The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F e d e r a l R e s e r v e Ba n k
DALLAS. TE X A S
of
Dallas
75222
Circular No. 81-143
July 15, 1981
REGULATIONS D AND Q
Amendments
TO ALL MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has
amended its Regulation D (Reserve Requirements of Depository Institutions)
and Regulation Q (Interest on Deposits) to authorize the establishment in
the United States of international banking facilities (IBF's) by U.S. de
pository institutions, Edge and Agreement Corporations, and branches and
agencies of foreign banks located in the United States beginning December
3, 1981.
Enclosed are
1981, and the material
These pages more fully
ment will be mailed to
copies of the Board's press release dated June 18,
submitted for publication in the Federal Register.
explain the Board's action. A copy of the amend
you as soon as it is received in this Bank.
Any questions regarding Regulations D and Q should be directed
to this Bank to Richard Ingram, Ext. 6333, and Dean Pankonien, Ext. 6662,
respectively.
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)
EDERAL RESERVE press release
June 18, 1981
For immediate release
The Federal Reserve Board has amended its regulations regarding
reserve requirements and payment of interest on
establishment of International Banking Facilities
deposits to permit the
(IBFs) in the United States.
The Board acted after consideration of comment
received on its
December proposal to revise its regulations to permit the establishment of
IBFs.
IBFs may be established, subject to conditions specified by the
Board, by United States depository institutions, by Edge and Agreement
Corporations— ^ and by United States branches and agencies of foreign banks.
In general, under the rules adopted by the Board, an IBF may accept
deposits from and extend credit to foreign residents or other IBFs.
All such
funds will be exempt from reserve requirements of Regulation D and from interest
rate limitations of Regulation Q.
The Board believes that establishment of
IBFs at U.S. banking offices will enhance the international competitive position
of banking institutions in the United States.
The Board made its action effective
December 3, 1981, in order
give all interested banking institutions time to make necessary arrangements
for implementation of IBFs.
In amending its regulations respecting reserve requirements
and interest rate ceilings to permit the establishment of IBFs, the
Board made a general statement of policy regarding the use of IBF
deposits and IBF loans.
1/
Domestically chartered corporations authorized to engage in international
or foreign banking, or other international or foreign operations.
to
The policy statement, which is contained in the attached notice
to the Board's action, said in part:
The Board expects that, with respect to nonbank
customers located outside the United States, IBFs
will accept only deposits that support the customer's
operations outside the United States and will extend
credit only to finance the customer'snon-U.S. opera
tions. Deposits should not be used as a means of
circumventing interest rate restrictions or reserve
requirements....
This policy, the Board specified, must be communicated in writing
to all IBF nonbank customers when a credit or deposit relationship is first
established, and the Board supplied a model statement that could be used for
this purpose.
In addition, IBFs are required to obtain acknowledgement of
receipt of such notice from nonbank customers that are foreign affiliates of
United States residents whenever a deposit or credit relationship is first
established with an IBF.
The Board also supplied a model statement for their
acknowledgement.
Under the rules established by the Board, IBFs may, free of Federal
reserve requirements or interest rate limitations:
1.
Offer to foreign nonbank residents time deposits with
a minimum maturity, or required notice period prior
to withdrawal, of two business days.
Such deposit
accounts require minimum deposits and withdrawals of
$ 100,000.
2.
Offer time deposits to foreign offices of United States
depository institutions or foreign banks, to other IBFs
or to the parent institution of an IBF with a minimum
one day (overnight) maturity.
3.
Extend credit to foreign residents (including banks),
to other IBFs, or to the parent institution of an IBF.
IBF loans and deposits may be denominated either in United States
dollars or in foreign currencies.
-3 -
Advances by an IBF to United States offices of its parent
institution will be subject to the reserve requirement on Eurocurrency
liabilities of the United States office in the same manner as advances from
a foreign office to its United States office.
IBFs will be subject to the same examination and supervisory
procedures as apply to other operations of its parent institution.
The
Board may require special reports from IBFs for monitoring monetary and
credit conditions and for other purposes.
The Bpard's order is attached.
