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F ederal Reserve
bank of
DALLAS. TEXAS
Dallas
75222
C ircu lar No. 79-108
June 25, 1979
REVISED REGULATION K
INTERNATIONAL BANKING OPERATIONS
Rescission of Regulations K, M, and a Part of Regulation Y
TO ALL MEMBER BANKS,
BANK HOLDING COMPANIES,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
By C ircular No. 79-48, dated March 14, 1979, this Bank transmitted pro
posed revisions to the Federal Reserve System's Regulation K and, a t the same time,
requested comments from the public on the proposal which was designed to implement
the International Banking Act of 1978. The comment period has e x p ired , and, after
taking the comments submitted into consideration, the Board of Governors of the
Federal Reserve System ("Board") has issued the revised Regulation K (12 CFR
Part 211), which has been entitled "International Banking Operations," in final form.
At the same time, the Board reviewed Regulation M (12 CFR Part 213)
"Foreign A ctivities of National Banks," and Section 2 2 5.4 (f) of Regulation Y (12 CFR
Part 225) "Bank Holding Companies and Change in Bank Control" and has incorporated
revisions to those regulations into the revised Regulation K. In order for your Regu
lations Binder to be c u rre n t, please discard the following:
Regulation K pamphlet dated January 7, 1969 and attendant amendments, and
Regulation M pamphlet dated January 7, 1971 and attendant amendments.
Printed on the following pages is a copy of the Board's press release an noucing the adoption of the new revised Regulation K. A copy of the Board's o rd e r,
as published in the Federal R egister, is enclosed. Please file these documents in
your Regulations Binder under the Regulation K tab, and please make the following
corrections to the text of the Regulation: in 211.7 (e ) (2 ), change "2 1 1 .6 (d )" to
" 2 1 1 .6 (b )"; and in 211.7(e) (3 ), change "2 1 1 .6 (c )" to " 2 1 1 .6 (d )" .
The revised Regulation K pamphlet, and a slip sheet making Regulation Y
c u rren t, w ill be sent in the near future.
Any questions concerning the contents of this c irc u la r or the enclosure
should be directed to the Attorneys' Section of our Holding Company Supervision
Department, E xt. 6182.
Sincerely yours,
Robert H. Boykin
First Vice President
Enclosure
Banks and others are encouraged to use the following incoming W ATS 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)
For immediate release
The Federal Reserve Board has revised its Regulation K —
June 14, 1979
governing
corporations engaged in international banking and financial operations, known
as Edge Corporations -- to conform with the International Banking Act of 1978.
At the same time, the Board revised and consolidated into the new
Regulation K provisions of other regulations dealing with foreign operations of
U.S. banks (Regulation M) and foreign investments by bank holding companies
(Regulation Y).
New Regulation K also incorporates a number of Board policy
positions in the field of international banking that have previously been
developed on a less formal basis.
As now constituted Regulation K, titled International Banking Operations,
includes
rules for (1) the ownership of Edge Corporations and their operation in
the United States (2) overseas activities and investments of Edge Corporations,
member banks and bank holding companies (3) lending limits and capital requirements
for Edge Corporations and other regulatory restrictions on international operations
and (4) authorization for the establishment and operation of foreign branches
of member banks.
The new Regulation -- which is effective June 14, 1979 -- thus
brings together in one place the Board's rules regarding the international
activities of United States banks, bank holding companies and Edge Corporations.
In making these changes, the Board noted:
In amending the Edge Act (Section 25(a) of the Federal
Reserve Act) Congress declared that Edge Corporations
are to have powers sufficiently broad to enable them
to compete with foreign banks in the United States as
well as abroad and to provide all segments of the
United States economy a means of financing interna
tional trade, and, in particular, exports.
In addition,
Edge Corporations are to serve as a means of fostering
the participation of regional and smaller banks in
international banking and financing and, in general, to
stimulate competition in making those services
available throughout the United States...
The Regulation has been Issued In furtherance of these and other objectives
set forth in the International Banking Act (IBA) after consideration of comment
received following publication by the Board of proposals for the new Regulation
In February.
In addition, the Board has sought to eliminate obsolete regulations,
clarify existing rules, and simplify relevant regulatory and supervisory standards
and procedures.
The rules adopted in new Regulation K differ in a number of respects
from proposals published in February.
The principal provisions of Regulation K
are:
1.
Operation of Edge Corporations in the United States:
Regulation K as revised enlarges the capabilities of Edge Corporations to
operate in the United States by permitting them to establish branches in the U.S.
with the prior approval of the Board.
Until now, a U.S. banking company could
establish separately incorporated Edge Corporations at various places, but Edge
Corporations were not permitted to branch.
The new authority makes it more efficient
and less costly for Edge Corporations to enter and operate at new locations.
Edge
Corporations are not subject to Federal law that limits the power of banks to
branch across State lines.
The Board set forth the following standards that it will consider in
acting upon applications to form new Edge Corporations or to establish domestic branches
-•The financial condition and history of the applicant;
— The general character of the applicant's management;
--The convenience and needs of the community to be served
with respect to International banking and financing
services;
--The effects of the proposed Corporation or branch on
competition.
The Board will publish in the Federal Register notice of proposals to
form new Edge Corporations or establish domestic branches In order to give
opportunity for interested persons to express their views.
The Board deferred action on another proposal to enlarge the capabilities
of Edge Corporations that would have given them authority to provide full banking
services to customers principally engaged In international or foreign commerce.
The Board will give further study to this matter and will publish a revised version
for further comment.
Edge Corporations may use funds held in the United States but not
employed in international or foreign business in the form of cash, deposits with
banks, money market Instruments such as bankers' acceptances, obligations of
Federal, State or local governments or obligations fully guaranteed by them (and
their Instrumentalities), repurchase agreements, Federal funds sold and camnerclal
paper.
The Board included in Regulation K a statement of activities that Edge
Corporations may conduct in the United States incidental to international
transactions.
The revised Regulation allows Edge Corporations to finance the production
of goods and services for export.
This may be done when the customer has obtained
export orders, or when the items to be financed are identifiable as being directly
for export.
2.
Foreign Investments by Edge Corporations. Banka and Bank Holding Companies:
The new Regulation contains a list of activities that may generally
be engaged in by foreign companies In which U.S. banking organisations hold a
substantial ownership interest ((Section 211.5(d)). The activities specified in
the Regulation are those the Board has generally allowed foreign subsidiaries of
United States banks because they are of a financial character or are related to
International banking and financial operations.
For example, U.S. banking
organisations may engage in nonbanking activities abroad that the Board has
authorized under Section 4(c)(8) of the Bank Holding Company Act.
Regulation K establishes uniform and simplified procedures for foreign
or International investments by Edge Corporations and member banks and bank holding
companies.
The Regulation establishes expedited procedures, under general consent
provisions, for investments up to $2 million for subsidiaries or joint ventures
engaged in activities permissible under the Regulation.
