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F ederal reserve Ba n k DALLAS, TEXA S of Dallas 75222 C irc u la r No. 79-52 March 21, 1979 PROVISIONS REGARDING RESERVE REQUIREMENTS FOR FOREIGN BRANCHES OF MEMBER BANKS MOVED FROM REGULATION M TO REGULATION D TO A L L MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE D IS T R IC T : On F e b ru a ry 14, 1979, the Board of G overnors of the Federal Reserve System adopted an amendment w hich tra n sfers provisions re g ard in g re s e rv e requirem ents fo r fo reig n branches of member banks from Regulation M to Regulation D . T h e tra n s fe r is being done as p a rt of the B oard's revision of its intern ational banking regulatio ns. Member banks and others that m aintain Regulations B inders should file the enclosed am endments, effective F e b ru a ry 14, 1979, in th e ir b in d e rs . Please remove the Supplem ent to Regulation D , dated November 2, 1978, and the amendment to Regulation M , dated October 5, 1978. A dditional copies of the amendments w ill be fu rn is h ed upon request to the S e c retary's O ffice of this B a n k, E x t. 6267. S in c e re ly y o u rs , Robert H . Boykin F irs t V ice President Enclosures (2) Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank: 1-800-492-4403 (intrastate) and 1-800-527-4970 (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) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM RESERVES OF MEMBER BANKS SUPPLEMENT TO REGULATION D A s amended effective February 14,1979 SECTION 204.5—RESERVE REQUIREMENTS (a) Reserve percentages. Pursuant to the p ro visions o f Section 19 o f the Federal Reserve A ct and § 204.2(a) and subject to paragraph (c) o f this section, the B oard o f Governors o f the Federal Reserve System hereby prescribes the following reserve balances that each mem ber bank o f the Federal Reserve System is required to maintain on deposits with the Federal Reserve Bank o f its district. (1) I f not in a reserve city — (i) 3 percent o f (a ) its savings deposits and ( b ) its time deposits, open account, that constitute de posits o f individuals, such as Christmas club ac counts and vacation club accounts, that are made under written contracts providing that no with draw al shall be made until a certain number of periodic deposits have been m ade during a period o f not less than 3 months; and ( i i ) 1 percent o f its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity o f 4 years or more; 2 Vi percent o f its time deposits outstanding on or issued after Decem ber 25, 1975, that have an initial maturity of 180 days or more but less than 4 years; 3 per cent o f its time deposits up to $5 million, outstand ing on or issued after October 16, 1975, that have an initial maturity o f less than 180 days, plus 6 percent o f such deposits in excess o f $5 million. Provided, however, that in no event shall the reserves required on its aggregate amount o f time and savings deposits be less than 3 percent. In addition, a m em ber bank shall maintain a reserve balance equal to 2 percent o f its time deposits o f the follow ing types: (a ) T im e deposits o f $100,000 or more; and (b ) T im e deposits o f $100,000 or m ore repre sented by promissory notes, acknowledge ments o f advance, due bills, or similar o b ligations as provided in § 2 0 4 .1 (f); and (c ) T im e deposits rep resen ted b y in e lig ib le bankers’ acceptances o r obligations issued by a member bank’s affiliate, as provided in § 2 0 4 .1 (f). However, the supplementary 2 percent reserve re quirement shall not apply to a savings deposit, or a time deposit, open account that constitutes de posits o f individuals, such as Christmas club ac counts and vacation club accounts, that are made under written contracts providing that no with drawal shall be made until a certain num ber of periodic deposits have been made during a period of not less than 3 months. (iii) ( a ) 7 percent o f its net demand deposits if its aggregate net demand deposits are $2 million or less, ( b ) $140,000 plus 9 Vi percent o f its net demand deposits in excess o f $2 million if its aggregate net demand deposits are in excess o f $2 million but not m ore than $10 million, ( c ) $900,000 plus 11% percent o f its net demand de posits in excess o f $10 million if its aggregate net demand deposits are in excess o f $10 million but r.ct more than $100 million, or ( d ) $11,475,000 plus 12% percent o f its net demand deposits in excess o f $100 million. (2 ) I f in a reserve city (except as to any bank located in such a city that is permitted by the Board o f G overnors o f the Federal Reserve Sys tem pursuant to § 204.2(a) (2), to maintain the reserve specifiied in paragraph (a )(1 ) o f this section) — ( i ) 3 percent o f (a ) its savings deposits and ( b ) its time deposits, open account, that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be m ade until a certain num ber o f periodic deposits have been m ade during a period o f not less than 3 months; and ( i i ) 1 percent o f its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity o f 4 years or m ore; 2Vi percent of its time deposits outstanding on o r issued after Decem ber 25, 1975, that have an initial maturity of 180 days or m ore but less than 4 years; 3 per cent o f its time deposits up to $5 million, outstand ing on or issued after October 16, 1975, that have an initial maturity o f less than 180 days, plus 6 percent o f such deposits in excess o f $5 million. Provided, however, that in no event shall the reserves required on its aggregate amount o f time and savings deposits be less than 3 percent. In addition, a m em ber bank shall maintain a reserve balance equal to 2 percent o f its time deposits of the follow ing types: (a ) Tim e deposits o f $100,000 or more; (b ) Tim e deposits o f $100,000 or m ore repre sented by promissory notes, acknowledge ments o f advance, due bills, or similar obligations as provided in § 2 0 4 .1 (f); and (c ) T im e deposits represented by ineligible bankers’ acceptances or obligations issued by a mem ber bank’s