-
0-
32426
Federal Register / Vol. 48, No. 120 / Tuesday, June 23, 1981 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12 CFR Parts 204,217
[Docket No. R-0214; Regulations D and Q]
International Banking Facilities;
Reserve Requirements of Depository
Institutions and Interest on Deposits
agency : Board of Governors of the
Federal Reserve System.
a c tio n : Final rules.
SUMMARY: The Board of Governors has
amended Regulation D—Reserve
Requirements of Depository Institutions
[12 CFR Part 204) and Regulation Q—
Interest on Deposits (12 CFR Part 217) to
authorize beginning December 3,1981,
the establishment in the United States of
international banking facilities ("IBFs”)
by U.S. depository institutions, Edge and
Agreement Corporations, and branches
and agencies of foreign banks located in
the United States. Under the rules
adopted by the Board, an IBF may
accept deposits from foreign residents
(including banks) or from other IBFs.
Such funds will be exempt from reserve
requirements of Regulation D and from
interest rate limitations of Regulation Q.
IBFs will be permitted to offer to foreign
nonbank residents large denomination
time deposits with a minimum maturity
or required notice period prior to
withdrawal of at least two business
days. In addition, IBFs will be .permitted
to offer overnight time deposits to
foreign offices of U.S. depository
institutions or foreign banks, to other
IBFs, foreign control banks, or to the
institution establishing the IBF. Funds
raised by an IBF could be used only to
extend credit to foreign residents, to
other IBFs, or to the institution
establishing the IBF. Funds derived by
Federal Register / Vol. 46, No. 120 / Tuesday, June- 23, 1981 / Rales and Regulations
an institution from its own IBF would be
subject to Eurocurrency reserve
requirements. The Board believes that
the establishment of IBFs at U.S.
banking offices will enhance the
international competitive position of
banking institutions located in the
United States.
EFFECTIVE DATE: December 3.1981.
FOR FURTHER INFORMATION CONTACT:
Gilbert T. Schwartz, Associate General
Counsel (202/452-3625), Paul S. Pilecki,
Senior Attorney (202/452-3281}, or Paige
Winebarger, Attorney (202/452-3265),
Legal Division; or Allen B. Frankel,
Senior Economist (202/452-3578), or
Sydney J. Key, Economist (202/452
3522), Division of International Finance,
Board of Governors of the Federal
Reserve System, Washington, D-C.
20551.
SUPPLEMENTARY INFORMATION: On
December 16,1980, the Board requested
public comment (45 FR 84070) on a
proposal to amend Regulation D—
Reserve Requirements of Depository
Institutions (12 CFR Part 204) and
Regulation Q—Interest on Deposits (12
CFR Part 217) that would facilitate the
establishment in the United States of
international banking facilities (''IBFs”)
by depository and other institutions to
promote international banking activity
in the United States.
Under the proposal, IBFs at all U.S.
depository institutions, Edge and
Agreement Corporations, and U.S.
branches and agencies of foreign banks
would be permitted to accept time
deposits from foreign residents and to
borrow from foreign banks or other IBFs.
Such funds would be exempt from
reserve requirements of Regulation D
and from interest rate limitations of
Regulation Q.1Funds raised by an IBF
could be used only to extend credit to
foreign residents, to other IBFs, or to the
institution establishing the IBF. Funds
obtained by an institution from its own
IBF would be subject to Eurocurrency
reserve requirements.
The period for public comment on the
IBF proposal ended on March 16,1981.
Comments were received from 79
respondents, primarily banking
institutions and trade associations. In
general, commentators were in favor of
the concept of IBFs. However, many
suggested a number of technical
modifications, and a significant number
indicated that they would favor
1Regulation Q applies to member banks, to Edge
and Agreement Corporations and to the following
U.S. offices of parent foreign banks having total
worldwide consolidated bank assets in excess of $1
billion: insured and uninsured Federal branches,
uninsured state branches, and Federal and state
agencies.
adoption of the proposal only in
conjunction with other changes in the
regulatory and competitive environment
under which IBFs would operate. Alter
consideration of the comments received
from the public, the Board has adopted
the proposal with certain modifications,
as indicated below, effective December
3,1981.
General Policy Regarding Activities of
IBFs
The Board believes that authorization
of IBFs will enhance the competitive
position of U.S. offices of depository
institutions and Edge and Agreement
Corporations, and of U.S. branches and
agencies of foreign banks. The Board
expects that, with respect to nonbank
customers located outside the United
States, IBFs will accept only deposits
that support the customer’s operations
outside the United States and will
extend credit only to finance the
customer's non-U.S. operations.
