ocket No. R-0584, should be m ailed to W illiam W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street an d Constitution Avenue, NW., W ashington, DC 20551, or should be delivered to the Office of the Secretary, Room 2223, Eccles Building, 20th Street and Constitution Avenue, NW, betw een the hours of 8:45 a.m. an d 5:15 p.m. w eekdays. Comments m ay be inspected in Room 1122, Eccles Building betw een 8:45 a.m. and 5:15 p.m. w eekdays. s u m m a ry : 41801 FOR FURTHER INFORMATION CONTACT: Frederick M. Struble, A ssociate Director, (202) 452-3794, Don E. Kline, A ssociate Director, (202) 452-3421, Kevin M. Raymond, Supervisory Financial A nalyst (202) 452-2573, or James V. Houpt, Supervisory Financial A nalyst, (202) 452-3358; Division of Banking Supervision an d Regulation: or for users of Telecom m unications Devices for the Deaf, E am estine Hill or D orothea Thompson, (202) 452-3244, Board of Governors of the Federal Reserve System, W ashington, DC 20551. SUPPLEMENTARY INFORMATION: Background Federal and state supervision and regulation of banking organizations is designed to achieve a variety of public policy objectives, including: (1) Promoting the stability of the banking system and, more generally, the stability of financial m arkets and the economy at large, (2) protecting depositors and the viability of the federal deposit insurance fund, (3) preserving com petition in local an d regional banking m arkets, and (4) limiting dislocations in local communities resulting from bank failures. Individual banking organizations benefit from the system of government supervision and regulation designed to further these public policy objectives. Indirectly, they benefit from the stability of the system as a whole, from the public confidence that such stability engenders, and from efforts to limit or contain problem s encountered by individual banking organizations. M ore directly, they benefit from regulations, off-site review, and on-site inspections an d exam inations designed to prevent problem s from developing and to assist in identifying and correcting problem s that m ay develop. Individual organizations submitting applications to the Board of Governors of the Federal Reserve System (“Board”) also benefit directly. The process of review som etim es detects existing problem s of applicant organizations or organizations to be acquired. Such review may also identify potential problem s th at might arise as a result of the transaction that is the subject of the application. In addition to such screening, it is through the application process that individual organizations are able to expand and increase profit opportunities in a m anner consistent w ith established public policy objectives. Individual banking organizations, as direct beneficiaries, have been asked to b ear a significant portion of the costs of bank supervision and regulation. Statechartered banking organizations, in 41802 Federal Register / Vol. 51, No. 223 / Wednesday, November 19, 1986 / Proposed Rules general, pay assessm en ts an d fees that cover the operating costs of the ban k supervisory agencies of their state. In one-half of the states, the assessm ents and fees paid b y state ch artered banks go into the general funds of the state, and the agency operates on an annual appropriation by the legislature; in another 22 sta te s the revenues are deposited in a special fund to be used only to cover the expenses of the banking agency, an d the agency’s budget is subject to approval by the legislature. In the three other states, all revenues are deposited w ith an d controlled by the banking departm ent, subject to the review of either the legislature or a state finance departm ent. The extent to w hich operating budgets coincide w ith revenues collected varies from sta te to state. In cases w here a m isalignment exists, it appears that revenues generally exceed costs. A t the federal level, the supervisory costs incurred by individual b an k supervisory agencies are paid in a variety of w ays, including general assessm ents, hourly charges for exam inations, fees assessed for processing applications and deposit insurance premiums. In part, such costs are also m et from returns on investm ents or by m eans other than a direct charge to individual banking organizations. The Board currently does not levy charges for any of its supervisory or regulatory activities. Prior to 1930, the Federal Reserve System w as required by law to charge for its exam ination of mem ber banks, but in that y ear Congress, at the recom m endation of the Board, an d b ecause of concerns about double assessm en t by the Board and state supervisors, am ended section 9 of the Federal Reserve A ct to eliminate m andatory assessm ent of Federal Reserve m em ber banks for exam