Such investments in foreign
companies may be made without specific consent by the Board.
Other investments in subsidiaries and joint ventures that do not qualify
under the general consent procedures but that do not exceed 10 per cent of capital
and surplus of the investor^may be made after 60 days' notification to the Board.
All other Investments must obtain the Board's prior approval.
3.
Foreign Branches of Edge Corporations:
An
Edge Corporation may establish branches abroad, under revised
Regulation K, according to the provisions of the Regulation (Section 211.3) by
which member banks may establish foreign branches.
4.
Foreign Investment In Edge Corporations;
The International Banking Act ((Section 3(f)) specifies that certain
foreign or domestic financial institutions may apply to the Board for prior
approval to acquire 50 per cent or more of the capital stock of an Edge Corporation.
In acting upon applications to acquire stock of Edge Corporations made by institutions
that are not subject to the IBA or the Bank Holding Company Act the Board will
Impose conditions it regards as necessary to prevent undue concentration of
resources, decreased or unfair competition, conflicts of Interest or unsound
banking practices in the United States.
A foreign financial institution may not
invest more than 10 per cent of the institution's capital and surplus in an
Edge Corporation.
4.
Lending Limits and Capital Requirements for Edge Corporations:
The Board established prudential rules for Edge Corporations that accept
deposits in the United States, including the following:
(1)
Risk assets of an Edge Corporation engaged in banking may not exceed 7 per
cent of capital and surplus.
In general, a Edge Corporation's capital should
be adequate In relation to the scope and character of its activities.
(2)
Extensions of credit to one person by Edge Corporations engaged in banking
may not exceed 10 per cent of the Corporation's capital and surplus.
(3)
Extensions of credit to one person by a member bank and by its Edge Corporation
and foreign direct and indirect subsidiaries may not exceed the member bank's
lending limit.
(4)
Underwriting commitments shall be deemded extensions of credit for purposes
applying the lending limits.
Underwritings of equities by subsidiaries may
not represent more than 20 per cent of an issuer's equity or amount to more
than $2,000,000.
5.
Deposits in Edge Corporations:
The deposits of an Edge Corporation in the United States and abroad are
subject to reserve requirements and interest rate ceilings as though they were
member banks.
Edge Corporations may receive in the United States demand, time and
savings deposits from foreign governments and their agents or instrumentalities,
and from persons conducting business principally at their offices abroad and from
individuals residing abroad.
Deposits of the same types may be received In the United States from
other sources if the deposits are to be used for purposes specified in the
Regulation ((Section 211.4(e)(2)).
of
6.
Supervision of Edge Corporations:
Edge Corporations will be examined once yearly by Federal Reserve examiners.
Organizations subject to the Regulation are required to supervise and administer
their foreign branches and subsidiaries so as to ensure that their activities
conform to high standards of banking and financial prudence.
When investing in
joint ventures investors must keep themselves informed of the activities and
condition of the joint venture, and must maintain files of complete information
on all transactions available to examiners.
An Edge Corporation must make at least
two reports of its financial condition to the'Board yearly, at times and in the
form prescribed by the Board.
The Board may require that reports of condition or
other reports be published or made available for public inspection.
7.
Foreign Branches of Member Banks:
New Regulation K simplifies the regulatory approval process for the
establishment of foreign branches by member banks.
A member bank that has
established branches in two or more foreign countries may establish branches in
additional countries after 60 days' notice to the Board.
Additional branches
in the same country may be established without prior notification to the Board.
The Board transferred to Regulation K provisions of Regulation M concerning the
activities of foreign branches of member banks, with minor changes.
8.
Transition Rules:
Transactions that have been consummated or activities engaged in
pursuant to the Board's general or specific consent prior to June 8, 1979 may
be retained or continued.
Extensions of credit that exceed limitations set forth
in the Regulation may remain outstanding until they mature.
Investors that do
not meet the requirements of the Regulation on June 14, 1979 (Section 211.6(c)
and 211.5(b)(iii) respectively) must conform their accounts and investments by
June 14, 1981.
-7The Board has considered the question of Federal Reserve membership
for Edge Corporations and Is sanding to the Congress the Board's views on this
mstter.
The Board deferred action on the question of the spproprlateness of
foreign subsldlsrles of U.S. banking organizations lending to U.S. residents for
domestic purposes, sod will consider this matter separately.
The Board's order revising Regulation K is attached.
# # # # # # # # # # # #
36005
Extract from
Federal R egister
VOL. 44, NO. 120
Wednesday, June 20, 1979
pp. 36005 - 36012
FEDERAL RESERVE SYSTEM
12 CFR Part 211
[Reg. K; Dock* No. R-0204]
International Banking Operations; Final
Rule Revision
Board of Governors of the
Federal Reserve System.
a c t io n : Final regulation.
agency:
SUMMARY: The Board of Governors of
the Federal Reserve System has revised
its regulations governing the
international operations of member
banks, Edge and Agreement
Corporations, and bank holding
companies. Hie regulation updates
existing regulations and combines them
in one comprehensive regulation. With
respect to Edge Corporations in
particular, the International Banking Act
of 1978 (“IBA"] (92 Stat. 607) directed
the Board to revise its regulations so as
to further certain purposes including the
stimulation of competition in providing
International banking and financing
services throughout the United States.
The Board's actions are intended to
promote this and other purposes of the
IBA in addition to revising and
reorganizing the Board’s international
banking regulations. The regulation has
been adopted after review and
consideration of the extensive public
comment on the Board's original
proposals.
DATE: The regulation i effective June 14,
s
1979.
FOR FURTHER INFORMATION CONTACT:
Frederick R. Dahl, Associate Director,
Division of Banking Supervision and
Regulation (202-452-2727); or C. Keefe
Hurley. Jr., Senior Attorney, Legal
Division (202-452-3269), Board of
Governors of the Federal Reserve
System.
SUPPLEMENTARY INFORMATION: On
February 14,1979, the Board of
Governors of the Federal Reserve
System proposed a revision of its
regulations governing the international
operations of member banks, Edge
Corporations, and bank holding
companies. The Board is required by the
International Banking Act of 1978 (92
Stat. 607) (“IBA”) to revise its
regulations governing Edge Corporations
in the light of several amendments made
to section 25(a) of the Federal Reserve
Act (12 U.S.C. 611-631) (“Edge Act”) by
the IBA. The Board has also revised its
regulations dealing with the foreign
operations of member banks (Regulation
M. 12 CFR Part 213) and foreign
investment by bank holding companies
(§ 225 4(f) of Regulation Y, 12 CFR
225.4(f)). These regulations have been
combined in a comprehensive regulation
entitled “International Banking
Operations” to be designated as
Regulation K.