Deposits should not be used as a means
of circumventing interest rate
restrictions or reserve requirements
applicable to U.S. depository
institutions. Edge or Agreement
Corporations and U.S. branches and
agencies of foreign banks. This policy is
required to be communicated in writing
to an IBF nonbank customer at the time
a loan or deposit account relationship is
first established. Furthermore, nonbank
foreign affiliates of U.S. residents will be
required to acknowledge in writing
receipt of such notice.
The following model statement could
be used by IBFs to advise their nonbank
deposit and loan customers of the
Board's policy:
It is the policy of the Board of Governors of
the Federal Reserve System that, with respect
to nonbank customers, deposits received by
international banking facilities may be used
only to support the non-U.S. operations of a
depositor (or its foreign affiliates) located
outside the United States and that extensions
of credit by international banking facilities
may be used.only to finance the non-U.S.
operations of a customer (or its foreign
affiliates] located outside the U.S.
The following model statement could
be used by IBFs to obtain an
acknowledgment of receipt of such
notice upon the opening of a deposit or
loan relationship from nonbank
customers that are foreign affiliates of
U.S. residents. (A loan relationship may
be established either by opening a line
of credit or by granting a loan other than
under a line of credit.)
--------------- , a nonbank entity located
outside the U.S., understands that it is the
policy of the Board of Governors of the
Federal Reserve System that deposits
received by international banking facilities
32427
may be ssed only to support the non-US.
operations of a depositor (or its foreign
affiliates] located outside the United States
and that extensions of credit by international
banking facilities may be used only to
finance the non-U.S. operations of a customer
(or its foreign affiliates) located outside the
U.S.
--------------- , acknowledges that funds it
deposits with the IBF of-------- will be used
solely in support of its non-US. operations, or
that of its foreign affiliates, and that the
proceeds of its borrowings from the IBF will
be used solely to finance its operations
outside the United States, or that of its
foreign affiliates.
Establishing an IBF
An institution is not required to
establish a separate organizational
structure for an IBF. It is contemplated
that an IBF would be operated primarily
as a recordkeeping entity similar to an
offshore shell branch. An institution
may establish one IBF for each reporting
entity that submits a separate Report of
Transaction Accounts, Other Deposits
and Vault Cash (Form FR 2900). An IBF
may be established initially by
identifying and segregating existing
assets and liabilities that qualify under
the definitions in Regulations D and Q
and under other regulatory provisions
applicable to IBFs. These assets may be
transferred to the IBF on a reserve-free
basis only during the first four reserve
computation periods after the institution
has established the IBF.1An institution
is required to maintain segregated
accounts for its IBFs within the office in
which the IBF is located, report its IBF
assets and liabilities as required by the
Board, and comply with any other
requirements established by the Board
for IBFs. Failure to comply with the
Board’s restrictions on the type of
business IBFs may engage in could
result in the imposition of reserve
requirements on the IBF, subjecting the
IBFs deposits to the interest rate
restrictions of Regulation Q, or
revocation of the institution's authority
to maintain an IBF.
An institution that desires to establish
an IBF will be required to notify the
Federal Reserve Bank in its district at
least 14 days prior to the first reserve
computation period during which it
intends to begin accepting IBF deposits
and to agree to abide by die conditions
established by the Board for conducting
’ For assets held by an institution prior to its
establishment of an IBF that are transferred to the
IBF within such four-week period, an IBF is not
required to provide such customers with notice of
the Board's policy concerning IK'S or to obtain
acknowledgment thereof. However, an IBF is
required to provide such notice and obtain such
acknowledgment (if required) upon any subsequent
extension of credit to such customer.
32428
Federal Register / Vol. 46, No. 120 / Tuesday, June 23, 1981 / Rules and Regulations
an IBF business. Application to or
approval by the Board is not required to
establish an IBF. However, an
institution is subject to any restrictions
established by its chartering or licensing
authority, or by its primary supervisor
concerning the types of activities in
which an IBF may be engaged.
