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F ederal reserve bank DALLAS, TEXAS of Dallas 75222 Circular Wo. 'jb-lkG May 30, 197^ REPRINT OF RULES REGARDING DELEGATION OF AUTHORITY To All Member Banks and Others Concerned in the Eleventh Federal Reserve District: Enclosed is a current reprint of the Board's "Rules Regarding Delegation of Authority" as amended effective April U, 197*+. All amendments to the regulation that have been issued and are effective through April k have been incorporated in the revised pamphlet. The pamphlet should be filed in the ring binder of Regulations of the Board of Governors of the Federal Reserve System and Bulletins of the Federal Reserve Bank of Dallas which has been furnished all member banks. The pamphlet as amended effective July 1967, and subsequent amendments should be destroyed. Yours very truly, P. E. Coldwell President Enclosure (l) 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 RULES REGARDING DELEGATION OF AUTHORITY (12 CFR 265) As amended effective April 4, 1974 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve District in which the inquiry arises. CONTENTS Se c . 2 6 5 .1 — D elegation G of enerally Se c . 2 6 5.1a— Spe cific gated F F u n ctio n s ....................................... u n ctio n s B oardM to D embers F un ctio n s gated to B oard E and F to B anks ederal (a) (b) (c) ele (a) Any Board Member designated by the C h a ir m a n ..................................... (b) The Committee on Organization, Compensation, andBuilding Plans S e c . 265 .2 — S pe cific 3 3 (d) 3 (e) 3 (f) (g) D ele m ployees Se c . R eserve .................................................. The Secretary of the B o a r d ............. The General Counsel of the Board .. The Director of the Division of Super vision and R e g u la tio n ................... The Director of the Division of Fed eral Reserve Bank Operations . . . The Director of the Division of Per sonnel A dm inistration................... Each Federal Reserve B a n k ........... The Director of the Division of Inter national Finance ............................ 265.3— 4 R e v iew gated of A ction L evel at 4 4 4 6 6 6 13 D ele ................................. 13 STATUTORY AUTHORITY This regulation is issued under authority of section 11 (k) of the Federal Reserve Act (12 U.S.C. 248(k) ), which reads as follows: Sec. 11. The Board of Governors of the Fed eral Reserve System shall be authorized and em powered: (k) To delegate, by published order or rule and subject to the Admininstrative Procedure Act, any of its functions, other than those relating to rulemaking or pertaining principally to monetary and credit policies, to one or more hearing exam iners, members or employees of the Board, or Federal Reserve Banks. The assignment of re sponsibility for the performance of any function that the Board determines to delegate shall be a function of the Chairman. The Board shall, upon the vote of one member, review action taken at a delegated level within such time and in such manner as the Board shall by rule prescribe. RULES REGARDING DELEGATION OF AUTHORITY* (12 C F R 265) As a m e n d e d effective A p r i l 4, 1974 rided, That such acquisition does not result, ei ther directly or indirectly, in the acquisition by such bank or corporation of effective control of Pursuant to the provisions of section 1 1(k ) of any such company (other than a company per the Federal Reserve Act (12 U.S.C. 248 (k ) ). the forming nominee, fiduciary, or other banking Board of Governors of the Federal Reserve Sys services incidental to the activities of a foreign tem delegates authority to exercise those of its branch or affiliate of such bank or corporation); functions described in this Part, subject to the and to approve any such acquisition that may ex limitations and guidelines herein prescribed. The ceed the limitations in section 25(a) of the Fed Chairman of the Board of Governors assigns the eral Reserve Act based on such a corporation's responsibility for the performance of such dele capital and surplus. gated functions to the persons herein specified. A (3) To permit an Edge or Agreement corpora delegee may submit any matter to the Board for tion to exceed the limitations in § 211.9(b) and determination if he considers such submission ap (c) of this chapter (Regulation K ) . 1 propriate because of the importance or complex (4) Under § 21 1.4 of this chapter (Regulation ity of the matter. K). to approve the issuance by an Edge or Agreement corporation or a subsidiary thereof of SECTION 265.1a— SPECIFIC FUNCTIONS debentures, bonds, promissory notes (with a ma DELEGATED TO BOARD MEMBERS turity of more than one year), or similar obliga (a) Any Board member designated by the tions: Provided, That such corporation is deter mined to be in satisfactory condition and the Chairman is authorized under sections 25 and delegee is satisfied that the case involves no ques 25(a) of the Federal Reserve Act and Parts 211 tion of general policy. and 213 of this chapter (Regulations K and M ): (b) The Committee on Organization, Compen (1) To approve the establishment, directly or sation, and Building Plans, consisting of three indirectly, of a foreign branch or agency by a members of the Board designated by the Chair member bank or corporation organized under man, is authorized, pursuant to the twenty-second section 25(a) (an “Edge" corporation) or oper paragraph of section 4 of the Federal Reserve ating under an agreement with the Board pur Act (12 U.S.C. 307) and subject to such general suant to section 25 (an “Agreement'’ corpora guidelines as may be prescribed by the Board: tion) which has already established, or has been (1) To approve (i) changes in the salary authorized to establish, branches in two or more structure for officers, other than the President foreign countries. and First Vice President, of each Federal Reserve (2) To grant specific consent to the acquisi Bank and branch theieof, and (ii) the salary of tion, either directly or indirectly, by a member any officer of a Federal Reserve Bank holding a bank or an Edge or Agreement corporation of position below that of Senior Vice President, sub stock of (i) a company chartered under the laws ject, however, to approval of such salaries by the of a foreign country or (ii) a company chartered Board in connection with year-end salary reviews under the laws of a State of the United States and subject to guidelines approved by the Board that is organized and operated for the purpose of under which each Reserve Bank makes salary financing exports from the United States: Prorecommendations. SECTION 265.1— DELEGATION OF FUNCTIONS GENERALLY * T h is text c o r r e s p o n d s to th e C o d e o f F e d e r a l R e g u l a t i o n s , T i t l e 12, C h a p t e r I I , P a r t 2 6 5 , c i t e d a s 12 C F R 265. T h e w o rd s “ this P a r t," as u sed h erein , m e a n R u les R eg arding D elegation o f A uthority. 