Full text of District Notices (Federal Reserve Bank of Dallas) : Amendments to Regulation D, Circular No. 81-146

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F e d e r a l R e s e r v e Ba n k

DALLAS, TEXAS

of

Dallas

75222

Circular No. 81-146
July 17, 1981

AMENDMENTS TO REGULATION D

TO THE CHIEF OPERATING OFFICER
OF ALL DEPOSITORY INSTITUTIONS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Enclosed is a copy of a slip-sheet regarding cu rren t amend­
ments to Regulation D as amended effe c tiv e June 17, 1981. This slipsheet, dated June 1981, should be filed with Regulation D in the Regu­
lations Binder furnished by this Bank. Additional copies of the slip-sheet
will be furnished upon request to the D epartm ent of Communications,
Financial and Community Affairs, Ext. 6289.
Sincerely yours,

William H. Wallace
First Vice President
Enclosure

Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

BO A R D O F G O V E R N O R S O F TH E FED ERA L R ESE R V E SYSTEM

RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS
A M E N D M E N T S TO R E G U L A T IO N D +
’r) < t ‘

As am ended effective Ju n e 17, 1981

E ffe c tiv e N o v e m b e r 13. 1980. sectio ns 2 0 4 .2 .
2 04 .3 . and 2 0 4 .4 are am ended as follows:
1. In section 2 0 4 .2 . paragraph (h)(1) is revised to
read as follows:
S E C T I O N 2 0 4 2 — D E F IN IT IO N S
Sk

SfC

5?C

(h) “ E u r o cu r r en c y lia b ilitie s" m eans the sum
o f the following:
(1) T ra n sa c tio n s with re la te d o ffice s outside
the U nited Stales.
(j)

* * *

(A )

* * *

(B) assets (including participations) held
by its n o n -U n ite d States o ffices o r by non-L'nited
S ta tes o fficcs o f an a ffiliated E dge or A greem e nt
C o r p o r a t i o n that w e re a c q u i r e d a fte r O c to b e r 6.
1979. from its United States offices.
(ii) * * *
(A )

* * *

(B) assets (including participations) held
by its fo reig n b ank (i n c lu d in g officcs th e re o f lo­
cated outside the United Stales). by its parent hold­
ing com pan y, or by non-U nited States offices o f an
affiliated Edge or Agreement Corporation that were
a c q u ire d a fte r O c to b e r 6. 1979. from the U nited
States branch o r agency (other than assets required
to be sold by Federal or State supervisory authori­
ties).
*

*

*

*

*

2. In s e c t io n 2 0 4 .3 , p a r a g r a p h (d) is r e v is e d to
read as follows:
S E C T IO N 2 0 4 .3 — C O M P U T A T IO N A N D
M A IN T E N A N C E
*

*

*

*

*

\

. /

(d)
Special rule for depository institutions that
have total deposits o f less than $15 million.
( 1 ) A depository institution with total deposits
o f less th an $15 m illio n shall file a report o f d e ­
posits o nce e ach calen d ar qu arter for a seven-day
com pu tatio n period that begins on the third T hurs­
day o f a given m onth during the calen dar quarter.
Each R eserve B ank shall divide the depository in­
stitutions in its District that qualify under this para­
graph into three substantially equal groups and a s ­
sign each group a different month to report during
each calendar quarter.
^*) J * * *

(3)
A depository institution that has less than
$15 m illio n in to tal d e p o sits as o f D e c e m b e r 31.
1979. shall quality under this paragraph until it re­
ports total deposits o f SI5 million o r more for two
consecutive calendar quarters.

3. In s e c t io n 2 0 4 . 4 . p a ra g r a p h (g) i'. re v ise d to
read as follows:
SE C T IO N 2 0 4 .4 — T R A N SIT IO N A L
ADJUSTM ENTS
*

*

*

*

*

(g)
M ergers and consolidations. The following
rules c o n c c rn in g transitional ad justm ents apply to
m e rg e rs and c o n s o l id a t io n s o f d e po sitory institu ­
tions.
(I)
W here all depository institutions involved
in a merger or consolidation are subject to the same
paragraph o f the transitional adjustm ent rules c o n ­
tained in p aragrap hs (a) through (f) o f this section
during the reserve com putation period immediately
preceding the m erger, the surviving institution shall
co n tin u e to c o m p u te its transitional adju stm en t of
required reserves un der such applicable paragraph.