Permissible IBF Deposits
As a general matter, an IBF will be
permitted to accept deposits only from
non-United States residents. Such
deposits will be subject to special rules,
discussed in greater detail below,
permitting shorter minimum maturities
than applicable to other types of time
deposits under Regulation Q but
requiring deposits and withdrawals to
be made in amounts of at least $100,000.
An IBF also will be permitted to obtain
funds from foreign offices of other U.S.
depository institutions or foreign banks,
from other IBFs, and from the United
States and non-United States operations
of the same institution. IBF time deposits
may be in the form of deposits,
borrowings, placements, or other similar
instruments. Such IBF liabilities will not
be subject to Federal Reserve interest
rate limitations and will be exempt from
Federal reserve requirements.
Restrictions on eligible holders o f IBF
deposits. As discussed above, only non
United States residents, including
foreign affiliates of United State entities,
other IBFs, and the institution operating
the IBF will be eligible to maintain time
deposits in IBFs. In order to help insure
that IBF deposits are restricted to non
United States residents, IBFs will be
prohibited from issuing negotiable
certificates of deposit, bankers'
acceptances, or other negotiable or
bearer instruments.
M aturity o f IBF time deposits. An IBF
will be permitted to obtain funds from
any office located outside the United
States of another U.S. depository
institution, foreign bank, or Edge or
Agreement Corporation, from other IBFs,
from foreign central banks and official
institutions, as well as from the foreign
branches and domestic operations of the
depository institution establishing the
IBF. The maturity of such obligations
may be on an overnight basis. IBF time
deposits of nonbank foreign residents
will be subject to a minimum maturity or
required notice period prior to
withdrawal of two business days.
Notice of withdrawal may be given on
the date of deposit or any business day
thereafter, but may not be given to the
date of deposit. Fixed maturity IBF time
deposits may be automatically
renewable. In addition, such accounts
may be established to provide for both a
fixed maturity and a notice period.
An IBF will not be permitted to accept
transaction accounts, since an IBF is not
intended to enable foreigpi customers to
maintain such accounts at U.S. offices
exempt from reserve requirements.
Minimum size o f transactions. The
Board believes that IBFs should be
established primarily to engage in a
wholesale international banking
business and, therefore, proposed that
' the minimum amount of any deposit or
withdrawal to or from an EBF account
would be $500,000. As an alternative, the
Board requested public comment on
whether to authorize an IBF to offer time
deposit accounts that require a minimum
daily average balance of $500,000 and a
minimum amount of $100,000 for deposit
or withdrawal transactions. Comments
received from the public indicated that
the $500,000 minimum transaction
amount could restrict the ability of some
institutions that currently engage in
international banking activity from
conducting an IBF business, and that the
requirement of a minimum daily average
balance would be operationally
burdensome.
In view of the comments received, the
Board has determined to require
minimum deposits and withdrawals
from IBF time deposits of nonbanks of
$100,000. No minimum daily average
balance is required. A withdrawal of
less than $100,000 is permitted if such
transaction is made to close out a
deposit account The Board believes that
the lower limitation will enable more
institutions to operate IBFs while at the
time same preserving the wholesale
nature of IBF business. EBF time deposits
of bank customers will not be subject to
any minimum transaction amount.
Permissible IBF Assets
An IBF will be permitted to extend
credit to foreign customers, to other
IBFs, or to U.S. and non-U.S. offices of
the depository institution establishing
the EBF. Advances to U.S. offices of the
IBFs parent institution will be subject to
the reserve requirement on Euro
currency liabilities in the same manner
as advances from a foreign office to its
U.S. office. IBF credit may be extended
in the form of a loan, deposit, placement,
advance, security or other similar asset
Under the Board's actions, credit may be
extended to nonbank foreign residents
provided that the funds are used in their
operations outside the United States.
Foreign Currency Operations of IBFs
The Board believes that the conduct
of international banking business in the
United States will be facilitated by
allowing IBFs to accept deposits and
make loans in currencies other than U.S.
dollars.
Other Activities of IBFs
Except as indicated above, the Board
is not limiting the activities in which an
IBF may engage. Consequently, if
authorized by the institution's chartering
or licensing authority and supervisor, an
IBF could engage in activities such as
providing fiduciary services.