'S u b j e c t , o f c o u rs e , to th e lim ita tio n s in s ectio n 2 5 ( a ) re l a ti n g to a g g r e g a te liabilities o u t s t a n d i n g o n d e b e n tu re s , b o n d s , a n d p r o m i s s o r y notes. § 265.2 (2) To approve (i) changes in maximum and minimum salaries for the respective grades of the salary structure for nonofficial employees of each Federal Reserve Bank and branch thereof, (ii) an increase in the special maximum salary for Grade 16 of such salary structure for each Re serve Bank or branch, and (iii) the payment of salary to any such employee in excess of the maximum or below the minimum for the grade in which the employee’s position is classified. (3) To approve (i) amendments to the au thorization from the Board of Governors to the Federal Reserve Banks for the payment of sepa ration allowances upon the involuntary termina tion of employment of any officer or employee of a Federal Reserve Bank or branch, and (ii) pay ment of such a separation allowance to any officer of a Reserve Bank or branch. (4) To approve the payment of salary to any officer (other than the President or First Vice President) or employee of a Federal Reserve Bank whose services are retained for more than 90 days after attainment of normal retirement age. (5) To approve amendments to the Guidelines and Objectives for Health Insurance prescribed by the Board of Governors for officers and em ployees of Federal Reserve Banks and their branches. In the exercise of any authority dele gated under this paragraph (b), the Committee shall be guided by the objectives of promoting the efficiency of Reserve Bank operations and of maintaining the morale of Reserve Bank person nel and shall give appropriate attention to salary levels and employment practices in the relevant community but with due regard to the public character of the Federal Reserve System. SECTION 265.2— SPECIFIC FUNCTIONS DELEGATED TO BOARD EMPLOYEES AND TO FEDERAL RESERVE BANKS (a) The Secretary of the Board (or, in his ab sence. the Acting Secretary) is authorized, under the provisions of Part 261 of this chapter, to make available, upon request, information in the records of the Board. (b) The Genera] Counsel of the Board (or. in his absence, the Acting General Counsel) is au thorized: (1) Under the provisions of section 2(g) of DELEGATION OF AUTHORITY the Bank Holding Company Act (12 U.S.C. 1841(g)), to determine whether a company that transfers shares to any of the types of transferees specified therein is incapable of controlling the transferee. (2) Under the provisions of section 4 ( c ) ( 8 ) of the Bank Holding Company Act (12 U.S.C. 1843(c)), to determine that a company engaged in activities of a financial, fiduciary, or insurance nature falls within the exemption described therein permitting retention or acquisition of con trol thereof by a bank holding company. (3) Under the provisions of sections 1101-1103 of the Internal Revenue Code (26 U.S.C. 1101-1103), to make certifications (prior and final) for Federal tax purposes with respect to distributions pursuant to the Bank Holding Company Act. (4) Under the provisions of section 4 (c )(8 ) of the Bank Holding Company Act (12 U.S.C. 1 843(c)(8)) and § 222.4(a) of this chapter (Regulation Y ). to issue an order for a hearing to be conducted for the purpose of determining whether a company engaged in activites of a fin ancial. fiduciary, or insurance nature falls within the exemption described therein permitting reten tion or acquisition of control thereof by a bank holding company. (5) Pursuant to the provisions of Part 261 of this chapter, to make available information of the Board of the nature and in the circumstances de scribed in § 261.6(b) and § 261.7 of that Part. (c) The Director of the Division of Supervi sion and Regulation (or. in his absence, the Act ing Director) is authorized: ( 1 ) Under the provisions of the seventh paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 325), to select or to approve the appointment of Federal Reserve Bank examiners, assistant examiners, and special examiners. (2) Under the provisions of the nineteenth paragraph of section 25(a) of the Federal Re serve Act (12 U.S.C. 625) and § 211.9(e) of this chapter (Regulation K ). to require submis sion and publication of reports by an "Edge Act" corporation. (3) Under the provisions of section 5 of the Bank Holding Company Act (12 U.S.C. 1844), after having received clearance from the Bureau of the Budget (where necessary) and in accord ance with the law of Administrative Procedure (5 DELEGATION OF AUTHORITY U.S.C. 553), to promulgate registration, annual report, and other forms for use in connection with the administration of such Act. (4) Under the provisions of section 12(g) of the Securities Exchange Act (15 U.S.C. 78/( g ) ): (i) to accelerate the effective date of a regis tration statement filed by a member State bank with respect to its securities; (ii) to accelerate termination of the registra tion of such a security that is no longer held of record by 300 persons; and (iii) to extend the time for filing a registration statement by a member State bank. (5) Under the provisions of section 12(d) of the Securities Exchange Act (15 U.S.C. 7 8 /(d )), to accelerate the effective date of an application by a member State bank for registration of a se curity on a national securities exchange. (6) Under the provisions of section 12(f) of the Securities Exchange Act (15 U.S.C. 7 8 /(f)), to issue notices with respect to an application by a national securities exchange for unlisted trading privileges in a security of a