Section 3 of the IBA contains the first
significant amendment of the Edge Act
since its enactment in 1919. In amending
the Edge Act, the Congress declared that
Edge Corporations are to have powers
sufficiently broad to enable them to
compete with foreign banks in the
United States as well as abroad and to
provide all segments of the United
States economy a means of financing
international trade and, in particular,
exports. In addition, Edge Corporations
are to serve as a means of fostering the
participation of regional and smaller
banks in international banking and
financing and, in general, to stimulate
competition in making those services
available throughout the United States.
In addition to the general statement of
purposes for Edge Corporations, the IBA
made certain specific amendments all of
which had the effect of relaxing
statutory restrictions. For example,
aggregate amount limitations on
borrowings were eliminated, the
minimum 10 per cent reserve
requirement on deposits in the United
States was eliminated, and the
restriction on foreign ownership of Edge
Corporations was modified.
Approximately 100 letters of comment
concerning the proposed regulation were
submitted to the Board. The Board has
considered the proposed regulation and
the comments received in the light of the
purposes of the IBA, the Federal Reserve
Act, and the Bank Holding Company
Act. In many instances the regulation
has been modified in response to
comments received. Certain parts of the
regulation differ significantly from
existing regulations. These include
domestic operations of Edge
Corporations, investment procedures
and restrictions, lending limits and
capital requirements of Edge
Corporations.
Operation ofEdge Corporations i the
n
UnitedStates
(1) The revised regulation permits
Edge Corporations to establish branches
in the United States with the prior
approval of the Board. Comments on
this proposal were mixed. Those
favoring branching stated that it would
make Edge Corporation operations more
efficient and more competitive.
Opponents were critical of the proposal
because of the general prohibition
against interstate branching by member
banks (12 U.S.C. 36) and in light of the
perceived effects of branches on
competition.
Currently several banks operate Edge
Corporations in more than one State.
Edge Corporations are not subject to
provisions of Federal law that limit the
branching powers of member banks.
Permitting Edge Corporations to branch
will offer a more convenient
organizational form by which to conduct
business. Reducing the expenses
associated with establishing an Edge
Corporation in a new market may make
international banking services available
at more locations throughout the United
States and encourage banks that do not
currently have extensive Edge
Corporation operations to consider this
form of international banking and
financing.
After considering the comments,
however, the Board has revised its
proposal by setting forth the factors that
the Board will consider in acting on
applications to establish Edge
Corporations branches (and to form
Edge Corporations). The Board will
publish notice of the filing of such
applications in the Federal Register and
afford interested persons an opportunity
to comment on the proposals.
(2) The proposed regulation would
have permitted an Edge Corporation to
provide full banking services to a
customer that was principally engaged
in international or foreign commerce.
According to the proposal, a customer
would be presumed to be principally
engaged in international or foreign
commerce if, on an unconsolidated
basis, two-thirds of its purchases or
sales were directly attributable to
international or foreign commerce. This
proposal, if adopted, would have
represented a departure from existing
rules that require verification of the
international character of each
transaction with an Edge Corporation.
The Board.invited comment regarding
the desirability of the qualifying
customer approach, the appropriate
criteria for designating an international
customer, the number and size of firms
that would qualify the effects of using a
different percentage, and the desirability
of using a test other than purchases or
sales in international commerce such as
the proportion of the customer’s
business devoted to exports.
Many comments were received on this
proposal; however, the information
submitted was not sufficient to enable
the Board to assess adequately the
likely effects of the proposal.
Accordingly, the Board decided to defer
action on the qualified customer concept
pending further consideration of the
issue. The Board intends to publish a
revised proposal for comment in the
near future.
(3) The regulation permits Edge
Corporations to finance the production
of goods and services directly for
export. The proposal would have
permitted the financing of goods
“readily identifiable" as being for
export. Some comments indicated that
this requirement could be unduly
restrictive by limiting financing to those
goods that can be isolated during the
process of production as being for
export. The regulation would permit the
financing of goods for export that are
identifiable as being directly for export
orgoods for which export orders have
been received. Under the latter test on
Edge Corporation could finance
nonsegregable goods for export if export
orders have been received.
(4) The regulation permits an Edge
Corporation to issue negotiable
certificates of deposit to foreign
governments and foreign persons or in
connection with international
transactions. The Board’s proposal
would have limited the Edge
Corporation’s authority to issue such
instruments to nonnegotiable
certificates of deposit. Comments
indicated that the limitation would place
Edge Corporations at a competitive
disadvantage in relation to other
institutions, including branches of
foreign banks.
Lending Limits
The regulation imposes a limit on the
direct and indirect loans that an Edge
Corporation engaged in banking can
make to one person. Except as
otherwise permitted by the Board, such
loans may not exceed 10 percent of the
Edge Corporation’s capital and surplus.
In addition, loans to one person made
by a member bank and by its direct and
indirect subsidiaries formed or acquired
under this regulation are to be
aggregated and the total may not exceed
the amount that the member bank alone
may make to that person.
The Board’s original proposal would
have placed lending limits on Edge
Corporations not engaged in banking
and on their subsidiaries as well as on
the subsidiaries of member banks and
bank holding companies. Comments
were generally opposed to this proposal
as being unduly restrictive. It is the
Board's judgment that the prudential
purposes of the lending limits can best
be served by placing limits on all loans
to one person made by affiliates of
member banks organized or acquired
under this regulation and by
establishing a separate limit for Edge
Corporations that are engaged in
banking.
CapitalRequirements
The regulation requires that Edge
Corporations engaged in banking
maintain capital and surplus equal to at
least 7 percent of the Edge Corporation’s
risk assets. The Board's proposal would
have required that capital be maintained
at 6 percent of total assets. Most of the
comments on this issue stated that the
proposal failed to account for the
composition and quality of an Edge
Corporation’s assets. Accordingly the
capital standard adopted by the Board
would be based on risk assets.
Several comments expressed the view
that no numerical capital standard
should be set for Edge Corporations
engaged in banking. It continues to be
the ^oard’s view that Edge Corporations
should be financially sound in their own
right. Thus, the Board has retained a
minimum capital standard and has set
that standard at 7 percent.
InvestmentProcedures and Limitations
(1) Section 211.5 contains revised
application procedures designed to
reduce the number of routine investment
applications that must be acted on by
the Board. The revised regulation
provides for an expanded use of the
general consent and the introduction of
a prior notice procedure. Specific
consent will be necessary only for
investments which because of their size
or some other aspect of the proposal,
deserve Board consideration. T ie
expanded general consent will allow
kvM tM nts of up to $2 ttilHon in
subsidiaries and joint ventures so loaf
as they arc engaged in oertain listed
activities, and will allow portfolio
investments in other companies up to
the same dollar amount. Beyond that
amount, investments can be made in
subsidiaries and joint ventures engaged
in listed activities up to 10 percent of an
Edge Corporation’s capital after 60 days'
notice has been given to the Board. All
other investments, either involving
larger amounts or activities not listed in
the regulation, will require specific
Board approval.