ination expenses. The Board w a s given explicit authority to decide w hether to assess state m em ber b ank s for the cost of their exam inations or to absorb these costs. (See 12 U.S.C. 326, as am ended June 26, 1930 (46 S tat 814).) The Board h as not charged state m em ber b anks for supervision since 1935. It has never charged for supervision of bank holding com panies or of foreign branches of U.S. banks. Prior to 1958 the Board a t times levied charges to cover p art of its costs incurred in conducting exam inations of Edge corporations. The B oard h as not levied such charges since 1958. Purpose of the Proposed Rulemaking The Board is seeking com ment on this proposal to depart from p ast practice and begin to charge fees to banking organizations for supervisory and regulatory oversight. The Board will evaluate w hether the budgetary benefits of such a proposal in the form of additional revenue w ould be outw eighed by possible adverse effects. This proposal is ad vanced as a budgetary m atter, to explore possible sources of additional revenue to com plem ent actions already taken to stream line operations and eliminate unnecessary functions. The Board believes th at in light of its expanded supervisory responsibilities since the passage of the Bank H olding Company A ct in 1956, an d in light of the fact th a t certain of these supervisory responsibilities w ould not result in the sort of double assessm ents th at provided the b asis for its efforts to eliminate fees and assessm ents in the past, it m ay b e appropriate to request the individual organizations that benefit m ost directly from Board supervisory activities to assum e a portion of the costs of th at supervision. The proposal, therefore, is designed to recover the costs of certain supervisory activities—to shift a portion of the costs of such supervision to those entities w hich receive the greatest direct benefit of such supervision—but to do so in a m anner that, in the Board’s view, will not be so burdensom e as to alter business decisions. It should be stressed that the Board is m aking this proposal in the context of ongoing budgetary review, an d it seeks com m ents upon the scope of services for w hich fees might be charged, the appropriate levels of such fees, an d any adverse effects upon either the activities of banking institutions or the supervisory process that m ay resu lt from the im position of such fees. T here are tw o basic areas of Board responsibility for w hich the Board may impose fees: (1) G eneral supervision, including inspection, exam ination, review of various types of reports of condition, and such oversight of corrective m easures as m ay be necessary, an d (2) applications, including those for acquisition of a bank, for geographic expansion or expansion into a n ew type of business activity, for change in business structure, an d for acquisition of or change in control of a banking organization. The Board h as considered assessm ent of fees in the first of these tw o are as an d h as proposed a very limited fee schedule in the supervisory area relating only to Edge corporations (as defined in section 25(a) of the F ederal R eserve Act, 12 U.S.C. 611 e t seq). In the applications area, how ever, the B oard h as proposed a b ro ad er range of fee schedules covering virtually all types of applications that come before the Board except those for Federal Reserve System m embership. Fees for Supervision of Edge Corporations A s noted above, the Board b ased its recom m endation that Congress free it from the requirem ent to charge for its supervision of state m em ber banks on the argum ent that banking organizations should n ot b e required to pay a double assessm ent for governm ent supervision. The Board also cited this consideration in deciding not to charge for the supervision of Edge corporations, noting that m any of them are subsidiaries of com mercial banks, w hich are assessed on the b asis of their consolidated assets (including those of the Edge corporations) to cover costs of supervising and regulating the entire organization. In recent years, however, significant num bers of Edge corporations have been established by foreign b anks and by nonbanking firms, which are not subject to assessm ent by other U.S. banking agencies. Double assessm ent is not an issue in these cases. Moreover, while m ost Edge corporations continue to be ow ned by institutions that do pay assessm ents or fees to other banking agencies for their general supervision, only the B oard specifically exam ines an d supervises these Edge corporations. Section 25(a) of the Federal Reserve Act perm its the Board to assess fees for supervision of Edge corporations (12 U.S.C. 611). The Board considered two approaches to recover the costs of supervising