+ F o r th is R e g u l a t i o n to b e c o m p l e t e retain:

1) Printed Regulation pamphlet dated November 13. I9K0
2) S u p p l e m e n t sl ip s h e e t d a t e d A u g u s t 1980.
3) T h i s sl ip s h e e t. ( D e s t r o y sl ip s h e e t d a t e d A p ri l 1 9 8 1 . )

J U N E 1981

e x c e p t th a t the am o u n t o f rese rv es w hich shall be
m a in ta in e d shall be r e d u c e d by an a m o u n t d e t e r­
m ined by multiplying the am ount by which the re ­
qu ired reserv es during the c o m p uta tion period im ­
m e d i a t e l y p r e c e d i n g th e d a t e o f th e m e r g e r
( c o m p u t e d as i f th e d e p o s i t o r y i n s t i t u t i o n s h a d
m erged) exceeds the sum o f the actual required re ­
s e r v e s o f e a c h d e p o s i t o r y in s ti tu t io n d u r i n g the
s a m e c o m p u t a t i o n p e r i o d , t i m e s th e a p p r o p r ia t e
percentage as specified in the following schedule:

M aintenance periods occurring
during quarterly periods
fo llo w in g merger

1
2
3
4
5

6
7
8 and succeeding

Percentage applied to
difference to compute
am ount to be subtracted

87.5
75.0
62.5
50.0
37.5
25.0
12.5
0

(2) (i) W h e r e th e d e p o s i to r y in stitu tio n s in ­
volved in a m erger or consolidation are not subject
to the same paragraph o f the transitional adjustment
rules contained in paragraphs (a) through (f) o f this
section and such m erger or consolidation occurs
(A ) o n o r after July 1, 1979, b e tw e e n a
n o n m e m b e r b a n k an d a b a n k that w as a m e m b e r
bank on or after July 1. 1979, and the survivor is a
n o n m e m b er bank;
(B) on or after M arch 31, 1980, between
a m e m b e r b a n k a n d a n o n m e m b e r b a n k an d the
survivor is a m em ber bank; or
(C) on o r a fte r S e p te m b e r 1, 1980, b e ­
tw een any other depository institutions

o f daily average total required reserves o f all insti­
tutions involved in the m erger o r consolidation du r­
in g th e re s e r v e c o m p u t a t i o n p e r i o d im m e d i a te ly
preceding the date o f the merger.
(A ) If th e m e r g e r o c c u r s b e fo r e N o ­
v e m b e r 6, 1980, su ch ratio o f daily av erage total
re q u ire d re s e rv e s shall be c o m p u te d using the r e ­
serve requirem ent ratios in section 204.8(b).
(B ) I f th e m e r g e r o c c u r s o n o r a ft e r
N ov em ber 6, 1980, such ratio o f daily average total
re q u ire d re s e rv e s shall be c o m p u te d using the r e ­
serve requirem ent ratios in section 204.8(a) without
re g a rd to th e tran sition a l ad ju stm e n ts o f this s e c ­
tion.
(iii) The low reserve tranche on transaction
a c c o u n t s (s e c tio n 2 0 4 . 8 ( a ) ) shall be allo c a te d to
each institution involved in the m e rg er o r co nsoli­
d a tio n u s i n g the ra tio c o m p u te d in s u b p a r a g ra p h
(2)(ii) and the reserve req uirem ent tranches on d e ­
m an d deposits (section 20 4.8(b)) shall be allocated
to m e m b e r b ank deposits using such ratio of daily
average total required reserves.
(iv) The vault cash of the surviving deposi­
tory institution also will be allocated to each institu­
tion involved in the m erger o r consolidation accord­
ing to th e r a t io th a t d a i l y a v e r a g e v au lt ca sh o f
each d ep o sito ry institution involved in the m e rger
w as to the su m o f d aily av erag e vault cash o f all
institutions involved in the m erger or consolidation
during the reserve com putation period immediately
preceding the date o f the merger.
(v) T h e am o u n t o f reserv es w hich shall be
m a in ta in e d shall be re d u c e d by an a m o u n t d e t e r­
mined by m ultiplying the am ount by which the re­
quired reserves du rin g the com putation period im ­
m e d i a t e l y p r e c e d i n g th e d a t e o f th e m e r g e r
( c o m p u t e d as i f th e d e p o s i t o r y i n s t i t u t i o n s had
merged) exceeds the sum o f the actual required re­
s e r v e s o f e a c h d e p o s i t o r y i n s ti tu t io n d u r i n g the
s a m e c o m p u t a t i o n p e r i o d , ti m e s the a p p r o p r ia t e
percentage as specified in the following schedule:

th e r e q u i r e d r e s e r v e s o f the s u r v iv in g in s titu tio n
shall be co m p uted by allocating its deposits. E uro­
c u rr e n c y liab ilitie s, o th e r re s e rv a b le cla im s, b a l ­
a n c e s d u e fro m o th e r d e p o s i to r y in stitu tio n s and
M aintenance periods occurring
cash items in process o f collection to each deposi­
during quarterly periods
tory institution in vo lve d in the m e rg er transaction
fo llo w in g merger
an d a p p ly in g to such am o u n ts the transitional a d ­
ju s tm e n t rule o f p aragraph s (a) th ro ug h (f) o f this
2
sectio n to w h ich ea c h such d e p o s ito r y institution
3
was subject during the reserve com putation period
4
im mediate ly prior to the m erger or consolidation.
(ii)
The deposits o f the surviving institution 5
6
shall be allocated acco rding to the ratio that daily
7
av erag e total re q u ire d reserves o f each depository
8 and succeeding
in stitution involved in the m e rg er were to the sum

Percentage applied to
difference to compute
amount to be subtracted

87.5
75.0
62.5
50.0
37.5
25.0
12.5
0

E f f e c t i v e D e c e m b e r I . 1980 s e c t i o n s 2 0 4 . 2 ,
2 0 4 .3 . 20 4 .4 and 204.6 are am ended as follows:
1. In sec tio n 2 0 4 .2 (e M 6 ), th e se c o n d sen te n c e is
am ended to read as set forth below:
SE C T IO N 2 0 4 . 2 — DEFIN ITIO N S
*

*

*

*

*

(e) “ T ran saction a cc o u n t” * * *
*

*

*

*

5-:

(6) * * * A n a c c o u n t tha t p e rm its o r a u t h o ­
rizes more than three such w ithdrawals in a calen­
dar m onth, o r statement cycle (or similar period) of
at le a s t f o u r w e e k s , is a ‘ ‘t r a n s a c t io n a c c o u n t ”
w h e th e r or no t m ore th an th ree such w ith draw als
actually are made during such period. * * *
*

*

*

*

*

2. In s e c t i o n 2 0 4 . 2 ( b ) ( I )( v ii). by i n s e r t in g the
word “ w h i c h " after the words “ withdrawal period
has expired a n d " and before the w ords “ have not
been r e n e w e d .”

stances, the low reserve tranche may be reallocated
at the beginning o f a calendar year.
(2) E dge a n d A greem ent Corporations.
* * *

(ii)
* * * If the low reserve tranche cannot
be fully utilized by a single office or by a group of
offices filing a single report o f deposits, the unused
portion o f the tranche may be assigned to other o f­
fices of the sam e institution until the am ount o f the
tranche is exh au sted. An Edge o r A g reem en t C o r ­
poration shall determ ine this assignment subject to
the restriction that if a portion o f the tranche is as­
signed to an office in a particular State, any unused
po rtio n m ust first be assign ed to o th e r offices lo ­
c a te d w ith in the s a m e State and w ith in the same
Federal Reserve District, that is, to other offices in­
clu d ed on the sam e a gg reg ate d report o f deposits.
If n ec ess ary in o rd e r to avoid under-utilization of
th e lo w r e s e r v e t r a n c h e , the a l l o c a t i o n m a y be
changed at the beginning o f a calendar month. U n­
d e r o th e r c i rc u m s ta n c e s , the low re serv e tranche
m a y be re allo cate d at the beg in ning o f a calen dar
year.
*

*

*

*

*

3. In section 204.3(a). the third sentence is revised
by deleting “ $5 m illio n " and inserting in its place
“ $15 m illio n ."

5. In sections 204.4(b)( I )(ii) and (2)(ii). by delet­
ing the w ord “ e x c e e d s ” and inserting in its place
“ e x c e e d ."