(2)
The activities listed in the
regulation are those of a banking or
financial nature that the Board has
generally authorized for U.S. banking
organizations to engage in abroad. Until
now, the activities that could be
engaged in abroad could only be
determined by reference to individual
Board consents to particular
investments. Listing the activities in the
regulation should afford a broader
understanding of the investment powers
and foreign activities of Edge
Corporations, member banks, and bank
holding companies. In addition,
inclusion of the list permits
simplification of approval procedures
for investments in companies engaged in
those activities. Provision is made for
applications to engage in activities not
on the list and for expansion of the list
OtherMatters
At the time that it published the
regulation for comment, the Board also
invited comment on two other issues.
The first issue involved the question of
whether foreign subsidiaries of United
States banking organizations should be
permitted to lend to United States
residents. The second issue was
whether the statutory prohibition
against Edge Corporations being
members of the Federal Reserve System
should be removed. Most of the
comments that addressed these issues
favored the wider lending authority and
opening up the possibility of System
membership. The Board is submitting
recommendations to Congress on the
membership issue as required by the
IBA. The issue of loans to United States
residents will be taken up as a separate
matter.
Part 211 is added to 12 CFR to read as
set forth below:
PART 211—
'INTERNATIONAL
BANKING OPERATIONS
Sm .
211.1
Authority, purpose, and scope
211.2
D s fin ib q a s .
211.3 Faraiga k u i l m of n e n b e r basks
211.4 ld g * and Ay i n n t Corporations.
211.4 k r u t a B r i i in other organization*
211J Leading Mnita and capital
ro q afcaiails.
211.7 Buparvisioa aad reporting.
Authority: Federal Reserve Act (12 U.S.C.
221 et seq); The Bank Holding Company Act
of 1956 (12 U.S.C. 1841 et seq); and the
International Banking Act of 197S (Pub. L. 95
.369; 92 Stat. 607; 12 U.S.C. 3101).
$211.1 Authority, purpose, and scope.
(a) Authority. This Part is issued by
the Board of Governors of the Federal
Reserve System (“Board”) under the
authority of the Federal Reserve Act (12
U.S.C. 221 e s q ) (“FRA”); the Bank
t e.
Holding Company Act of 1956 (12 U.S.C
1841 ets q ) (“BHCA"); and the
e.
International Banking Act of 1978 (92
Stat. 607) (“IBA”).
(b) Purpose and scope. This Part is in
furtherance of the purposes of the FRA.
the BHCA, and the IBA. It applies to
corporations organized under section
25(a) of the FRA (12 U.S.C. 611-631),
“Edge Corporations”; to corporations
having an agreement or undertaking
with the Board under section 25 of the
FRA (12 U.S.C. 601-604(a)), “Agreement
Corporations”; to member banks with
respect to their foreign branches and
investments in foreign banks under
section 25 of the FRA (12 U.S.C. 601604(a));1and to bank holding companies
with respect to the exemption from the
nonbanking prohibitions of the BHCA
afforded by section 4(c)(13) of the BHCA
(12 U.S.C. 1843(c)(13)).
§ 211.2 Definitions.
For the purposes of this part:
(a) An “affiliate” of an organization
means any company of which the
organization is a direct or indirect
subsidiary, any other direct or indirect
subsidiary of that company, and any
direct or indirect subsidiary of the
organization.
(b) “Capital and surplus” means paidin and unimpaired capital and surplus,
and includes undivided profits but does
not include the proceeds of capital notes
or debentures.
(c) “Directly or indirectly” when used
in reference to activities or investments
of an organization means activities or
investments of the organization or of
any subsidiary of the organization.
(d) An Edge Corporation is "engaged
in banking” if it is ordinarily engaged in
the business of accepting deposits in the
United States from nonaffiliated
persons.
(e) "Engaged in business in the United
States” means maintaining and
operating an office (other than a
representative office) or subsidiary in
die United States.
1Saation V of Ike FRA, which ra in s to national
benklag essoaeHoao, also a p p let to State nraabar
b asks of the Fedaval Raaarvc S jstem by virUw e f
seettoa s o f the FRA (12 I).8X1 an).
two or more foreign countries may
establish initial branches in additional
foreign countries after 60 days’ notice to
the Board; and (2) without prior
approval or prior notice, a member bank
may establish additional branches in
any foreign country in which it operates
one or more branches. Authority to
establish branches through prior
approval or prior notice shall expire one
year from the earliest date on which it
could have been exercised, unless
extended by the Board. A member bank
sh'all inform the Board within 30 days of
the opening, closing or relocation of a
branch and the address of a new or
relocated foreign branch.
(b) Further powers of foreign
branches. In addition to its general
banking powers, and to the extent
consistent with its charter, a foreign
branch of a member bank may engage in
the fallowing activities so far as usual in
connection with the business of banking
in the country where it transacts
business:
(1) Guarantee customers’ debts or
otherwise agree for their benefit to make
payments on the occurrence of readily
ascertainable events,2 if the guarantee
or agreement specifies a maximum
monetary liability; but, except to the
extent that the member bank is fully
secured, it may not have liabilities
outstanding for any person on account
of such guarantees or agreements which
when aggregated with other obligations
of the same person exceed the limit
contained in section 5200 of the Revised
Statutes (12 U.S.C. 84);
(2) Accept drafts or bills of exchange
drawn upon it subject to the amount
limitations of section 13 of the FRA (12
U.S.C. 372);
(3) Invest in (i) the securities of the
central bank, clearing houses,
governmental entities, and governmentsponsored development banks of the
country in which the foreign branch is
located, (ii) other debt securities
eligible to meet local reserve or similar
requirements, and (iii) shares of
professional societies, schools, and the
like necessary to the business of the
branch; however, the branch's total
investments under this provision
(exclusive of securities held as required
by the law of that country or as
authorized under section 5136 of the
Revised Statutes (12 U.S.C. 24)) shall not
exceed one per cent of its total deposits
1211.3 Foreign Branches of member
on the preceding year-end call report
banks.
(a) Establishment of foreign branches. date (or on the date of acquisition in the
A member bank may establish a foreign
1 “Readily ascertainable events” include, but are
branch with prior approval of the Board.
not limited to, events such as nonpayment of taxes,
Unless otherwise advised by the Board:
rentals, customs duties, or costs of transport and
(1) A member bank that has branches in
loss or nonconformance of shipping documents.
(f) “Foreign" or “foreign country”
refers to one or more foreign nations,
and includes the overseas territories,
dependencies, and insular possessions
of those nations and of the United
States, and the Commonwealth of
Puerto Rico.
(g) “Foreign bank” means an
organization that: is organized under the
laws of a foreign country; engages in the
business of banking; is recognized as a
bank by the bank supervisory or
monetary authority of the country of its
organization or principal banking
operations; receives deposits to a
substantial extent in the regular course
of its business; and has the power to
accept demand deposits.