Supervision and Reporting
Requirements
IBF operations of a depository
institution will be subject to the same
examination and supervision procedures
that apply to the other operations of the
institution. It is expected that
supervisory review of IBFs will be
conducted in conjunction with
examination of other operations of the
institution establishing the IBF.
However, the Board may require the
establishing institution to submit reports
on the activities of its IBF for purposes
of monitoring monetary and credit
conditions as well as for other purposes.
Beginning Date of IBF Operations
The amendments to Regulations D
and Q are effective for the reserve
computation period beginning December
3,1981, and the corresponding reserve
maintenance period beginning
December 17,1981.
Effective December 3,1981, pursuant
to the Board's authority under sections
19,25, and 25(a) of the Federal Reserve
Act (12 U.S.C. 461 et seq., 601 et seq., 611
et seq.) and section 7 of the
International Banking Act of 1978 (12
U.S.C. 3105), Regulation D (12 CFR Part
204) and Regulation Q (12 CFR Part 217),
are amended as follows:
PART 204—RESERVE REQUIREMENTS
OF DEPOSITORY INSTITUTIONS
1. In S 204.2 of Regulation D (12 CFR
Part 204), paragraph (h) is revised to
read as follows:
§ 204.2 Definitions.
*
*
*
*
*
(h) "Eurocurrency liabilities” means:
(1) For a depository institution or an
Edge or Agreement Corporation
organized under the laws of the United
States, the sum, if positive, of the
following:
(i) Net balances due to its non-United
States offices and its international
banking facilities (“IBFs") from its
United States offices;
(ii)(A) For a depository institution
organized under the laws of the United
States, assets (including participations)
acquired from its United States offices
and held by its non-United States
offices, by its IBF, or by non-United
Federal Register / Vol. 46, No. 120 / Tuesday, June 23, 1981 / Rules and Regulations
States offices of an affiliated Edge or
Agreement Corporation:1or
(B) For an Edge or Agreement
Corporation, assets [including
participations) acquired from its United
States offices and held by its non-United
States offices, by its IBF, by non-United
States offices of its U.S. or foreign
parent institution, or by non-United
States offices of an affiliated Edge or
Agreement Corporation;1and
(iii) Credit outstanding from its non
United States offices to United States
residents (other than assets acquired
and net balances due from its United
States offices), except credit extended
(A) from its non-United States offices in
the aggregate amount of $100,000 or less
to any United States resident, (B) by a
non-United States office thaf at no time
during the computation period had
credit outstanding to United States
residents exceeding $1 million, (C) to an
international banking facility, or (D) to
an institution that will be maintaining
reserves on such credit pursuant to this
Part. Credit extended from non-United
States offices or from IBFs to a foreign
branch, office, subsidiary, affiliate of
other foreign establishment (“foreign
affiliate”) controlled by one or more
domestic corporations is not regarded as
credit extended to a United States
resident if the proceeds will be used to
finance the operations outside the
United States of the borrower or of other
foreign affiliates of the controlling
domestic corporation(s).
(2) For a United States branch or
agency of a foreign bank, the sum, if
positive, of the following:
(i) Net balances due to its foreign
bank [including offices thereof located
outside the United States) and its
international banking facility affer
deducting an amount equal to 8 per cent
of the following: the United States
branch’s or agency's total assets less the
sum of (A) cash items in process of
collection; (B) unposted debits; (C)
demand balances due from depository
institutions organized under the laws of
the United States and from other foreign
banks; (D) balances due from foreign
central banks; and (E) positive net
balances due from its IBF, its foreign
bank, and the foreign bank's United
States and non-United States offices;
and
(ii) Assets (including participations)
acquired from the United States branch
or agency (other than assets required to
be sold by Federal or State supervisory
authorities) and held by its foreign bank
1Thia subparagraph does not apply to assets (1]
that were acquired before October 7,1979, o r (2)
that were acquired by an IBF from its establishing
entity before the end of the fourth reserve
computation period after its establishm ent
32429
controlled by one or more domestic
corporations provided that such funds
are used only to support the operations
outside the United States of the
depositor or of its affiliates located
outside the United States; and
(C) That is maintained under an
agreement or arrangement under which
§ 204.8 [Redesignated as § 204.9]
no deposit or withdrawal of less than
3. Section 204.8 is redesignated
$100,000 is permitted, except that a
S 204.9.
withdrawal of less than $100,000 is
4. By adding a new $ 204.8, as follows: permitted if such withdrawal closes an
account.