Edge corporations— charging on the b asis of exam iner time devoted to exam inations or charging annual assessm ents on the basis of an organization’s size. W hile each approach has certain advantages, the Board h as proposed to adopt a schedule of annual assessm ents b ased on the total assets of the Edge corporations. A significant proportion of the costs of supervising Edge corporations are incurred for various off-premises activities—collection and review of reports and other data, formulation of regulations, an d monitoring of activities for compliance. Because on-site exam inations are only part o f a com prehensive supervisory system, the Board believes a n annual general assessm ent b ased on an institution’s size is a more suitable approach. A general assessm ent w ould also be easier to adm inister an d of greater benefit to the Board’s budgeting process since the am ounts assessed annually Federal Register / Vol. 51, No. 223 / Wednesday, November 19, 1986 / Proposed Rules w ould be more predictable. This approach w ould avoid potential disputes with Edge corporations about the accuracy of exam iners’ time records and the efficiency of their work. It also w ould avoid an additional recordkeeping burden for exam iners. Moreover, a general assessm ent w ould assist the exam ined institutions to budget for this cost and w ould allow corporations experiencing serious difficulties to correct their problem s w ithout additional adm inistrative fees for more frequent and longer exam inations. T able 1 contains a proposed schedule of annual assessm ents for Edge corporations. The proposed schedule is on a sliding scale b ased on the size and type of institution to be supervised. In Table 1, the Board distinguished betw een banking Edge corporations, w hich conduct banking activities in the United States relating to foreign or international transactions, and Investment Edge corporations, w hich are essentially holding com panies for foreign investm ents. The m easure of size used for banking Edge corporations is their total assets, plus the volume of their outstanding standby letters of credit. Account has not been taken of other off-balance sheet items—either because of a lack of d ata or because the available d ata m easure the volume of trading rather than the risk to an Edge corporation, as in the case of foreign exchange activities. The sam e m easure would be used for investm ent Edge corporations, in their case consolidating the assets an d standby letters of credit of their subsidiaries. It should be em phasized that the proposed schedule is tentative and subject to change based upon review of public comments. T able 2 contains the general structure and size of Edge corporations and indicates revenues that would have been collected from these corporations in 1985. The size of banking Edges am ounts to less than half that of investm ent Edges, while the estim ated revenue in 1985 from these two types of Edge corporations would have been about equal. The estim ated revenue to be derived from each type of Edge corporation is generally consistent with the relative am ount of time the Board devotes to supervising th at type of corporation. Less time is spent in supervising investm ent Edge corporations per dollars of assets, in part because their overseas subsidiaries (which account for virtually all of their assets) are exam ined only every tw o or three years. During the other y ears their assets and activities are review ed using information available at the parent Edge corporation. In addition, since certain U.S. law s and regulations are directed only tow ard a corporation’s domestic business, the exam inations of foreign activities can be narrow er in scope than those of banking Edge corporations. The Board has not proposed to charge for supervision of organizations other than Edge corporations. However, the Board requests comment on the concept of expanding such supervisory fees or assessm ents to cover b ank holding com pany inspection and supervision. Fees for Processing Bank Holding Company, International Banking, and Other Applications The analysis perform ed by the Board on the various types of applications that it processes is, as a general rule, not duplicated by other banking agencies. Board fees for processing such applications generally w ould not duplicate assessm ents by other b ank supervisors. Similarly, authority sought in applications before the Board is not granted by any other federal banking agency, although in some cases organizations applying for authority to form a bank holding com pany or to acquire a national or state bank may be required to submit concurrent applications to other federal or state agencies. The Board h as traditionally attributed both direct an d support costs to the