member State bank. (7) Under the provisions of section 12(h) of the Securities Exchange Act (15 U.S.C. 7 8 /(h )), to issue notices with respect to an application by a member State bank for exemption from regis tration. (8) Under the provisions of § 206.5(f) and (i) of this chapter (Regulation F ), to permit the mailing of proxy and other soliciting materials by a member State bank before the expiration of the time prescribed therein. (9) Under the provisions of §§ 206.41, 206.42, and 206.43 (Instructions as to Financial Statements 9, 4, and 3, respectively) of this chapter (Regulation F ), to permit the omission of financial statements from reports by a member State bank and/or to require other financial state ments in addition to, or in substitution for, the statements required therein. (10) To exercise the functions described in subparagraph (4) of paragraph (f) of this sec tion in cases in which the conditions specified therein as prerequisites to exercise of such func tions by the Federal Reserve Banks are not pres ent or in which, even though such conditions are present, the appropriate Federal Reserve Bank considers that nevertheless it should not take ac tion on the member bank’s request, and to exer cise the functions described in subparagraphs § 265.2 (1), (2), and (7) of paragraph (f) of this sec tion in cases in which the appropriate Federal Reserve Bank considers that it should not take action to approve the member bank’s request. (11) Under sections 25 and 25(a) of the Fed eral Reserve Act and Parts 211 and 213 of this chapter (Regulations K and M ), to approve in creases and reductions in the capital stock and amendments to the articles of association of a corporation organized under section 25(a) and additional investments by a member bank in the stock of a corporation operating under an agree ment with the Board pursuant to section 25. (12) To exercise the functions described in subparagraphs (15) (i) and (ii) of paragraph (f); and to exercise the functions described in subparagraph (15) (iii) of paragraph (f) in those cases in which the appropriate Federal Reserve Bank concludes that, because of unusual consid erations, or for other good cause, it should not take action. (13) Under the provisions of § § 207.2(f), 220.2(e), and 221.3(d) of this chapter (Regula tions G, T, and U, respectively), to approve issu ance of the list of OTC margin stocks and to add, omit, or remove any stock in circumstances indicating that such change is necessary or appro priate in the public interest. (14) Under the provisions of the seventh par agraph of section 25 of the Federal Reserve Act (12 U.S.C. 602), to require submission of a re port of condition respecting any foreign bank in which a member bank holds stock acquired under the provisions of § 213.4 of this chapter (Regula tion M). (15) Under the twelfth pargraph of section 13 of the Federal Reserve Act (39 Stat. 754) and § 203.2 of this chapter (Regulation C), to permit any member bank to accept drafts or bills of ex change drawn upon it for the purpose of furnish ing dollar exchange. (16) Under the provisions of section 4(b) of the Federal Deposit Insurance Act (12 U.S.C. 1814(b), to certify to the Federal Deposit In surance Corporation that, with respect to the ad mission of a State-chartered bank to Federal Re serve membership, the factors specified in section 6 of that Act (12 U.S.C. 1816) were considered. (17) Under section 1 8 (c)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1 82 8 (c )(4 )), to furnish to the Comptroller of the Currency § 265.2 and the Federal Deposit Insurance Corporation reports on competitive factors involved in a bank merger required to be approved by one of those agencies if each of the appropriate departments or divisions of the appropriate Federal Reserve Bank and the Board of Governors is of the view that the proposed merger either would have no adverse competitive effects or would have only slightly adverse competitive effects, and if no member of the Board has indicated an objection prior to the forwarding of the report to the ap propriate agency. (18) Under the provisions of § 207.4(a) (2) (ii) of this chapter (Regulation G) to approve repay ments of the ‘deficiency’ on stock option loans in lower amounts and over longer periods of time than those specified in the regulation. (19) Pursuant to the provisions of Part 261 of this chapter to make available reports and other information of the Board acquired pursuant to Part 207, 220, 221, and 224 (Regulations G, T, U, and X) of the nature and in the circum stances described in § 261.6(a)(2) and (3) of Part 261. (d) The Director of the Division of Federal Reserve Bank Operations (or, in his absence, the Acting Director) is authorized: (1) Under the provisions of the sixteenth par agraph of section 4 of the Federal Reserve Act (12 U.S.C. 304), to classify member banks for the purposes of electing Federal Reserve Bank class A and class B directors, giving consideration to (i) the statutory requirement that each of the three groups shall consist as nearly as may be of banks of similar capitalization and (ii) the desir ability that every member bank have the opportu nity to vote for a class A or a class B director at least once every three years. (2) Under the provisions of the third para graph of section 16 of the Federal Reserve Act (12 U.S.C. 413), to apportion credit among the Reserve Banks for unfit notes that are destroyed, giving consideration to the net number of notes of each denomination that were issued by each Reserve Bank during the preceding calendar year. (3) Under the provisions of section 19(b) of the Federal Reserve Act (12 U.S.C. 461) and § 204.2(a) (2) of this chapter (Regulation D), to permit a member bank in a reserve city to main tain reserves at the ratios prescribed for banks DELEGATION OF AUTHORITY not in reserve cities, provided such bank holds demand deposits of not more than $25 million, or, demand deposits less than the amount of de mand deposits of the largest bank in the city that is permitted to maintain reserves at such lower ratio, whichever is larger, giving consideration to factors such as the amount of the bank’s re sources, total deposits, demand deposits, demand deposits owing to banks, types of depositors and