§ 204.8 International banking facilities.
(3) "International banking fa cility
(a) Definitions. For purposes of this
extension o f credit or “ loan”means
IBF
Part, the following definitions apply:
any transaction where an IBF supplies
(1) “
International banking fa cility" at
funds by making a loan, or placing funds
“
IBF" means a set of asset and liability
in a deposit account. Such transactions
accounts segregated on the books and
may be represented by a promissory
records of a depository institution,
note, security, acknowledgment of
United States branch or agency of a
advance, due bill, repurchase
foreign bank, or an Edge or Agreement
agreement, or any other form of credit
Corporation that includes only
transaction. Such credit may be
international banking facility time
extended only to:
deposits and international banking
(i) Any office located outside the
facility extensions of credit.
United States of another depository
(2) “
International banking fa cility
institution organized under the laws of
time deposit” or “ tim e deposit"
IBF
the United States or of an Edge or
means a deposit, placement borrowing
Agreement Corporation;
or similar obligation represented by a
(ii) Any office located outside the
promissory note, acknowledgment of
United States of a foreign bank;
advance, or similar instrument that is
(iii) A United States or a non-United
not issued in negotiable or bearer form,
States office of the institution
and
(i) (A) That must remain on deposit at establishing the IBF;
(iv) Another IBF;
the IBF at least overnight; and
(v) An institution whose time deposits
(B) That is issued to
are exempt from interest rate limitations
(1) Any office located outside the
under section 217.3(g) of Regulation Q
United States of another depository
(12 CFR 217.3(g)); or
institution organized under the laws of
(vi) A non-United States resident or a
the United States or of an Edge or
foreign branch, office, subsidiary,
Agreement Corporation;
affiliate or other foreign establishment
(2) Any office located outside the
(“foreign affiliate”) controlled by one or
United States of a foreign bank;
more domestic corporations provided
(5) A United States office or a non
that the funds are used only to finance
United States office of the entity
the operations outside the United States
establishing the ^BF;
of the borrower or of its affiliates
(4) Another IBF; or
located outside the United States.
(5) An institution whose time deposits
(b) Acknowledgment o f use o f IBF
are exempt from interest rate limitations
deposits and extensions o f credit. An
under section 217.3(g) of Regulation Q
IBF shall provide written notice to each
(12 CFR 217.3(g)); or
of its customers (other than those
(ii) (A) That is payable
specified in § 204.8(a)(2)(i)(B) and
(1) On a specified date not less than
I 204.8(a)(3) (i) through (vj) at the time a
two business days after the date of
deposit relationship or a credit
deposit;
relationship is first established that it is
(2) Upon expiration of a specified
the policy of the Board of Governors of
period of time not less than two
the Federal Reserve System that
business days after the date of deposit;
deposits received by international
or
(5) Upon written notice that actually is banking facilities may be used only to
required to be given by the depositor not support the depositor’s operations
outside the United States as specified in
less than two business days prior to the
S 204.8(a)(2)(ii)(B) and that extensions of
date of withdrawal;
(B) That represents funds deposited to credit by IBFs may be used only to
finance operations outside of the United
the credit of a non-United States
States as specified in § 204.8(a)(3)(vi). In
resident or a foreign branch, office,
the case of loans to or deposits from
subsidiary, affiliate, or other foreign
foreign affiliates of U.S. residents.
establishment (“foreign affiliate”)
(including offices thereof located outside
the United States), by its parent holding
company, by non-United States offices
or an IBF of an affiliated Edge Or
Agreement Corporation, or by its IBFs.1
2. In S 204.2(t), footnote 1 is
redesignated as footnote 2.
32430
Federal Register / Vol. 46, No. 120 / Tuesday, June 23, 1961 / Rules and Regulations
receipt-of such notice must be
acknowledged in writing whenever a
deposit or credit relationship is first
established with the IBF.
(c) Exemption from reserve
requirements. An institution that is
subject to the reserve requirements of
this Part is not required to maintain
reserves against its IBF time deposits or
IBF loans. Deposit-taking activities of
IBFs are limited to accepting only IBF
time deposits and lending activities of
IBFs are restricted to making only IBF
loans.