processing of applications. The total of such direct and support costs incurred by the Board in processing applications w ere estim ated to be $18.0 million in 1985. A s in the case of Edge corporation supervision fees, the Board com pared the advantages of basing a proposed fee schedule on staff time involved in processing an application w ith the alternative of establishing a stand ard schedule of fees that w ould be paid in filing specific types of applications. Although the hourly rate approach would provide a more exact method for charging applicants for the costs involved in processing specific applications, the Board believes that this approach w ould have significant adm inistrative problems. T here are a variety of Reserve Bank an d Board functions involved in the applications process, and these functions involve personnel w ith a w ide range of salary levels. Since applications staff m em bers w ork on several applications at the sam e time, accounting for the hours spent on any given application and, therefore, the resulting billing w ould be quite complicated. Even more important, however, is the fact that issues raised by specific applications often have policy implications that go well beyond the acceptance or rejection of that 41803 application. Thus the costs incurred in addressing those issues should properly be spread over subsequent applications w hich raise the sam e issues. Under a stan d ard fee approach, on the other hand, a fee schedule could be established for each type of application or for a group of applications, with the fees set to reflect the relative am ount of staff time generally spent on the various types of applications (or groups of applications). U nder this approach, applicants w ould know in advance of the costs o f processing an application. Those applicants raising significant issues of first impression, resolution of which would expedite processing of future applications, w ould not b ear a disproportionate p art of the costs of resolving such questions. There appear to be few er adm inistrative problem s associated with this type of approach, since staff w ould not have to compile complex records of time spent on individual applications. The proposed Table 3 w ould group the types of applications processed by four general categories and w ould establish a fee schedule necessary to permit recovery of 1985 processing costs. The Board recognizes that the volume of applications subm itted varies from year to year, and that revenues w ould vary with the volume of applications. The proposed fee schedule contained in Table 3, does not vary according to the size of the applicant or organization to be acquired. A s a general rule—to w hich there are m any exceptions—the applications of larger organizations w ithin a given category are more complex than those of smaller organizations and require more processing time. Accordingly, the Board h as also proposed, and seeks comment upon T able 4, a flexible rate schedule for different types of applications based upon the size of the applicant. Table 4 contains the sam e four groupings or categories of applications as Table 3. There is a maximum level of fees proposed on the theory that processing costs do not continue to increase in direct proportion to the size of a banking organization applicant. Moreover, there is no sliding scale for applications to install autom ated teller m achines since the costs of processing these applications do not vary w ith size. The size of the applicant in T able 4 is to be com puted on a pro forma consolidated assets basis, that is after including the assets of any acquisition that may be the subject of the application for w hich the fee is assessed. T able 4 presents an alternative to Table 3 that w ould recover the sam e level of 1985 costs. 41804 Federal Register / Vol. 51, No. 223 / Wednesday, November 19, 1986 / Proposed Rules Both T able 3 an d T able 4 are b ased on a system of fees for all applications filed w ith the Board except for those involving membership in the Federal Reserve System. The Board believes that a fee for mem bership w ould in all cases constitute a double charge against state banks that m ust pay certain fees or assessm ents to state supervisory agencies. Moreover, such banks already b ea r additional costs in the form of the requirem ent to purchase stock in a Federal Reserve Bank. This proposal also contem plates a fee only for final applications and notices filed with and accepted by the Federal Reserve System, including notices for change in control of a bank holding com pany or state m em ber bank, applications by U.S. banking organizations to engage in activities in other countries, and applications for merger, acquisitions, branches and autom ated teller facilities. T here will be no assessm ent for review of draft applications. Specific Issues for Com ment The Board requests com ment on the following issues raised by the proposed rulemaking. 