4. In sec tio n 2 0 4 .3 ( a ) . s u b p a r a g ra p h s ( l ) ( i i) and
(2)(ii) are revised to read as follows:

6. In se c tio n 2 0 4 .4 ( b ) ( 2 ) . by d e letin g the p a r e n ­
the ses that a p p e a r aro u n d the phrase “ than its re ­
quired reserves com puted using the reserve ratios in
effect on A ugust 31. 1980.”

SE C T IO N 2 0 4 . 3 — C O M P U T A T IO N A N D
M A IN T E N A N C E

7. In s e c t i o n 2 0 4 . 4 ( g ) ( 2 ) ( i v ) . by d e l e t i n g the
(a) M ainten an ce o f required reserves. * * *
p h ra s e “ d a ily a v e ra g e v au lt c a s h " and insertin g
(1)
U n ite d S la t e s b r a n c h e s a n d a g e n c ie s o f
“ d a i ly a v e r a g e to tal r e q u i r e d r e s e r v e s ” in both
foreign banks.
places that it appears.
(i) * * *
(ii) * * * If the low reserve tranche cannot
8. In s e c t io n 2 0 4 . 6 ( b ) ( 1 ) . by d e l e ti n g th e w o rd
be fully utilized by a single office o r by a group of
“ o n ” which appears after the word “ im p o se d " and
offices filing a single report o f deposits, the unused
before the word “ f o r ."
portion o f the tranche may be assigned to other o f­
fices o f the same foreign bank until the am ount of
E ffec tiv e D e c e m b e r 11, 1980, section 2 0 4 .2 is
the tranche is exhausted. The foreign bank shall de­
am ended to read as follows:
te rm in e th is a ss ig n m e n t su b ject to the restrictio n
that if a portion o f the tranche is assigned to an o f­
In section 20 4 .2 , paragraph (h) is revised to read as
fice in a particular State, any unused portion must
follows:
first be assigned to other offices located within the
sam e State and w ith in the sam e F ederal R eserv e
D istric t, that is. to o th e r o ffic e s in c lu d e d on the
SE C T IO N 2 0 4 .2 — D EFIN IT IO N S
same aggregated report o f deposits. If necessary in
* * * * *
o rd er to avoid under-utilization o f the low reserve
tr an ch e, the allo cation m ay be ch ang ed at the b e ­
(h) “ E urocurrency liabilities” means:
ginning o f a calend ar m onth. U n der other circu m ­
( I ) F or a depo sitory institution or an Edge or

Agreem ent C orporation organized under the laws o f
the U nited States, the sum , if positive, o f the fol­
lowing:
(i) net balances due to its non-U nited States
offices from its United States offices.
(ii) assets (including participations) held by
its n o n - U n i t e d S ta t e s o f f i c e s o r by n o n - U n i t e d
S tates o ffice s o f an affiliated E d ge o r A greem ent
C o r p o r a t io n th a t w e re a c q u i r e d a fte r O c to b e r 6.
1979. from its United States offices, and
(iii) credit outstand in g from its non-U nited
States offices to United States residents (other than
a s s e t s a c q u i r e d a n d n e t b a l a n c e s d u e fr o m its
United States offices), except credit extended (i) in
the a g g r e g a t e a m o u n t o f S I 0 0 . 0 0 0 o r less to any
U nited States resident, (ii) by a non-U nited States
office that at no time during the computation period
had credit outstanding to United States residents ex­
c e e d i n g SI m illio n , o r (iii) to an in s titu tio n that
will be maintaining reserves on such credit pursuant
to this Part. C redit e x te n d e d to a fo reign b ran ch,
o ffic e , su bsidiary, affiliate o r othe r foreign estab ­
lishm ent ( “ foreign affiliate” ) controlled by one or
m o r e d o m e s t i c c o r p o r a t i o n s is not r e g a r d e d as
c re d it e x t e n d e d to a U n ite d S ta tes re sid e n t if the
proceeds will be used in its foreign business or that
o f other foreign affiliates o f the controlling d o m e s­
tic corporation(s).
(2)
For a United States branch o r agency o f
foreign bank, the sum. if positive, o f the following:
(i) net balances due to its foreign bank (in­
clu d in g offices th e re o f located outside the United
S ta te s) a fte r d e d u c tin g an a m o u n t eq ua l to 8 per
cent o f the following: the United States branch's or
a g e n c y 's total assets less the sum o f United States
currency and coin, cash items in process o f collec­
tion. unposted debits, balances due from depository
institutions organized under the laws o f the United
States, balances due from other foreign banks, bal­
ances due from foreign central banks, and net bal­
a n c e s d ue fro m its f o r e ig n b an k and the fo re ig n
b a n k 's United States and non-United States offices,
and
(ii) assets (including participations) held by
its fo reig n bank (in clu din g o ffices th e re o f located
o u ts id e the U n ite d S ta te s ) , by its p a re n t h old in g
c o m pan y, o r by non-U nited States offices o f an af­
filiated E dg e or A g reem en t C o rp o ra tio n that were
a c q u ire d a fte r O c to b e r 6. 1979. from the U nited
States branch or agency (other than assets required
to be sold by Federal o r State supervisory authori­
ties).