(h) “Foreign branch” means an office
of an institution which is located outside
the country under the laws of which the
institution is organized, at which a
banking or financing business is
conducted.
(i) “Investment” means the ownership
or control of shares, including binding
commitments to acquire shares, and
other contributions to the capital
accounts of an organization, including
the holding of an organization's
subordinated debt when shares of stock
of the organization are also held directly
or indirectly by an investor.
(j) “Investor” means an Edge
Corporation, Agreement Corporation,
bank holding company, or member bank.
(k) “Joint venture" is an organization
20 percent or more of the voting stock of
which is held directly or indirectly by an
investor or by an affiliate of the
investor, but which is not a subsidiary of
the investor.
(1) “Listed activities" means the
activities specified in § 211.5(d).
(m) “Organization" means a
corporation, government, partnership,
association, or any other legal or
commercial entity.
(n) “Person” means an individual or
an organization.
(o) “portfolio investment" means an
investment in an organization other than
a subsidiary or joint venture.
(p) “Subsidiary” means an
organization more than 50 percent of the
voting stock of which is held directly or
indirectly by the investor, or which is
otherwise controlled or capable of being
controlled by the investor or an affiliate
of the investor.
case of -a newly established branch that
has not so reported);
(4) Underwrite, distribute, buy, and
sell obligations of the national
government of the country in which the
branch is located, obligations of an
agency or instrumentality of the national
government, and obligations of a
municipality or other local or regional
governmental entity of the country;
however, no member bank may hold, or
be under commitment with respect to,
obligations of the government or
governmental entities of a country as a
result of underwriting, dealing, or
purchasing for the bank’s own account
an aggregate amount exceeding 10 per
cent of the member bank's capital and
surplus;
(5) Take liens or other encumbrances
on foreign real estate in connection with
its extensions of credit, whether or not
of first priority and whether or not the
real estate is improved or has been
appraised, and without regard to
maturity or amount limitations or
amortization requirements of section 24
of the FRA (12 U.S.C. 371);
(6) Extend credit up to $100,000 or its
equivalent to an officer of the bank
residing in the country in which the
foreign branch is located to finance the
acquisition or construction of living
quarters to be used as the officer's
residence abroad, provided any such
credit extension is reported promptly to
the branch's home office; however,
when necessary to meet local housing
costs, such amount may be exceeded
with the specific prior approval of the
member bank's board of directors;
(7) Act as insurance agent or broker;
(8) Pay to an employee of the branch,
as part of an employee benefit program,
a greater rate of interest than that paid
to other depositors of the branch; and
(9) Engage in rep u rchase
arran gem en ts involving com m od ities
and secu rities th at are the fu n ctional
equ iv alen t o f e x te n sio n s o f credit.
(c) Otherpermissible a t v t e . A
ciiis
member bank that is of the dpinion that
activities other than those specified in
this section are usual in connection with
the transaction of the business of
banking in the places where its
branches transact business may apply to
the Board for permission to engage in
such activities.
(d) Reserves. Reserves shall be
maintained ^against foreign branch
deposits when required by Part 204 of
this chapter (Regulation D).
§ 211.4 Edge and agreement corporations.
(a) Organization. (1) A proposed Edge
Corporation shall become a body
corporate when the Board issues a
preliminary permit approving its
proposed name, articles of association,
and organization certificate. The name
shall include “international,” “foreign,”
"oVerseas,” or some similar word, but
may not resemble the name of another
organization to an extent that might
mislead or deceive the public. The
factors that will be considered by the
Board in acting on a proposal to
organize an Edge Corporation include:
(1) The financial condition and history
of the applicant;
(ii) The general character of its
management;
(iii) The convenience and needs of the
community to be served with respect to
international banking and financing
services; and
(iv) The effects of the proposal on
competition.
The Board will publish in the Federal
Register notice of any such proposal and
will give interested persons an
opportunity to express their views on
the proposal.
(2) After the Board issues a
preliminary permit, the Edge
Corporation may elect officers and
otherwise complete its organization,
invest in obligations of the United States
Government, and maintain deposits
with banks, but it may not exercise any
other powers until the Board has issued
a final permit to commence business. No
amendment to the articles of association
shall become effective until approved by
the Board.
(b) Nature and ownership ofshar s
e.
(1) Shares of stock in an Edge
corporation may not include no-par
value shares and shall be issued and
transferred only onjts books and in
compliance with section 25(a) of the
FRA. The share certificates of an Edge
Corporation shall (i) name and describe
each class of shares indicating their
character and any unusual attributes
such as preferred status or lack of voting
rights; and (ii) conspicuously set forth
the substance of (A) limitations upon the
rights of ownership and transfer of
shares imposed by section 25(a) of the
FRA, and (B) rules that the Edge
Corporation shall prescribe in its by
laws to ensure compliance with this
paragraph. Any change in status of a
shareholder that causes a violation of
section 25(a) of the FRA shall be
reported to the Board as soon as
possible, and the Edge Corporation shall
take such action as the Board may
direct.
(2) One or more foreign or domestic
institutions referred to in section 3(f) of
the IBA may apply for the Board's prior
(ii) Consist of collateral or funds to be
approval to acquire a majority of the
used for payment of obligations to the
shares of the capital stock of an Edge
Edge Corporation;
Corporation. In acting on an application
(iii) Consist of the proceeds of
by a foreign institution that is not
collections abroad that are to be used to
subject to the IBA or the BHCA, the
pay for exported or imported goods or
Board will impose any conditions that
for other costs of exporting or importing
are necessary to prevent undue
concentration of resources, decreased or or that are to be periodically transferred
to the depositor’s account at another
unfair competition, conflicts of interest,
financial institution;
or unsound banking practices in the
(iv) Consist of the proceeds of
United States. The aggregate amount
extensions of credit by the Edge
invested in Edge Corporations by a
Corporation; or
foreign institution shall not exceed 10
(v) Represent compensation to the
percent of the foreign institution's
Edge Corporation for extensions of
capital and surplus.
credit or services to the customer.
(c) Branches. (1) With prior Board
(3) Use offunds i the UnitedS a e .
n
tts
approval, an Edge Corporation may
Funds of an Edge Corporation not
establish branches in the United States.
currently employed in its international
In acting on a proposal to establish a
or foreign business, if held or invested in
branch in the United States, the Board
the United States, shall be in the form of
will consider the same factors
cash, deposits with banks, and money
enumerated in S 211.4(a)(1). The Board
market instruments such as bankers’
will publish in the Federal Register
acceptances, obligations of or fully
notice of any proposal to establish a
guaranteed by Federal, State, and local
branch in the United States and will
governments and their instrumentalities,
give interested persons an opportunity
repurchase agreements, Federal funds
to express their views on the proposal.
sold, and commercial paper.