borrowers, turnover of demand deposits, geo graphical location within the city, and competi tive position with relation to other banks in the city. (4) Under the provisions of §§ 216.5(b), 216.5(d), and 216.6 of this chapter (Regulation P), with respect to Federal Reserve Banks and branches: (i) to require reports on security de vices; (ii) to require special reports; and (iii) to determine, in view of the provisions of §§ 216.3 and 216.4, whether security devices and proce dures are deficient in meeting the requirements of Part 216, to determine whether such require ments should be varied in the circumstances of a particular banking office, and to require correc tive action. (e ) The Director of the Division of Personnel Administration (or, in his absence, the Acting Director) is authorized, under the provisions of the twenty-first paragraph of section 4 of the Federal Reserve Act (12 U.S.C. 306), to approve the appointment of assistant Federal Reserve agents (including representatives and alternate representatives of such agents). (f) Each Federal Reserve Bank is authorized, as to member banks or other indicated organiza tions headquartered in its district: (1) Under the provisions of the third para graph of section 9 of the Federal Reserve Act (12 U.S.C. 321), section 5155 of the Revised Statutes (12 U.S.C. 36), and § 208.8 of this chapter (Regulation H ), to approve the establish ment by a State member bank of a domestic branch if the proposed branch has been approved by the appropriate State authority and if the Re serve Bank is satisfied that approval is warranted after giving consideration to: (i) the bank’s capitalization in relation to the character and condition of its assets and to its deposit liabilities and other corporate responsibil ities, including the volume of its risk assets and of its marginal and inferior quality assets, all DELEGATION OF AUTHORITY considered in relation to the strength of its man agement; (ii) the ability of bank’s management to cope successfully with existing or foreseeable problems, and to staff the proposed branch without any sig nificant deterioration in the overall management situation; (iii) the convenience and needs of the com munity; (iv) the competitive situation (either actual or potential); (v) the prospects for profitable operations of the proposed branch within a reasonable time, and the ability of the bank to sustain the opera tional losses of the proposed branch until it be comes profitable; and (vi) the reasonableness of bank’s investment in bank premises after the expenditure for the proposed branch. (2) Under the provisions of the sixth para graph of section 9 of the Federal Reserve Act (12 U.S.C. 324) and the provisions of section 5199 of the Revised Statutes (12 U.S.C. 60), to permit a State member bank to declare dividends in excess of net profits for the calendar year combined with the retained net profits of the pre ceding two years, less any required transfers to surplus or a fund for the retirement of any pre ferred stock, if the Reserve Bank is satisfied that approval is warranted after giving consideration to: (i) the bank’s capitalization in relation to the character and condition of its assets and to its deposit liabilities and other corporate responsibil ities, including the volume of its risk assets and of its marginal and inferior quality assets, all considered in relation to the strength of its man agement; and (ii) the bank's capitalization after payment of the proposed dividend. (3) Under the provisions of the tenth para graph of section 9 of the Federal Reserve Act (12 U.S.C. 328), to approve or deny applications by State banks for waiver of the required six months’ notice of intention to withdraw from Federal Reserve membership. (4) Under the provisions of the eleventh para graph of section 9 of the Federal Reserve Act (12 U.S.C. 329), to permit a State member bank to reduce its capital stock if its capitalization thereafter will be: § 265.2 (i) in conformity with the requirements of Federal law, and (ii) adequate in relation to the character and condition of its assets and to its deposit liabilities and other corporate responsibilities, including the volume of its risk assets and of its marginal and inferior quality assets, all considered in relation to the strength of its management. (5) Under the provisions of the seventeenth paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 334), to extend the time, for good cause shown, within which an affiliate of a State member bank must file reports. (6) Under the provisions of the seventh para graph of section 13 of the Federal Reserve Act (12 U.S.C. 372), to permit a member bank to accept commercial drafts in an aggregate amount at any one time up to 100 per cent of its capital and surplus. (7) Under the provisions of section 24A of the Federal Reserve Act (12 U.S.C. 371 d ), to permit a State member bank to invest in bank premises in an amount in excess of its capital stock, if the Reserve Bank is satisfied that ap proval is warranted after giving consideration to: (i) the bank’s capitalization in relation to the character and condition of its assets and to its deposit liabilities and other corporate responsibil ities, including the volume of its risk assets and of its marginal and inferior quality assets, all considered in relation to the strength of its man agement: A n d provided, That (ii) upon completion of the proposed invest ment, the bank’s aggregate investment (direct and indirect) in bank premises plus the indebtedness of any wholly-owned bank premises subsidiary will not exceed 40 per cent of its total capital funds (including capital notes and debentures) plus reserves other than valuation reserves. (8) Under the provisions of the ninth para graph of section 25(a) of the Federal Reserve Act (12 U.S.C. 615), to extend the time in which an “Edge Act” corporation must divest it self of stock acquired in satisfaction of a debt previously contracted. (9) Under the provisions of the twenty-second paragraph of section 25(a) of the Federal Re serve Act (12 U.S.C. 628), to extend the period of corporate existence of an “Edge Act” corpora tion. § 265.2 DELEGATION OF AUTHORITY Act (12 U.S.C. 612) and § 211.3 of this chapter (10) Under the provisions of section 5(a) of