Effective January 15. 1981, section 20 4.3 (d) is
a m e n d e d by rev isin g su b p a r a g ra p h (2) to read as
follows:
S E C T IO N 2 0 4 .3 — C O M P U T A T IO N A N D
M A IN TE N A N C E
*

*

* *

*

(d) Special rule for depository institutions that
have total deposits o f less than $15
million.
*

*

**

*

(2 )
R e q u i r e d r e s e r v e s a re c o m p u t e d o n the
basis o f the d e p o sito ry in s titu tio n ’s daily average
deposit balances during the seven-day com putation
perio d . In d e t e rm i n in g the re serv e balan ce that a
d ep osito ry institution is requ ired to m ainta in with
the F ed era l R e s e rv e , the av e rag e daily vault cash
h eld d u r i n g th e c o m p u t a t i o n p e r i o d is d e d u c t e d
fro m th e a m o u n t o f the in s ti tu t io n 's re q u ire d r e ­
serves. T h e reserv e b alan ce that is required to be
maintained with the Federal Reserve shall be main­
tained during a corresponding period that begins on
th e f o u r t h T h u r s d a y f o l l o w i n g th e e n d o f the
i n s t i t u t i o n 's c o m p u t a t i o n p e rio d and en ds on the
third W ed n e sd ay after the close of the institution's
next com putation period. Such reserve balance shall
be m aintained in the am ount required on a daily av ­
ae rag e basis during eac h w eek o f the quarterly r e ­
serve maintenance period.
*

*

*

*

*

E f f e c t i v e A p ril 3 0 . 19 81 . s e c t io n 2 0 4 . 2 ( f ) is
am ended by revising subparagraph (2) to read as fol­
lows:
S E C T IO N 2 0 4 .2 — D E F IN IT IO N S
*
*

*

*

*

*

* *

(2)
“ N o np erso nal time d e p o s i t” does not in­
clude nontransferable time deposits to the credit of
or in w hich the entire beneficial interest is held by
an individual pursuant to an Individual Retirement
Account or K eogh (H .R . 10) Plan under 26 U .S.C .
(I.R .C . 1954) §§ 40 8. 401. or nontransferable time
deposits held by an em ployer as part o f an unfunded
deferred co m p ensation plan established pursuant to
subtitle D o f the Revenue Act o f 1978 (Pub. L. No.
95-600, 92 Stat. 2763).