(2) An Edge Corporation may
(4) General a t v t e . Subject to the
ciiis
establish branches abroad in
limitations of section 25(a) of the FRA
accordance with the procedures in
and § 211.6, an Edge Corporation may
§ 211.3(a).
engage in the following activities to the
(d) Reserve requirements and i t r s
n e e t extent consistent with sound banking
ratel m t t o s The deposits of an Edge practices:
iiain.
Corporation are subject to Parts 204 and
(i) Issue obligations to domestic
offices of other banks (including
217 of this chapter (Regulations D and
pruchases of Federal funds) or to the
Q) in the same manner and to the same
extent as if the Edge Corporation were a United States or any of its agencies;
(ii) Incur indebtedness from a transfer
member bank.
of direct obligations of, or obligations
(e) Permissible a t v t e i the
ciiis n
UnitedS a e . An Edge Corporation may that are fully guaranteed as to principal
tts
and interest by, the United States or any
engage in activities in the United States
agency thereof that the Edge
that are permitted by the sixth
Corporation is obligated to repurchase;
paragraph of section 25(a) of the FRA
(iii) Issue long-term subordinated debt
and in such other activities as the Board
that does not qualify as a “deposit"
determines are incidental to
under Part 204 of this Chapter
international or foreign business. The
(Regulation D);
following activities will ordinarily be
(iv) Finance the following; (A)
considered incidental to an Edge
Contracts, projects, or activities
Corporation’s international or foreign
performed substantially abroad; (B) the
business;
importation into or exportation from the
( )Depositsfrom foreigngovernments
1
United States of goods, whether direct
andpersons. An Edge Corporation may
or through brokers or other
receive in the United States demand,
intermediaries; (C) the domestic
savings, and time deposits (including
shipment or temporary storage of goods
negotiable certificates of deposits) from
being imported or exported (or
foreign governments and their agencies
accumulated for export); and (D) the
and instrumentalities, persons
assembly or repackaging of goods
conducting business principally at their
imported or to be exported;
offices or establishments abroad, and
(v) Finance the costs of production of
individuals residing abroad.
goods and services for which export
( )Depositsfrom otherpersons. An
2
orders have been received or which are
Edge Corporation may receive in the
identifiable as being directly for export;
United States demand, savings, and time
( i Assume or acquire participations
v)
deposits (including negotiable
in extensions of c e i , or acquire
rdt
certificates of deposits) i such deposits:
f
obligations arising from transactions the
() Are to be transmitted abroad;
i
Edge Corporation could have financed;
36010
diversification of risks, suitable
(vii) Guarantee a customer’s debts or
liquidity, and adequacy of capital.
otherwise agree for the customer’s
Subject to these considerations and the
benefit to make payments on the
other provisions of this section, it is the
occurrence of readily ascertainable
Board's policy to allow activities abroad
events,3 if the guarantee or agreement
to be organized and operated as best
specifies the maximum monetary
meets corporate policies.
liability thereunder and is related to a
(b) Investment limitations. (1) An
type of transaction described in
investor, in accordance with the
paragraphs (e)(4](iv) and (4)(v) of this
investment procedures described in
section;
paragraph (c) of this section, may
(viii) Receive checks, bills, drafts,
acceptances, notes, bonds, coupons, and directly or indirectly:
(1) Invest in a subsidiary that engages
other securities for collection abroad,
solely in listed activities or in such other
and collect such instruments in the
activities as the Board has determined
United States for a customer abroad;
(ix) Hold securities in safekeeping for, in the circumstances of a particular case
are permissible;
or buy and sell securities upon the order
(ii) Invest in a joint venture provided
and for the account and risk of a person;
that, unless otherwise permitted by the
(x) Act as paying agent for securities
Board, not more than .10 percent of the
issued by foreign governments or other
joint venture’s consolidated assets or
entities organized under foreign law;
(xi) Act as trustee, registrar,
revenues shall be attributable to
conversion agent, or paying agent with
activities that would not be permissible
respect to any class of securities issued
for a subsidiary;
to finance foreign activities and
(iii) Make portfolio investments
distributed solely outside the United
(including securities held in trading or
States;
dealing accounts) in an organization if
(xii) Make private placements of
the total direct and indirect portfolio
participations in its investments and
investments in organizations engaged in
extensions of credit; however, except to
activities that are not permissible for
the extent permissible for member
joint ventures does not at any time
banks under section 5136 of the Revised
exceed 100 per cent of the investor’s
Statutes (12 U.S.C. 24), no Edge
capital and surplus.4
Corporation may otherwise engage in
(2) A member bank’s direct
the business of selling or distributing
investments under section 25 of the FRA
securities in the United States; and
shall be limited to foreign banks and to
(xiii) Buy and sell spot and forward
foreign organizations formed for the sole
foreign exchange.
purpose of either holding shares of a
(5)
Other permissible activities. An foreign bank or performing nominee,
Edge Corporation that is of the opinion
fiduciary, or other banking services
that other activities in the United States
incidental to the activities of a foreign
would be incidental to its international
branch or foreign bank affiliate of the
or foreign business may apply to the
member bank.
Board for such a determination.
(3) Subsidiaries may establish
(f)
Agreement Corporations. With the branches in accordance with the
prior approval of the Board, a member
procedures set forth in § 211.3(a).
bank or bank holding company may
(4) In computing the amount that may
invest in a federally or State chartered
be invested in any organization under
corporation that has entered into an
this section there shall be included any
agreement or undertaking with the
unpaid amount for which the investor is
Board that it will not exercise any
liable and any investments by affiliates.
power that is impermissible for an Edge
(5) An investor shall dispose of an
Corporation under this part.
investment promptly (unless the Board
authorizes retention) if;
§ 211.5 Investments In other
(i) The organization invested in (A)
organizations.
engages in the business of underwriting,
(a)
General policy. Activities of
selling or distributing securities in the
investors abroad, whether conducted
United States; (B) engages in the general
directly or indirectly, shall be confined
business of buying or selling goods,
to those of a banking or financial nature
wares, merchandise, or commodities in
and those that are necessary to carry on
the United States; or (C) transacts
such activities. In doing so, investors
business in the United States that is not
shall at all times act in accordance with
incidental to its international or foreign
high standards of banking or financial
business;
prudence, having due regard for
(ii) In the ease of a subsidiary, it
* “RaadDy asaaaiam abit avaoto” m la d i, bat ara Mgages bn m activity other then that
■o( United to, a v a il* awah a * a o a p a p a m t a f taxaa,
riatala. a m to a * dutiee, ar ooat* af tmaaport and
loaa ar K n i a i f a n n u i a a f ahippiaf docaaiaata.