1. The board seeks comment initially, and most im portantly, on the advisability of charging fees for any of its supervisory or regulatory services. The Board requests com ment on w hether the assessm ent of fees w ould adversely affect the exam ination or inspection process or diminish cooperation and communication betw een the Board and supervised institutions to a significant degree. The board also seeks suggestions on how this proposal m ay be modified to minimize any such potential problems. 2. The Board seeks comment as a general m atter on the scope of supervisory and application activities for w hich fees should be assessed. More particularly, the Board seeks comment on w hether it should assess fees for the general supervision an d inspection of bank holding com panies. Such fees w ould not ap p ear to duplicate charges by other regulatory agencies and some of the arguments in favor of fees for the supervision of Edge corporations would apply equally to bank holding com panies. 3. In view of the tentative nature of the proposed fee schedules, the Board seeks com ment on the following issues with respect to fees for supervision of Edge corporations: (a) the distinction b etw een banking & investm ent Edges, (b) the use of an annual assessm ent as the basis for the fee schedules, (c) the use of a sliding scale b ased on size, (d) how the size of Edge corporations should be determ ined, including the use of some off balanced sheet items in determ ining size, and (e) w hether the proposed fee levels are equitable an d appropriate. 4. The Board seeks com m ent on the following issues w ith respect to the fee schedules for applications: (a) the grouping of applications in categories an d appropriate placem ent of each type of application, (b) w hether to choose the fee schedule model or T able 3 or T able 4, and (c) w hether the proposed fees are appropriate and equitable. 5. The Board requests com ment upon a variety of issues involved in adm inistering the proposed fee schedules for applications should they be adopted, including: (a) W hen fees should be paid, (b) W hether fees should be charged for draft applications, (c) W hether fees should be refunded upon w ith draw al of the application, (d) W hether fees should be assessed for em ergency applications, (e) W hether fees should be adjusted for dual applications for the sam e transaction, (f) W hether fees should attach to notices as w ell as applications, and (g) W hether fees should b e charged for applications for m em bership in the Federal R eserve System. (h) W hether the B oard should separately recover the cost of publishing notice of applications in the Federal Register T a b l e 2.— E s t im a t e d R e v e n u e C o l l e c t a b l e F r o m E d g e C o r p o r a t io n s B a s e d o n A s s e s s m e n t S c h e d u l e s S h o w n in T a b l e 1 Number of corpora tions Aggregate assets + standby L /C ($000,000) Estim at ed revenue ($000) Banking Edges: Less than $10 m illion................ 10 to 2 5 ........ ....... 25 to 1 0 0 .............. 100 to 1 ,0 0 0 ....... O ver 5 00 ............... 19 12 27 20 11 $94 194 1,509 4,800 14,095 $ 73 69 254 709 1,204 Subtotal............ 89 20,692 2,309 Investm ent Edges: Less than $ 10 million................ 10 to 100............ 100 to 1 ,0 0 0 ....... 1 ,000 to 5,000 ... Over 5 ,0 0 0 .......... 16 15 5 9 2 50 622 2,584 10 58 152 1,163 839 Size category 1 25,280 21,421 Subtotal............ 47 49,957 2,2 2 2 Total.™ .......... .. 135 $70,649 $4,531 1 The size categories for banking corporations refer to their estim ated assets, based on data these corporations submit on FR 2886b reports. The size categories for investment Edges refer to the estim ated consolidated assets of these corporations and their m ajority-owned (or otherwise con trolled) subsidiaries, since these corporations are principally holding com panies for foreign investments. T a b l e 3.— P r o p o s e d F e e S c h e d u l e f o r P r o c e s s in g A p p l ic a t io n s S u b m it t e d t o th e Federal Reserve System 1985 Banking Edges: 1 SO to 10 m illion................... 10 to 2 5 .................................. 25 to 1 0 0 .............................. 100 to 5 0 0 ............................ Over 5 0 0 ............................... Investm ent E d g e s :1 $0 to 10 m illion................... 10 to 1 0 0 .............................. 100 to 1 ,0 0 0 ......................... 1,000 to 5 ,0 0 0 ..................... Over 5 ,0 0 0 ............................ Assess this amount Plus $2,000 4,000 6,000 15,000 55,000 0.0 0 02 00 0.000130 0.000120 0.000100 0.000078 $0 10 25 100 500 1,000 2,000 7,500 5 7,000 237,000 0.000100 0.000060 0.000055 0.0 0 00 40 0.000032 0 10 100 1,000 5,000 1 Banking Edge corporations conduct banking activities in the United States related to foreign o ' international transactions, while investment Edges are essentially hold ing companies lor foreign investments. The size categories for banking Edges refer to their estim ated assets, based on data they submit on FR 2866b reports. The size categories for investment Edges refer to the estim ated consolidated assets of these corporations and their majority-owned (of otherwise controlled subsidiaries. Total revenue dollars in Thou sands) 1,958 $ 15,664 5 ,000 130 650 2,500 Total assets plus standby letters of credit (dollars in millions) Of ex cess over (dol lars in mil lions) Appli cations volume $ 8,000 T a b l e 1.— P r o p o s e d A s s e s s m e n t S c h e d u l e f o r E d g e C o r p o r a t io n s Type of application 628 1,570 1,000 64 64 2,780 $17,946 Proposed fee Category A: Bank holding company formations, ac quisition of banks and acquisition o f nonbanks (going concerns); bank holding company stock redem ptions and changes in control; inter national investm ent apCategory B: Initial foreign branches, Edge Act and other international appli cations, domestic bank mergers, and changes in control for state member banks............................... ...... Category C: Bank holding company nonbank ac quisitions (de novo) and export trading company notifications; state member bank branches, bank service corpora tions, investments in bank premises and issu ance of capital notes by state m ember banks; additional foreign branch and investm ent notifiedCategory D: ATM Federal Register / Vol. 51, No. 223 / Wednesday, November 19, 1986 / Proposed Rules T a b l e 4.— P r o p o s e d F e e S c h e d u l e f o r P r o c e s s in g A p p l ic a t io n s S u b m it t e d t o t h e Fe d e r a l R e s e r v e S y s t e m A s se ts 1 30ver Proposed fee But not over This amount Pius Of excess Category A 1 $ 0 .......................... 1 50M .................... IB ........................... SB.......................... 1 0 B ...................... $150M IB 5B 10B - $5,000 5,000 10,000 15,000 20,000 _ 0 0000058 .0000012 .0000009 S150M IB 5B Category B * $ 0 .......................... 150 M .................... IB ........................... 5B 1 0 3 ...................... ............ $150M IB 58 10B - $2,500 2,500 5,000 7,500 10,000 _ 0 .0000029 .0000006 .0000005 - $150M IB 58 - Category C 1 SO ........................ 150M .................... IB ........................... 5B .......................... 1 0 B ...................... S150M IB 5B 10B Category D $1,250 1,250 2,500 3,750 5,000 - 0 .0000014 .0000003 .0000002 $150M IB 5B - $ 1.000 1 Total assets are to be measured on a pro form a basis— that is, the applicant's total assets if its application is approved. 4 For types of applications and notifications inlcuded in each category, see Table. 3 Fee PART 211—INTERNATIONAL BANKING OPERATIONS serve It is proposed to am end 12 CFR Part 211 as follows: 1. The authority citation for Part 211 continues to read as follows: Authority: Federal Reserve Act (12 U.S.C. 211 et seq.); Bank Holding Company Act of 1956, as amended (12 U.S.C. 1841 et seq.); the International Banking Act of 1978 (Pub. L. 95369; 92 Stat. 607; 12 U.S.C. 3101 et seq.); the Bank Export Services Act (Title II, Pub. 97290, 96 Stat. 1235); and the International Lending Supervision Act (Title IX, Pub. L. 98181, 97 Stat. 1153). 2. Section 211.4 is am ended by adding paragraph (a)(7) to read as follows: § 211.4 Edge and Agreem ent Corporations. PART 262—RULES OF PROCEDURE It is proposed to am end 12 CFR Part 262 as follows: 3. The authority citation for Part 262 is revised to rea d as follows: Authority: Administrative Procedure Act (5 U.S.C. 552); Bank Holding Company Act (12 U.S.C. 1841 et seq.); Federal Reserve Act (12 U.S.C. 211 et seq.); International Banking Act of 1978 (12 U.S.C. 3101 et seq.) and the International Lending Supervision Act (12 U.S.C. 3901 et seq.). § 262.3 List of Subjects § 262.3 12 CFR P art 211 (d) (1) The Board shall assess fees for the filing of all applications (except applications for m em bership in the Federal Reserve System) according to the following schedule. Banks, banking, Federal Reserve System, Foreign banking, Reporting and recordkeeping requirem ents, Export trading com panies, A llocated transfer risk reserve, Reporting an d disclosure of international assets, Accounting for fees on international loans. Applications. * * * * Fee S c h e d u l e f o r P r o c e s s in g A p p l ic a S u b m it t e d t o t h e F e d e r a l R e serve System t io n s 12 CFR P art 262 A dm inistrative practice an d procedure. Banks, banking. Federal Reserve System, Holding com panies. For the reasons set forth above, the Board proposes to am end 12 CFR Parts 211 and 262 as follows: Processing fee Assets 1 Over Bui not over This am ount Plus Of excess Category A 1 ............ $0 150 M .................... $150M 1B $5,000 5,000 P r o c e s s in g to the A p p l ic a Federal Re S y s t e m — C ontinued Processing fee Over But not over 1B......................... 5 8 .......................... 5B 10B $ 0 .......................... 150M .................... 1B ......................... 5B .......................... 1 0 B ...................... S150M 1B 5B 10B SO................... .... 150M .................... 1B......................... 5B .......................... 1 0 3 ...................... $150M IB 5B 10B This amount Plus Of excess .0000012 .0000009 1B 5B .0000029 .0000006 .0000005 10,000 15.000 20,000 $150M 1B 58 .0000014 .0000003 .0000002 $150M 1B 5B Category B * $2,500 2,500 5 ,000 7,500 10,000 0 Category C ‘ $1,250 1,250 2,500 3,750 5,000 0 'T o ta l assets are to be measured on a pro forma basis— that is, the applicant's total assets if its application is approved. 2Category A applications include: bank holding company formations, acquisition of banks and acquisition of nonbanks, (going concerns); bank holding company stock redemptions, and changes in control; international investment applications. 3 Category B applications include; initial foreign branches. Edge Act and other international applications, domestic bank mergers, and changes in control for state member banks. 4Category C applications include: Bank holding company nonbank acquistions (de novo) and export trading company notifications; state m em ber bank branches, bank service corporations, investments in bank premises and issuance of capital notes by state member banks; additional foreign branch and investment notifications. 5Category D includes ATM branches. All ATM branches pay the sam e processing fee (2) The Board shall assess annual fees for the supervision and inspection of Edge corporations (as defined in section 25(a) of the Federal Reserve Act, 12 U.S.C. 611 e t seq.) ^according to the following schedule. As s e s s m e n t S ch e d u le for Edge C o r p o r a t io n s [Am ended] 4. Paragraphs 262.3 (d) through (1) are redesignated as paragraphs 262.3 (e) through (m). 5. A new paragraph (d) is added to § 262.3 to read as follows: ★ for S u b m it t e d Category D 5 $1,000 (a) * * * (7) Fees. Edge corporations shall be assessed an annual fee by the Board for supervision and inspection. The schedule of such fees is provided in § 262.3(d) of the Board’s Rules of Procedure, 12 CFR 262.3(d). Regulatory Flexibility Act The Board is sensitive to the im pact of the proposed rule on small entities. Consequently, the Board is considering the imposition of fees for supervision of Edge corporations and for applications on a sliding scale b ased upon the size of the regulated organization. It has proposed com paratively limited fee assessm ents for sm aller organizations. Moreover, the proposed schedules are designed only to recover partially those costs associated w ith a particular supervisory activity. The Board believes the fees payable will be sufficiently small as to have no significant im pact on the financial stability of a reasonably profitable institution. The proposed regulation im poses no additional inform ation collection requirem ents. Schedule t io n s 41805 0 .0000058 $150M Total assets plus standby letters of credit (dollars in millions) Assess this amount Plus Of excess over (dollars in mil lions) Banking E d g e s:1 10 to 2 5 ............................. 25 to 1 0 0 ........................... 100 to 5 0 0 ........................ Over 5 0 0 ............................ Investment E d g e s:1 10 to 1 0 0 ........................... 100 to 1 ,000..................... 1 000 to 5 ,0 0 0 .................. $2,000 4,000 6,000 15,000 55,000 0.000200 0.000130 0.000120 0.000100 0.000078 $0 10 25 100 500 1,000 2,000 7,500 57,000 237,000 0.000100 0.000060 0.000055 0.000040 0.000032 0 10 100 1,000 5.000 1 Banking Edge corporations conduct banking activities in the United States related to foreign or international transac tions, while investment Edges are essentially holding com pa nies for foreign investments. The size categories for banking Edges refer to their estimated assets, based on data they submit on FR 2886b reports. The size categories for invest ment Edges refer to the estimated consolidated assets of these corporations and their ma|onty-owned (or otherwise controlled) subsidiaries. Board of Governors of the Federal Reserve System, November 12,1986. William W. Wiles, Secretary of the Board. [FR Doc. 86-25926 Filed 11-18-86; 8:45 am] BILLING CODE 6210-01-M