(B )
for an E d g e o r A g re e m e n t C o r p o r a ­
tion. assets (including participations) acquired from
its United States offices and held by its non-U nited
States offices, by its IB F, by non-U nited States o f­
S E C T IO N 2 0 4 .2 — D EF IN IT IO N S
fices o f its U .S . or foreign parent institution, or by
n o n -U n ited S tates offices o f an affiliated E dge or
For purposes o f this Part, the following definitions
Agreem ent C orporation;1 and
apply unless otherw ise specified:
(iii)
credit o utstan ding from its non-U nited
* * * * *
States offices to United States residents (other than
(t) " A n y deposit that is payable only at an office
assets acquired and net balances due from its United
States offices), except credit extended (A) from its
located outside the United S ta t e s " means (1) a d e ­
non-United States offices in the aggregate am ount of
posit o f a United States resident1 that is in a d en o m i­
$ 1 0 0 ,0 0 0 o r less to any U nited States resident, (B)
nation of S 1 00.000 or more, and as to which the de­
by a non-United States office that at no time during
p o s i to r is e n t itl e d , u n d e r the a g r e e m e n t w ith the
th e c o m p u ta t io n p e rio d h ad c re d it o u ts ta n d in g to
in s ti tu t io n , to d e m a n d p a y m e n t o n ly o u ts id e the
United States residents exceeding SI million. (C) to
United States or (2) a deposit o f a person who is not
an international banking facility, o r (D) to an institu­
a United States resident1 as to which the depositor is
tion that will be maintaining reserves on such credit
entitled, under the agreem ent with the institution to
p u rs u a n t to th is P art. C re d it e x t e n d e d from n o n ­
dem and paym ent only outside the United States.
U n ite d S ta t e s o f f i c e s o r fr o m IB F s to a f o r e ig n
branch, office, subsidiary, affiliate or other foreign
Effective D ecem ber 3. 1981. section 204.2. para­
establishment ( " fo re ig n affiliate” ) controlled by one
graph (h) is revised to read as follows:
o r m o re d o m e s ti c c o rp o r a ti o n s is not re g ard ed as
S E C T IO N 2 0 4 .2 — D EFIN IT IO N S
credit extended to a United States resident if the pro­
ceeds will be used to finance the operations outside
* * * * *
the United States o f the borrow er o r o f other foreign
(h) “ E u rocu rren cy liabilities” means:
affiliates o f the controlling domestic corporation(s).
(2)
For a United States branch or agency o f a
(1)
For a d epository institution o r an E dge or
foreign bank, the sum , if positive, o f the following:
A greement Corporation organized under the laws of
(i) net balances due to its foreign bank (in­
the United States, the sum . if positive, o f the fol­
lowing:
clu d in g offices th e re o f located ou tsid e the U nited
States) and its international banking facility after d e ­
(i) net balances due to its non-U nited States
o f f i c e s an d its i n t e r n a t i o n a l b a n k i n g f a c i l i t i e s
ducting an am ount equal to 8 per cent o f the follow ­
ing: the United States b ra n c h 's o r ag en cy 's total as­
( " I B F s " ) from its United States offices;
sets less the su m o f (A ) ca sh item s in p ro c e s s of
(ii) (A ) fo r a d e p o s i to r y in s titu tio n o r g a ­
collection: (B) unposted debits: (C) dem and balances
nized under the laws o f the United States, assets (in­
due from depository institutions organized under the
c l u d in g p a r t i c i p a t i o n s ) a c q u i r e d fr o m its U n ite d
law s o f the U n ite d S tates and fro m o th e r foreign
States offices and held by its non-United States o f­
fices, by its IBF. or by non-United States offices of
banks: (D) balances due from foreign central banks;
and (E) positive net balances d ue from its IB F. its
an affiliated Edge or Agreem ent Corporation;' or
foreign bank, and the foreign b a n k 's United States
and non-U nited States offices: and
I A depo sit o f a foreign b ran c h , o ffic e , s u b s i d ia r y affilia te or
other foreign establishment ( "fo reig n affilia te'‘ j controlled b> one or
(ii) assets (including participations) acquired
more dom estic corporations is not regarded as a deposit o f a United
from the United States branch or agency (other than
States resident if the funds serve a purpose in connection with its for­
assets required to be sold by Federal or State super­
eign or international business or that o f other foreign affiliates o f the
controlling domestic corporalion(s)
visory authorities) and held by its foreign bank (in­
c lu d in g o ffices th e re o f located outsid e the United
S ta t e s ) , by its p a re n t h o ld i n g c o m p a n y , by n o n ­
' This subparagraph does not apply to assets ( I ) that were acquired
before O ctober 7. 1979. o r (2) that were acquired by an IBF from its
United States offices or an IBF o f an affiliated Edge
establishing entity before the e n d o f the fourth reserve com putation
o
r Agreem ent C orporation, o r by its IBFs.'
period after its establishment
E f f e c t i v e M a y 14. 1 9 8 1 , s e c t i o n 2 0 4 . 2 is
am ended by adding a new paragraph (t) as follows:

2. In'Section 2 0 4 .2(t), footnote 1 is redesignated
as footnote 2.
3. Section 20 4.8 is redesignated section 204.9.
4. By adding a new section 20 4 .8 , as follows:
SE C T IO N 2 0 4 . 8 — IN T E R N A T IO N A L
B A N K I N G FACILITIES
(a)
D efinitions. For purposes o f this Part, the fol­
lowing definitions apply:
(1) "International banking fa c ili ty ” or “I B F ”
means a set o f asset and liability accounts segregated
on the books and records o f a depository institution,
United States branch o r agency o f a foreign bank, or
an E d g e o r A g r e e m e n t C o r p o r a t io n that in c lu d e s
only international banking facility time deposits and
international banking facility extensions o f credit.
(2 ) “ I n t e r n a t io n a l b a n k in g f a c i l i t y tim e d e ­
p o s i t ’ ’ o r “ I B F tim e d e p o s i t ' ' m e a n s a d e p o s i t,
p la c e m e n t, b o rro w in g or sim ilar o b lig atio n re p r e ­
sented by a prom issory note, acknow ledgm ent o f a d ­
v ance, or similar instrument that is not issued in n e­
gotiable o r bearer form , and
(i) (A ) that m u st re m a in on de p o sit at the
IBF at least overnight: and
(B) that is issued to
(1 ) a n y o f f i c e l o c a t e d o u t s i d e th e
United States o f another depository institution orga­
nized un der the laws o f the U nited States or o f an
Edge or Agreem ent Corporation:
(2 ) a n y o f f i c e l o c a t e d o u t s i d e the
United States o f a foreign bank:
(3 ) a U n i t e d S ta t e s o f f ic e o r a n o n ­
U nited S tates o ffic e o f the entity e sta b lish in g the
IBF:
(4) another IBF: or
(5) an institution w hose time deposits
are exem pt from interest rate limitations under sec­
tion 217.3(g) o f Regulation Q (12 C F R 217.3(g)): or
(ii) (A) that is payable
(1) on a specified date not less than two
business days after the date o f deposit;
(2) upon expiration o f a specified p e r­
iod o f time not less than tw o business days after the
date o f deposit: or
(3) upon written notice that actually is
required to be given by the depositor not less than
two business days prior to the date o f withdrawal;

(B ) that represents funds deposited to the
cred it o f a n o n -U n ited States resid ent or a foreign
branch, office, subsidiary, affiliate, o r other foreign
establishment ( “ foreign affiliate” ) controlled by one
o r m ore d o m e stic c o rp o ra tio n s p ro v id e d that such
funds are used only to support the operations outside
the United States o f the depositor or o f its affiliates
located outside the United States: and
(C) that is maintained under an agreement
o r a r r a n g e m e n t u n d e r w h ic h n o d e p o s it o r w i t h ­
d raw al o f less than $ 1 0 0 ,0 0 0 is perm itted , except
that a withdrawal o f less than $1 00 ,0 00 is permitted
if such w ithdrawal closes an account.
(3)
“International banking fa c ility extension o f
cred it’’ or “IB F lo a n ’’ means any transaction where
an IB F supplies funds by m aking a loan, o r placing
funds in a deposit account. Such transactions may be
r e p r e s e n t e d by a p r o m i s s o r y n o t e , s e c u r it y , a c ­
k n o w l e d g m e n t o f a d v a n c e , d u e b il l, r e p u r c h a s e
agreem ent, o r any other form o f credit transaction.
Such credit may be extended only to
(i) any o f f ic e lo c a te d o u ts id e the U n ite d
States o f another depository institution organized u n­
d er the laws o f the United States or o f an Edge or
Agreement Corporation:
(ii) an y o ff ic e lo c a te d o u ts id e th e U n ite d
States o f a foreign bank:
(iii) a United States o r a non-U nited States
office o f the institution establishing the IBF:
(iv) another IBF;
(v) an institution w hose time deposits are e x ­
e m p t fr o m in teres t rate li m i ta t io n s u n d e r sectio n
217.3(g) o f Regulation Q (12 C F R 217.3(g)): or
(vi) a non-United States resident or a foreign
branch, office, subsidiary, affiliate or other foreign
establishment ( “ foreign affiliate” ) controlled by one
or m o r e d o m e s ti c c o r p o r a ti o n s p ro v id e d tha t the
funds are used only to finance the operations outside
the United States o f the borrower or of its affiliates
located outside the United States.
(b)
A c k n o w le d g m e n t o f u se o f IB F d e p o s its
a n d e x t e n s io n s o f c r e d i t . A n IB F shall p ro v id e
written notice to each o f its cu sto m ers (other than
th ose specified in § 2 0 4 .8 (a ) (2 )(i)(B ) and §2 0 4 .8
(a)(3)(i) through (v)) at the time a deposit relation­
ship or a credit relationship is first established that it
is the policy o f the Board o f G overnors of the F ed ­
eral Reserve System that deposits received by inter­
national banking facilities may be used only to sup­