4For tUa parpoac, a dkaot tobai diary ai a
■ aaib ar baak ia daanad to ba aa iavaator.
which the Board has determined to be
permissible; or in the case of j i t
on
venture, i engages i an impermissible
t
n
activity beyond that described in
paragraph ( ) l ( i of this section; or
b()i)
(i) After notice and opportunity for
ii
hearing, the investor i advised by the
s
Board that i s investment i
t
s
inappropriate under the FRA, the BHCA,
or t i P r .
hs at
( ) Investment procedures.* Direct and
c
indirect investments shall be made in
accordance with the general consent,
notice, or specific consent procedures
contained in t i section. The Board
hs
may at any time, upon notice, suspend
the general consent and notification
procedures with respect to any investor
or with respect to the acquisition of
shares of companies engaged in
particular kinds of a t v t e . An
ciiis
investor must receive prior specific
consent of the Board for investment in
i sf r t subsidiary, i sf r tjoint venture,
t is
t is
and i s f r tportfolio investment unless
t is
an a f l a e has made such investments.
fiit
Authority to make investments under
prior notice or prior consent shall expire
one year from the earliest date on which
i could have been exercised, unless
t
extended by the Board.
(1) General consent. The Board grants
i s genera] consent for the following:
t
()Any investment in a j i t venture
i
on
or subsidiary, and any p r f l o
otoi,
investment, i:
f
(A) The organization i not engaged in
s
business in the United States; and
( ) The total amount invested does
B
not exceed the lesser of (7) $2 million or
(2) five per cent of the investor’s capital
and surplus in the case of a member
bank, bank holding company, or Edge
Corporation engaged in banking, or 25
per cent of the investor's capital and
surplus in the case of an Edge
Corporation not engaged in banking;
(i Any additional investment in an
i)
organization i:
f
(A) The additional investment does
not cause the organization t be a direct
o
or indirect subsidiary or j i t venture of
on
the investor, and
(B) The additional amount invested
does not in any calendar year exceed 10
per cent of the investor’ historical cost
s
plus dividends for that year. The amount
that may be invested under t i
hs
provision of the general consent may, i
f
not exercised, be carried forward and
accumulated for up to five consecutive
years; or
* Whan a i u i i B T , tba f a a a i l aaaaaat aad prior
•otUaatioo p ro rtfo a s of M a MaHaa aaw tftoli Ika
Board'! approval aackr A a
paragraph ■I
■ • d ial 2S(i) of Ike FRA far I i t h Im b I i b oxoair
a f tfca U allattaaa (baraia baaad aa lapftal end
la y b i.
(iii) Any investment that is acquired
from an affiliate at net asset value.
(2) Priorn t f c t o . An investment
oiiain
in a subsidiary or joint venture that does
not qualify under the general consent
procedure, may be made after the
investor has given 60 days' prior written
notice to the Board if the total amount to
be invested does not exceed 10 per cent
of the investor’s capital and surplus. The
notification period shall commence at
the time the notice is accepted. The
Board may, during the notification
period, disapprove the investment,
suspend the period, or require that an
application be filed by the investor for
the Board's specific consent.
(3) Specificconsent. Any investment
that does not qualify for either the
general consent or the prior notification
procedure shall not be consummated
without the specific consent of the
Board.
(d) Listeda t v t e . The Board has
ciiis
determined that the following activities
are usual in connection with the
transaction of banking or other financial
operations abroad:
(1) Commercial banking;
(2) Financing, including commercial
financing, consumer financing, mortgage
banking, and factoring;
(3) Leasing real or personal property if
the lease serves as the functional
equivalent of an extension of credit to
the lessee of the property;
(4) Acting as fiduciary;
(5) Underwriting credit life insurance
and credit accident and health
insurance related to extensions of credit
by the investor or its affiliates;
(6) Performing services for other direct
or indirect operations of a United States
banking organization, including
representative functions, sale of long
term debt, name saving, and holding
assets acquired to prevent loss on a debt
previously contracted in good faith:
(7) Holding the premises of a branch
of an Edge Corporation or member bank
or the premises of a direct or indirect
subsidiary;
(8) Providing investment, financial or
economic advisory services;
(9) General insurance brokerage;
(10) Data processing;
(11) Managing a mutual fund if the
fund's shares are not sold or distributed
in the United States or to United States
residents and the fund does not exercise
managerial control over the firms in
which it invests;
(12) Performing management,
consulting services provided that such
services when rendered with respect to
the United States market shall be
restricted to the initial entry;
(13) Underwriting, distributing, and
dealing in debt and equity securities
outside the United States, provided that
no underwriting commitment by a
subsidiary of an investor for shares of
an issuer may exceed $2 million or
represent 20 per cent of the capital and
surplus or voting stock of an issuer
unless the underwriter is covered by
binding commitments from
subunderwriters or other purchasers;
(14) Engaging in other activities that
the Board has determined by regulation
or order are closely related to banking
under section 4(c)(8) of the BHCA.
An investor that is of the opinion that
other activities are usual in connection
with the transaction of the business of
banking or other financial operations
abroad and are consistent with the FRA
or the BHCA may apply to the Board for
such a determination.
(e) Debtspreviously c
ontracted.
Shares of stock or other evidences of
ownership acquired to prevent a loss
upon a debt previously contracted in
good faith shall not be subject to the
limitations or procedures of this section;
however, the shares or evidences of
ownership shall be disposed of
promptly, but in no event later than two
years after their acquisition unless the
Board authorizes retention for a longer
period.
§ 211.6 Lending limits and capital
requirements.
(a) Acceptances ofEdge Corporations.
An Edge Corporation shall be and
remain fully secured for (1) all *
acceptances outstanding in excess of
twice its capital and surplus; and (2) all
acceptances outstanding for any one
person in excess of 10 per cent of its
capital and surplus. These limitations
shall not apply (i) if the excess
represents the international shipment of
goods and the Edge Corporation is fully
covered by primary obligations to
reimburse it that are also guaranteed by
banks or bankers, or (ii) if the Edge
Corporation is covered by participation
agreements from other banks.
(b) L a i i i s ofoneperson. (1)
iblte
Except as the Board may otherwise
specify:
(i) the liabilities of any person to an
Edge Corporation engaged in banking
and to its direct or indirect subsidiaries
shall not exceed 10 per cent of the Edge
Corporation's capital and surplus;
(ii) the total liabilities of any person to
a foreign bank or Edge Corporation that
is a subsidiary of a member bank, and to
subsidiaries of such foreign bank, Edge
Corporation or member bank when
combined with liabilities of the same
person to the member bank and its
a f l a e , shall not exceed the member
fiits
bank’ limitation on loans to one person.
s
(2) "Liabilities'' includes: Ineligible
acceptances outstanding; obligations for
money borrowed; investments in
another organization (valued at original
cost) except where that organization is a
direct or indirect subsidiary; unsecured
obligations resulting from the issuance
of guarantees or similar agreements;
underwriting commitments to an issuer
of securities; in the case of a partnership
or firm, obligations of its members, in
the case of a corporation, obligations
incurred for its benefit by other
corporations that it controls; and in the
case of a foreign government, the
liabilities of its departments or agencies
deriving their current funds principally
from general tax revenues.