the Bank Holding Company Act (12 U.S.C. (Regulation K ), to approve amendments to the 1844(a)), to extend the time within which a Articles of Association of any “Edge Act” corpo bank holding company must file a registration ration to reflect the following: (i) any increase in statement. the capital stock of such corporation where all (11) Under the provisions of section 4(a) of additional shares are to be acquired by existing the Bank Holding Company Act (12 U.S.C. shareholders; (ii) any change in the location of 1843(a)), to extend the time within which a the home office of such corporation within the bank holding company must divest itself of inter city where such corporation is presently located; ests in nonbanking organizations. and (iii) any change in the number of members (12) Under the provisions of section 4(c)(2) of the Board of Directors of such corporation. of the Bank Holding Company Act (12 U.S.C. (19) Under § 225.4(d) of this chapter (Regu 1843(c)), to extend the time within which a lation Y), bank holding company must divest itself of inter (i) to notify a bank holding company that has ests in a nonbanking organization acquired in sat informed it of a proposed acquisition of a going isfaction of a debt previously contracted. concern that, because the circumstances sur (13) Under the provisions of section 5(c) of rounding the application indicate that additional the Bank Holding Company Act (12 U.S.C. information is required or that the acquisition 1844(c)), to require reports under oath to deter should be considered by the Board, the acquisi mine whether a company is complying with the tion should not be consummated until specifically provisions of such Act and the Board’s regula authorized by the Reserve Bank or by the Board. tions promulgated thereunder. (ii) to permit a bank holding company that (14) Under the provisions of § 208.10(c) of has informed it of a proposed acquisition of a this chapter (Regulation H ), to extend the time going concern to make the acquisition before the within which a member bank that has given no expiration of the 45-day period referred to in tice of intention to withdraw from membership that paragraph, because exigent circumstances must surrender its Federal Reserve Bank stock justify consummation of the acquisition at an ear and its certificate of membership. lier time. (15) Under the provisions of §§ 216.5(b), (20) Under § 225.4(b)(1) of this chapter 216.5(d), and 216.6 of this chapter (Regulation (Regulation Y ), and subject to § 265.3 if a per P), with respect to State member banks only: (i) son submitting adverse comments that the Re to require reports on security devices; (ii) to re serve Bank has decided are not substantive files a quire special reports; and (iii) to determine, in petition for review by the Board of that decision, view of the provisions of §§ 216.3 and 216.4, (i) to permit a bank holding company that whether security devices and procedures are defi has furnished it with a copy of a duly published cient in meeting the requirements of Part 216, to notice of a proposal to engage de novo in activi determine whether such requirements should be ties specified in § 225.4(a) (or retain shares in a varied in the circumstances of a particular bank company established de novo and engaging in ing office, and to require corrective action. such activities) if its evaluation of the considera (16) Under § 208.9(a) of this chapter (Regu tions specified in section 4 ( c ) ( 8 ) of the Bank lation H ), for good cause shown, to extend the Holding Company Act leads it to conclude that time for publication of reports of condition, such the proposal can reasonably be expected to pro extensions not ordinarily to be for more than 10 duce benefits to the public. days except in very unusual circumstances be (ii) to notify a bank holding company that yond control of the reporting bank. has furnished it with a duly published notice of (17) Under the provisions of § 207.1(b) of the kind described in subdivision (i) of this sub this chapter (Regulation G ), to approve applica paragraph that the proposal should not be con tions for termination of registration by persons summated until specifically authorized by the Re who are registered pursuant to § 207.1 (a). serve Bank or by the Board or that the proposal (18) Under the provisions of the second para should be processed in accordance with the pro graph of section 25(a) of the Federal Reserve cedures of § 225.4(b) (2). DELEGATION OF AUTHORITY (iii) to permit a bank holding company that has furnished it with a duly published notice of the kind described in subdivision (i) of this sub paragraph to consummate the proposal before the expiration of the 45-day period referred to in § 225.4(b) (1), because exigent circumstances jus tify consummation at an earlier time. (21) Under § 225.4(c)(2) of this chapter (Regulation Y) to permit or stay a proposed de novo modification or relocation of activities en gaged in by a bank holding company on the same basis as de novo proposals under subpara graph (20) of this paragraph. (22) Under the provisions of section 3 (a ) ( 1 ) of the Bank Holding Company Act (12 U.S.C. 1842), to approve the formation of a bank hold ing company through the acquisition by a com pany of a controlling interest in the voting shares of one or more banks, if all of the following con ditions are met: (i) no member of the Board has indicated an objection prior to the Reserve Bank’s action. (ii) all relevant departments of the Reserve Bank recommended approval. (iii) no substantive objection to the proposal has been made by a bank supervisory authority, the United States Department of Justice, or a member of the public. (iv) no significant policy issue is raised by the proposal as to which the Board has not expressed its view. (v) considerations relating to the convenience and needs of the communities to be served are consistent with or lend weight toward approval of the application. (vi) in the event any debt incurred by the holding company to purchase shares of any bank involved in the proposal: (a) an agreed plan for amortization of the debt within a reasonable time exists, such period normally not exceeding 12 years. (b) the interest rate on any loan to purchase the bank shares will