port the d e p o s i to r 's o p e ra tio n s o utside the United
States as specified in § 20 4.8 (a)(2)(ii)(B ) and that
extensions o f credit hy IBFs may be used only to fi­
n a n c e o p e r a t io n s o u ts id e o f the U n ite d S ta te s as
specified in § 204.8(a)(3)(vi). In the case o f loans to
or deposits from foreign affiliates o f U .S. residents,
receipt o f such notice must be acknow ledged in writ­
ing w henever a deposit or credit relationship is first
established with the IBF.
(c) E x em p tio n from reserve req u irem en ts. An
institution that is subject to the reserve requirements
o f th is P a rt is n ot r e q u i r e d to m a in ta in r e s e r v e s
against its IB F time deposits or IB F loans. Depositta k in g a c tiv itie s o f IB F s are lim ite d to acc e p tin g
only IBF time deposits and lending activities o f IBFs
are restricted to making only IBF loans.
(d) E stab lish m en t o f an international banking
facility. A depository institution, an Edge or A g ree­
m e n t C o r p o r a t i o n o r a U n i t e d S ta t e s b r a n c h o r
ag ency of a foreign ban k m ay establish an IBF in
any location where it is legally authorized to engage
in IBF business. How-ever. only one IB F may be es­
tablished for each reporting entity that is required to
submit a Report o f Transaction Accounts. Other D e­
posits and Vault Cash (Form FR 2900).
(e) N o tif ic a tio n to F e d e r a l R e s e r v e . At least
fourteen days prior to the first reserve computation

period that an institution intends to establish an IBF
it shall notify the Federal Reserve Bank o f the dis­
trict in which it is located o f its intent. Such notifi­
cation shall include a statem ent o f intention by the
institution that it will com ply with the rules o f this
P a rt c o n c e r n i n g I B F s , i n c l u d i n g r e s t r i c t i o n s on
sources and uses o f fu nd s, and reco rd kee pin g and
accounting requirem ents. Failure to com ply with the
requirem ents o f this Part shall subject the institution
to reserve requirem ents under this Part and to inter­
est paym ent limitations that m ay be applicable under
Regulation Q (12 C FR Part 217) on its IB F time d e ­
posits, or result in the revocation o f the institution’s
ability to operate an IBF.
(f)
R e co rd k eep in g req u ir em en ts. A depository
institution shall segregate on its books and records
the asset and liability accounts of its IBF and submit
reports con cern ing the op eratio ns o f its IBF as re ­
quired by the Board.

5.
In s e c tio n s 2 0 4 .3 ( a ) . 2 0 4 .3 (a)! 1 )(ii). 2 0 4 .3
(a ) (2 )(ii) . 2 0 4 . 3 ( c ) , 2 0 4 . 4 ( b ) ( 1 ) . 2 0 4 .4 (b ) ( I )(ii).
2 0 4 . 4 ( b ) ( 2 ) , 2 0 4 . 4 ( b ) ( 2 ) ( i i ) . 2 0 4 . 4 ( d ) . 2 0 4 .4 ( g )
( 2 ) ( i i ) ( A ) . 2 0 4 . 4 ( g ) ( 2 ) ( i i ) ( B ) . and 2 0 4 . 4 ( g ) ( 2 )
(iii), references to sections “ 2 0 4 . 8 . ” “ 2 0 4 . 8 ( a ) . ’’
or “ 2 0 4 . 8 ( b ) " are redesignated as references to sec­
tions “ 2 0 4 . 9 . ” " 2 0 4 . 9 ( a ) , " o r “ 2 0 4 .9 (b ) .” respec­
tively.