(3) The limitations of this paragraph
do not apply to:
(i) Deposits of banks and Federal
funds purchased;
(ii) Bills or drafts drawn in good faith
against actual goods and on which two
or more parties are liable;
(iii) Any acceptance that has not
matured and is not held by the acceptor;
(iv) Obligations to the extent secured
by cash collateral; or
(V) Obligations to the extent
supported by the full faith and credit of
the following:
(A) The United States or any of its
departments, agencies, establishments,
or wholly-owned corporations (including
obligations to the extent insured against
foreign political and credit risks by the
Export-Import Bank of the United States
or the Foreign Credit Insurance
Association), the International Bank for
Reconstruction and Development, the
International Finance Corporation, the
International Development Association,
the Inter-American Development Bank,
or the Asian Development Bank;
(B) Any organization if at least 25 per
cent of such an obligation or of the total
credit is also supported by the full faith
and credit of, or participated in by any
institution designated in paragraph
(b)(3)(v)(A) of this section in such
manner that default to the lender will
necessarily include default to that
entity. The total liabilities of such
person shall at no time exceed 100 per
cent of the capital and surplus of the
lender or the parent Edge Corporation.
(c) Loans t foreign banks. A member
o
bank that holds directly or indirectly
shares in a foreign bank may make
loans to that foreign bank without
regard to section 23A of the FRAT
(d) C p t l z t o . An Edge
aiaiain
Corporation shall at a l times be
l
capitalized in an amount that i
s
adequate in relation to the scope and
36012
(2) Edge Corporations, member banks,
and bank holding companies shall file
such reports on their foreign operations
as the Board may require.
(3) A member bank, Edge Corporation
or a bank holding company shall report
within 30 days any acquisition or
dispdsition of shares in a manner
prescribed by the Board.
(d) Filing procedures. Unless
otherwise directed by the Board,
applications, notifications, and reports
S211.7 Supervision and reporting.
required by this Part shall be filed with
(a) Supervision. (1) Investors shall
the Federal Reserve Bank of the district
supervise and administer their foreign
in which the parent bank or bank
branched and subsidiaries in such a
holding company is located, or if none,
manner as to ensure that their
the Federal Reserve Bank of the district
operations conform to high standards of
in which the applying or reporting
banking and financial prudence.
institution is located. Instructions and
Effective systems of records, controls,
forms for such applications,
and reports shall be maintained to keep
notifications and reports are available
management informed of their activities
from the Federal ~Reserve Bank.
and condition. Such systems should
(e) Transition. (1) Transactions that
provide, in particular, information on
have been consummated or activities
risk assets, liquidity management, and
engaged in pursuant to the Board’s
operations of controls and conformance
general or specific consent prior to June
to management policies. Reports on risk
8,1979, may be retained or continued.
assets should be sufficient to permit an
Conditions imposed or undertakings in
appraisal of credit quality and
connection with suGh investments that
assessment of exposure to loss, and for
are inconsistent with this Part shall be
this purpose provide provide full
superseded by this part.
information on the condition of material
(2) Extensions of credit in excess of
borrowers. Reports on the operations of
the limitations of section 211.6(d) that
controls should include the internal and
were outstanding on June 8,1979, may
external audits of the branch or
remain outstanding until the date of
subsidiary.
maturity.
(2] Investors shall maintain sufficient
(3) Edge Corporations whose accounts
information with respect to joint
or investments do not conform to
ventures to keep informed of their
§§ 211.6(c) or 211.5(b) on June 14,1979,
activities and condition. Such
shall conform such accounts and
information shall include audits and
investments by June 14,1981.
other reports on financial performance,
By order of the Board of Governors,
risk exposure, management policies, and
effective June 13,1979.
operations of controls. Complete
Griffith L. Garwood,
information shall be maintained on all
Deputy Secretary o f the Board.
transactions with the joint venture by
[FR Doc. 79-1&185 Filed 6-19-79; 8:45 am]
the investor and its affiliates.
61LUNG CODE 8210-01-M
_ (3) The reports and information
_
specified in paragraphs (a) (1) and (2) of
this section shall be made available to
12 CFR Parts 211,213, and 225
examiners of the appropriate bank
supervisory agencies.
International Banking Operations;
(b) Examinations. Examiners
Rescission of Regulations K, M and
appointed by the Board shall examine
part of Regulation Y
each Edge Corppration once a year. An
Edge Corporation shall make available
agency : Board of Governors of the
to examiners sufficient information to
Federal Reserve System.
assess its condition and operations and
ACTION: Rescission of regulations.
the condition and activities of any
organization whose shares it holds.
SUMMARY: The Board is revising its
(c) Reports. (1) Each Edge Corporation regulations governing international
shall make at least two reports of
banking operations. Current Regulations
condition annually to the Board at such
K (12 CFR Part 211), M (12 CFR Part 213),
times and in such form as the Board may and S 225.4(f) of Regulation Y (12 CFR
prescribe. The Board may require that
225.4(f)) are being revised and combined
statements of condition or other reports
in new Regulation K (12 CFR Part 211)
be published or made available for
which is set forth in an accompanying
public inspection.
notice. Regulations K, M and that
character of its activities. In the caae of
an Edge Corporation engaged in
banking, its capital and surplus shall be
not less than seven per cent of risk
assets. For this purpose, risk assets shall
be deemed to be all assets on a
consolidated basis other than cash,
amounts due from banking institutions
in the United States, United States
Government securities, and Federal
funds sold.
section of Regulation Y are, therefore,
rescinded.
EFFECTIVE DATE: June 14,1979.
FOR FURTHER INFORMATION CONTACT:
Frederick R. Dahl. Associate Director,
DivisioA of Banking Supervision and
Regulation (202-452-2727); or C. Keefe
Hurley. Jr., Senior Attorney, Legal
Division (202-452-3269), Board of
Governors of the Federal Reserve
System.
The following actions are taken under
the Board’s authority under sections 125
and 25(a) of the Federal Reserve Act (12
U.S.C. 601 and 611); section 5 of the
Bank Holding Company Act (12 U.S.C.
1844); and section 13 of the International
Banking Act (12 U.S.C. 3108). Title 12
CFR is amended as follows:
PART 211—CORPORATIONS
ENGAGED IN FOREIGN BANKING AND
FINANCING UNDER THE FEDERAL
RESERVE ACT [DELETED]
1.12 CFR Part 211 is deleted in its
entirety.
PART 213—FOREIGN ACTIVITY OF
NATIONAL BANKS [DELETED]
2.12 CFR Part 213 is deleted in its
entirety.
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL
S 225.4 [Amended]
3. Section 225.4(f) of 12 CFR Part 225 is
deleted in its entirety.
By order of the Board of Governors, June
13,1979.
Griffith L. Garwood,
Deputy Secretary o f the Board.
(FR Doc. 79-19186 Filed 6-19-79; 8:45 am]
BILUNO COO£ 6210-01-*!
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