Id) Establishm ent o f an international
banking facility. A depository
institution, an Edge or Agreement
Corporation or a United States branch
or agency of a foreign bank may
establish an IBF in any location where it
is legally authorized to engage in IBF
business. However, only one IBF may be
established for each reporting entity that
is required to submit a Report of
Transaction Accounts, Other Deposits
and Vault Cash (Form FR 2900).
(e) Notification to Federal Reserve. 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 of
the district in which it is located of its
intent. Such notification shall include a
statement of intention by the institution
that it will comply with the rules of this
Part concerning IBFs, including
restrictions on sources and uses of
funds, and recordkeeping and
accounting requirements. Failure to
comply with the requirements of this
Part shall subject the institution to
reserve requirements under this Part and
to interest payment limitations that may
be applicable under Regulation Q (12
CFR part 217) on its IBF time deposits,
or result in the revocation of the
institution's ability to operate an IBF.
(f) Recordkeeping requirements. A
depository institution shall segregate on
its books and records the asset and
liability accounts of its IBF and submit
reports concerning the operations of its
IBF as required by the Board.
§ 204.3 and 204.4 [Amended]
5. In §§ 204.3(a), 204.3(a)(l)(ii},
204.3(a)(2)(ii), 204.3(c), 204.4(b)(1),
204.4(bKl)(ii), 204.4(b)(2), 204.4(b)(2)(ii),
204.4(d), 204.4(g)(2)(ii)(A),
204.4(g)(2)(ii)(B), and 204-4(g)(2)(iii),
references to §§ “204.8," “204.8(a),” or
“204.8(b)” are redesignated as
references to 55 “204.9,” "204.9(a),” or
"204.9(b)," respectively.
6. In Regulation Q (12 CER Part 217),
paragraphs (a) and (b) of 5 217.1 are
revised to read as follows:
§217.7 Maxbnuin rates of Interest payable
by member banks on time and savings
deposits.
§217.1 Definitions.
(a) Time deposits o f $100,000 or more
and IBF time deposits. There is no
maximum rate of interest presently
prescribed on any time deposit of
$100,000 or more or on IBF time deposits
issued under section 217.1(1).
For purposes of this Part, the
following definitions apply unless
otherwise specified:
(a) Demand deposit The term “any
deposit which is payable on demand,”
hereinafter referred to as a “demand
deposit." includes every deposit that is
not a “time deposit," “international
banking facility time deposit,” or
“savings deposit” as defined in this
section.
(b) Time deposit. The term “time
deposit” means “time certificates of
deposit,” “time deposits, open account”
and “international banking facility time
deposit," as defiiied in this section.
*
*
*
*
*
7. Section 217.1 is amended by adding
a new paragraph (1) as follows:
§ 217.1 Definitions.
*
*
*
*
*
(1) “
International banking facility time
deposit" or “
IBF time deposit"means a
deposit, placement, borrowing or similar
obligation represented by a promissory
note, acknowledgement of advance, or
similar instrument that is not issued in
negotiable or bearer form and
(1) That is payable
(1) On a specified date not less than
two business days after the date of
deposit;
(ii] Upon expiration of a specified
period of time not less than two
business days after the date of deposit;
or
(iii) Upon written notice that actually
is required to be given by the depositor
not less than two business days prior to
the date of withdrawal; (
(2) That represents funds deposited to
the credit of a non-United States
resident or a foreign branch, office,
subsidiary, affiliate, or other foreign
establishement (“foreign affiliate’’)
.
controlled by one or more domestic
corporations provided that such funds
are used only to support the operations
outside the United States of the
depositor or of its affiliates located
outside the United States; and
( 3 ) That is held under an agreement or
arrangement under which no deposit or
withdrawl of less than $100,000 is
permitted, except that a withdrawal of
less than $100,000 is permitted if such
withdrawal closes an account.
8. In § 217.7, paragraph (a) is revised
to read as follows:
*
*
*
*
*
*
*
*
*
*
By order of the Board of Governors. June
13, 1981.
James McAfee,
Assistant Secretary of the Board.
[FR Doc. 81-18533 F ile d 6-22-81; 8:45 am)
BILLIN G CODE 6210-01-M