affiliate, as provided in § 204.1(f). H ow ever, the supplementary 2 percent reserve re quirement shall not apply to a savings deposit, or a time deposit, open account that constitutes de posits o f individuals, such as Christmas club ac counts and vacation club accounts, that are made under written contracts providing that no with drawals shall be made until a certain num ber o f periodic deposits have been m ade during a period o f not less than 3 months. (iii) $49,725,000 plus 16V a percent o f its net demand deposits in excess o f $400 million. ( b ) Currency and coin. T h e amount o f a m em ber bank’s currency and coin shall be counted as reserves in determining compliance with the re serve requirements o f paragraph (a) o f this section. (c ) Reserve percentages against certain deposits by foreign banking offices. Deposits represented by promissory notes, acknowledgements o f ad vance, due bills, o r similar obligations described in § 2 0 4 .1 (f) to foreign offices o f other banks,1 1 or to institutions the time deposits o f which are exempt from the rate limitations o f Regulation Q pursuant to § 2 1 7 .3 (g ) thereof, shall not be subject to paragraph ( a ) o f this section o r to § 2 0 4 . 3 ( a ) ( 1 ) and ( 2 ) ; but during each week of the four-w eek period beginning M a y 22, 1975, and during each successive four-week ( “mainte nance” ) period, a member bank shall maintain with the Reserve Bank o f its district a daily aver age balance equal to zero percent o f the daily average amount o f such deposits during the fourweek computation period ending on the W edn es day 15 days before the beginning o f the mainte nance period. A n excess or deficiency in reserves in any week o f a maintenance period under this paragraph shall be subject to § 204.3(a)(3), as if computed under § 204.3(a)(2), and deficien cies under this paragraph shall be subject to § 2 0 4 .3 (b ).1 2 (d ) Foreign branch transactions with parent bank. D u rin g each week o f the four-week period beginning M a y 22, 1975, and during each week o f each successive four-w eek ( “maintenance” ) period, a mem ber bank having one or m ore for eign branches shall maintain with the Reserve Bank o f its district, a reserve against its foreign branch deposits, a daily average balance equal to zero percent o f the daily average total o f — ( 1 ) net balances due from its domestic offices to such branches, and (2 ) assets (including participations) held by such branches which were acquired from its domestic offices (other than assets rep resenting credit extended to persons not residents o f the U nited States), during the four-week computation period ending on the W ednesday 15 days before the be ginning o f the maintenance period. ( e ) Foreign branch credit extended to United States residents. D u rin g each o f the four-week periods beginning M a y 22, 1975, and during each week o f each successive four-w eek maintenance period, a m em ber bank having one or m ore for eign branches shall maintain with the Reserve Bank o f its district, as a reserve against its foreign branch deposits, a daily average balance, equal to zero percent o f the daily average credit outstand ing from such branches to United States residents1 3 (other than assets acquired and net balances due from its domestic offices) during the four-week computation period ending on the W ednesday 15 days before the beginning o f the maintenance period: Provided, that this paragraph does not apply to credit extended ( 1 ) in the aggregate amount o f $100,000 or less to any United States resident, ( 2 ) by a foreign branch which at no time during the computation period had credit outstanding to U nited States residents exceeded $ 1 million, ( 3 ) to enable the borrow er to comply with the requirements o f the Office o f Foreign Direct Investments, Department o f Com m erce,1 4 ( 4 ) under binding commitments entered into be fore M a y 17, 1973, or ( 5 ) to an institution that will be maintaining reserves on such credit under subsection ( c ) o f this section or § 2 1 1 .3 (g ) of Regulation K . 11 A n y banking office located outside the States o f the U n ited States and the D istrict o f C o lu m b ia o f a bank o rgan ized under dom estic o r fo re ig n law . 12 T h e term “ com pu tation p erio d ” in § 2 0 4 . 3 ( a ) ( 3 ) and ( b ) shall, fo r this purpose, be d eem ed to refer to each w eek o f a m aintenance p erio d under this paragraph. 13 ( a ) A n y in divid u al residing at the tim e the cred it is extended in any State o f the U n ited States o r the D is trict o f C olu m b ia ; ( b ) any corporation , partnership, association o r oth er entity o rgan ized therein o f any other entity w h erever organized. C red it extended to a fo r e ig n branch, office, subsidiary, affiliate o r oth er fo r e ig n estab lishm ent ( “ fo re ig n affiliate” ) con tro lled b y one o r m o re such dom estic corporation s w ill not be deem ed to be cred it extended to a U n ited States resident i f the p roceeds w ill be used in its fo re ig n business o r that o f other fo reig n affiliates o f the c on tro llin g dom estic c o r p o r a t io n ^ ) . 14 T h e branch m a y in g o o d faith re ly on the b o r ro w e r’ s certification that the funds w ill be so used. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FOREIGN ACTIVITIES OF NATIONAL BANKS AMENDMENT TO REGULATION Mt Effective February 14, 1979, Section 213.7 — R E S E R V E S A G A IN S T F O R E IG N B R A N C H D E P O S IT S is deleted. Provisions regarding reserve requirements for foreign branches o f member banks have been transferred to Regulation D — R E S E R V E S O F M E M B E R B A N K S , Section 204.5(d) and (e). t F o r this R egu lation to be com plete as am ended e ffec tiv e February 14, 1979, retain: 1 ) Prin ted R egu lation pam phlet containing R egu lation M dated January 7. 1971; 2 ) A m en d m en t effective August 25, 1975, Section 213.3 ( b ) ( 6 ) , ( b ) ( 7 ) , and ( b ) ( 8 ) ; and 3 ) T h is slip sheet.
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