be comparable with other stock collateral loans by the lender to persons of comparable credit standing. (c) no compensating balances, specifically at tributable to the loan, will be deposited in the lending institution and the amount of any corre spondent account which the proposed subsidiary bank will maintain with the lending institution should not exceed the amount necessary to com § 265.2 pensate the lending bank for correspondent ser vices rendered by it to the proposed subsidiary b an k(s). (vii) the Reserve Bank determines that the managerial and financial resources, including the equity to debt relationships, of Applicant, it’s ex isting subsidiaries, and any proposed subsidiary bank, are adequate, or will be adequate within a reasonable period of time after consummation of the proposal, and any debt service requirements to which the holding company may be subject are such as to enable it to maintain the capital adequacy of any proposed subsidiary bank in the forseeable future. (viii) if Applicant or any of Applicant’s exist ing or proposed nonbanking subsidiaries compete in the same geographic and product market as any proposed subsidiary bank, the resulting orga nization will control no more than 10 per cent of that product or service line after consummation of the proposal. (ix) total nonbank gross revenues of Appli cant and its subsidiaries do not exceed 20 per cent of total operating income of the proposed banking subsidiaries. (x) if Applicant, engages, or is to engage, in nonbanking activities requiring the Board’s ap proval under section 4 ( c ) ( 8 ) of the Act, the Re serve Bank must also have delegated authority to approve the section 4(c) (8) activities. (xi) if the proposal involves the acquisition of the controlling stock of only one bank, and any debt is incurred by the holding company to pur chase shares of the bank, the amount of the loan does not exceed 75 per cent of the purchase price of the shares of the proposed subsidiary bank. (xii) if the proposal involves the acquisition of the controlling stock of more than one bank, the following additional conditions must be met: (a) in the event any debt is incurred by the holding company to purchase shares of any pro posed subsidiary bank(s), the total amount of the debt does not exceed 20 per cent of the equity capital accounts of the holding company. (b) the Applicant will control no more than 15 per cent of total deposits in commercial banks in the State. (xiii) neither Applicant nor the bank(s) to be acquired has entered into or proposes to enter into any agreement with any director, officer, em ployee or shareholder of the bank(s) that con § 265.2 DELEGATION OF AUTHORITY tains any condition that limits or restricts in any (vii) the Reserve Bank determines that the manner the right of such persons to compete managerial and financial resources, including the with Applicant or any of Applicant's existing or equity to debt relationships, of Applicant, its ex proposed subsidiaries. isting subsidiaries, and any proposed subsidiary (23) Under the provisions of section 3 (a )(3 ) bank, are adequate, or will be adequate within a of the Bank Holding Company Act (12 U.S.C. reasonable period of time after consummation of 1842), to approve the acquisition by a bank the proposal, and any debt service requirements holding company of additional shares in abank to which the holding company may be subject that are to be acquired through exercise of rights are such as to enable it to maintain the capital received, on a pro rata basis, by the bank’s share adequacy of any existing or proposed subsidiary holders. bank in the foreseeable future. (24) Under the provisions of section 3 (a )(3 ) (viii) if Applicant or any of Applicant’s exist of the Bank Holding Company Act (12 U.S.C. ing or proposed nonbanking subsidiaries compete 1842), to approve the acquisition by a bank in the same geographic and product market as holding company of a controlling interest in theany proposed subsidiary, the resulting organiza voting shares of an additional bank, if all of the tion will not control more than 10 per cent of following conditions are met: that product or service line after consummation (i) no member of the Board has indicated an of the proposal. objection prior to the Reserve Bank’s action. (ix) total nonbank gross revenues of Appli (ii) all relevant departments of the Reserve cant and its subsidiaries do not exceed 20 per Bank recommend approval. cent of total operating income of the company’s (iii) no substantive objection to the proposal existing or proposed bank subsidiaries. has been made by a bank supervisory authority, (x) if Applicant engages, or is to engage, in the United States Department of Justice, or a nonbanking activities requiring the Board’s ap member of the public. proval under section 4 ( c ) ( 8 ) of the Act, the Re (iv) no significant policy issue is raised by the serve Bank must also have delegated authority to proposal as to which the Board has not expressed approve the section 4 ( c ) ( 8 ) activities. its view. (xi) in the event any debt is incurred by Ap (v) considerations relating to the convenience plicant to purchase shares of the bank, the result and needs of the communities to be served are ing total acquisition debt of the holding company consistent with or lend weight toward approval of will not exceed 20 per cent of the company’s eq the application. uity capital accounts after consummation of the (vi) in the event any debt is incurred by the proposal. holding company to purchase shares of any bank (xii) Applicant is not one of the dominant involved in the proposal: banking organizations in the State, and, unless (a) an agreed plan for amortization of the the proposed subsidiary is a proposed new bank, debt within a reasonable time exists, such period Applicant will control no more than 15 per cent normally not exceeding 12 years. of the total deposits in commercial banks in the (b) the interest rate on any loan to purchase State after consummation of the proposal. the bank shares will be comparable with other (xiii) if the bank to be acquired is an existing stock collateral loans by the lender to persons of bank and if no banking offices of Applicant's ex comparable credit standing. isting subsidiary bank are located in the same (c) no compensating balances, specifically at market as the proposed subsidiary, the proposed tributable to the loan, will be deposited in the subsidiary has no more than $25 million in total lending institution and the amount of any corre deposits or controls no more than 15 per cent of spondent account which the proposed subsidiary deposits in commercial banks in the market. bank will maintain with the lending institution (xiv) if the bank to be acquired is an existing should not exceed the amount necessary to com bank and if any of Applicant’s existing subsidiary pensate the lending bank for correspondent ser vices rendered by it to the proposed subsidiary banks compete in the same market as the pro bank. posed subsidiary, Applicant will control no more DELEGATION OF AUTHORITY than 10 per cent of total deposits in commercial banks in the market after consummation. (xv) if the bank to be acquired is a proposed new bank, bank subsidiaries of Applicant will not hold in the aggregate more than 20 per cent of the total deposits in commercial banks in the rel evant market area and Applicant will not be one of the dominant banking organizations in the State. (xvi) Applicant has a proven record of fur nishing to its subsidiaries, when needed, special services, management, capital funds and general guidance. (xvii) neither Applicant nor the bank to be acquired has entered into or proposes to enter into any agreement with any director, officer, em ployee or shareholder of the bank that contains any condition that limits or restricts in any man ner the right of such persons to compete with Applicant or any of Applicant’s existing or pro posed subsidiaries. (25) To set the salaries of its officers below the level of Senior Vice Presidents (Salary Group A), excluding the General Auditor, within officer salary ranges approved and guidelines subse quently issued by the Board of Governors. (26) Under the provisions of the first para graph of Section 9 of the Federal Reserve Act (12 U.S.C. 325) to approve applications for membership in the Federal Reserve System if the Reserve Bank is satisfied with respect to each of the following criteria: (i) the financial history and condition of the applying bank and the general character of its management; (ii) the adequacy of its capital structure in relation to the character and condition of its as sets and to its existing and prospective deposit liabilities and other corporate responsibilities; and its future earnings prospects; (iii) the convenience and needs of the com munity to be served by the bank; and (iv) whether its corporate powers are consist ent with the purposes of the Federal Reserve Act and the Federal Deposit Insurance Act. (27) Under the provisions of section 5(c) of the Bank Holding Company Act, as amended (12 U.S.C. 1844(c)), to grant to a bank holding company a 90-day extension of time in which to file an annual report; and for good cause shown § 265.2 an additional extension of time, not to exceed 90 days, may be granted. (28) Under the provisions of section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)), to approve a merger, consolidation, acquisition of assets or assumption of liabilities, where the resulting bank is a State member bank, if all of the following conditions are met: (i) no member of the Board has indicated an objection prior to the Reserve Bank’s action. (ii) all relevant departments of the Reserve Bank recommended approval. (iii) no substantive objection to the proposal has been made by a bank supervisory authority, the United States Department of Justice, or a member of the public. (iv) no significant policy issue is raised by the proposal as to which the Board has not expressed its view. (v) if the banks do not have offices in the same market, the bank to be acquired has no more than $25 million in total deposits or con trols no more than 15 per cent of the total deposits - in commercial banks in the market. (vi) if the banks compete in the same banking market, the resulting bank will control no more than 10 per cent of total deposits 3 in commercial banks in the market. (vii) neither of the merging or consolidating banks is a dominant banking organization in the State and the resulting institution will control no more than 15 per cent of the total deposits in commercial banks in the State after consumma tion of the proposal.4 (viii) the Reserve Bank determines that the managerial and financial resources, including the equity capital accounts of the resulting bank, are adequate, or will be adequate within a reasonable period of time after the proposal is consum mated. - I f e i t h e r o f t h e p r o p o n e n t b a n k s is a s u b s i d i a r y o f a h o ld in g c o m p a n y a n d the p a re n t c o m p a n y h a s a n o th e r b a n k s u b si d ia r y o p e r a t i n g in the m a r k e t o f th e b a n k to b e a c q u i r e d , d e p o s i t s o f s u c h of fic es s h o u l d b e i n c l u d e d in t h e c o m p u t a t i o n o f m a r k e t s h a r e s . S e e f o o t n o t e 2, a b o v e . 1 I f e i t h e r o f t h e p r o p o n e n t b a n k s is a s u b s i d i a r y o f a h o ld in g c o m p a n y , the d e p o sits o f th e o th e r s u b sid iary b a n k s o f t h e h o l d i n g c o m p a n y s h o u l d b e i n c l u d e d in d e t e r m i n i n g w h e t h e r t h e r e s u l t i n g i n s t i t u t i o n w il l c o n t r o l m o r e t h a n 15 p e r c e n t o f t h e t o t a l d e p o s i t s in c o m m e r cial b a n k s in th e State. § 265.2 (ix) considerations relating to the convenience and needs of the communities to be served are consistent with, or lend weight toward, approval of the application. (x) no bank involved in this proposal has en tered into or proposes to enter into any agree ment with any director, officer, employee or shareholder of either bank that contains any con dition that limits or restricts in any manner the right of such persons to compete with the result ing institution. (29) Under the provisions of Section 3(a) of the Bank Holding Company Act (12 U.S.C. 1842), to approve by a letter of notification with out compliance with section 262.3(h) of the Board’s Rules of Procedures, the retention of shares of bank stock acquired in a fiduciary ca pacity (with sole voting rights) for a two-year period from the date of such acquisition, pro vided that the Applicant undertakes uncondition ally to dispose of such shares or its sole discre tionary voting rights with respect to such shares within two years from the date of such acquisi tion. (30) Under the provisions of section 3 (a )(5 ) of the Bank Holding Company Act (12 U.S.C. 1842), to approve the merger or consolidation of a bank holding company with any other bank holding company, if all of the following condi tions are met: (i) no member of the Board has indicated an objection prior to the Reserve Bank’s action. (ii) all relevant departments of the Reserve Bank recommended approval. (iii) no substantive objection to the proposal has been made by a bank supervisory authority, the United States Department of Justice, or a member of the public. (iv) no significant policy issue is raised by the proposal as to which the Board has not expressed its view. (v) considerations relating to the convenience and needs of the communities to be served are consistent with or lend weight toward approval of the application. (vi) in the event any debt is incurred by the resulting or surviving holding company to effect the merger or consolidation: (a) an agreed plan for amortization of the debt within a reasonable time exists, such period normally not exceeding 12 years. DELEGATION OF AUTHORITY (b) the interest rate on any loan involved will be comparable with other stock collateral loans by the lender to borrowers of comparable credit standing. (c) no compensating balances, specifically at tributable to the loan, will be deposited in the lending institution and the amount of any corre spondent account which the subsidiary banks of the resulting or surviving company will maintain with the lending institution should not exceed the amount necessary to compensate the lending bank for correspondent services rendered by it to the depositing bank(s). (d) the total acquisition debt of the resulting or surviving company will not exceed 20 per cent of such company's equity capital accounts after consummation of the proposal. (vii) the Reserve Bank determines that the managerial and financial resources, including the equity to debt relationships, of the merging or consolidating companies, and their existing sub sidiaries, are adequate, or will be adequate within a reasonable period of time after consummation of the proposal, and any debt service require ments to which the resulting or surviving com pany may be subject are such as to enable it to maintain the capital adequacy of any existing or proposed subsidiary bank in the foreseeable fu ture. (viii) if either of the merging or consolidating companies or any of their subsidiaries compete in the same geographic and product market as the other merging or consolidating company or any of its subsidiaries, the resulting or surviving orga nization will not control more than 10 per cent of that product or service line after consumma tion of the proposal. (ix) if the merging or consolidating bank holding companies do not have subsidiary bank ing offices in the same market, the resulting or surviving bank holding company will not acquire a subsidiary bank with more than $25 million in deposits or with more than 15 per cent of the total deposits in commercial banks in the market. (x) if any subsidiary bank(s) of either of the merging or consolidating companies competes in the same market as any subsidiary bank(s) of the other merging or consolidating company, the resulting or surviving company will control no more than 10 per cent of total deposits in com DELEGATION OF AUTHORITY mercial banks in the market after consummation of the proposal. (xi) neither merging or consolidating company is one of the dominant banking organizations in the State, and the resulting or surviving company will control no more than 15 per cent of total de posits in commercial banks in the State after con summation of the proposal. (xii) total nonbank gross revenues of the merging or consolidating companies and their subsidiaries do not exceed 20 per cent of the total operating income of the merging or consoli dating companies’ bank subsidiaries. (xiii) if either of the merging or consolidating companies engages, or is to engage, in nonbank ing activities requiring the Board’s approval under section 4 (c ) ( 8 ) of the Act, the Reserve Bank must also have delegated authority to ap prove the section 4(c) (8) activities. (xiv) Applicant has a proven record of fur nishing to its subsidiaries, when needed, special services, management, capital funds and general guidance. (xv) neither bank holding company involved in this proposal nor any of the subsidiary banks of either bank holding company involved in this proposal has entered into or proposes to enter into any agreement with any officer, director, em ployee or shareholder of the bank(s) involved in this proposal that contains any condition that limits or restricts in any manner the right of such § 265.3 person to compete with the resulting or surviving company or any of its existing or proposed sub sidiaries. (g) The Director of the Division of Interna tional Finance (or, in his absence, the Acting Director) is authorized, under the provisions of the sixth paragraph of section 14 of the Federal Reserve Act (12 U.S.C. 358) to approve the es tablishment of foreign accounts with the Federal Reserve Bank of New York. SECTION 265.3— REVIEW OF ACTION AT DELEGATED LEVEL Any action taken at a delegated level shall be subject to review by the Board only if such re view is requested by a member of the Board ei ther on his own initiative or on the basis of a pe tition for review by any person claiming to be adversely affected by the action. Any such peti tion for review must be received by the Secretary of the Board not later than the fifth day after the date of such action. Notice of any such review shall be given to the person with respect to whom such action was taken and be received by such person not later than the close of the tenth day following the date of such action. Upon re ceipt of such notice, such person shall not pro ceed further in reliance upon such action until he is notified of the outcome of review thereof by the Board.
@FedFRASER