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F ederal reserve Bank DALLAS, T EX AS of Dallas 75222 Circular No. 79-205 December 17, 1979 REVISED SUPPLEMENT TO REGULATION D IN CONJUNCTION WITH ESTABLISHMENT OF MARGINAL RESERVE REQUIREMENT ON INCREASES IN "MANAGED LIABILITIES" TO ALL MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: Reference is made to our C ircular No. 79-171 dated October 18, 1979 concerning a marginal reserve requirem ent on increases in "managed lia b i lities" at which time the text of the amendment to the supplement to Regula tion D, effective October 6, 1979, was furnished. The revised supplement to Regulation D, as amended effective October 6, 1979, is enclosed. Member banks and others should file the enclosed slip sheets in th eir Regulations Binders. The slip sheet dated February 14, 1979 should be destroyed. Sincerely yours, Robert H . Boykin F irs t Vice President Enclosure Banks and others are encouraged to use the fo llo w in g incom ing WATS num bers in co n ta ctin g th is Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) B O A R D OF GO V E R N O R S OF THE FEDERAL RESERVE SYSTEM RESERVES OF MEMBER BANKS SUPPLEMENT TO REGULATION D I As amended effective O ctober 6 , 1979 SECTION 204.5— RESERVE REQUIREMENTS (a) Reserve percentages. Pursuant to the provi sions of section 19 o f the Federal Reserve Act, sec tion 7 o f the International Banking Act of 1978 and § 204.2(a) and subject to paragraphs (b) through (f) of this section, the Board of Governors o f the Federal Reserve System hereby prescribes the following re serve balances that each member bank of the Federal Reserve System is required to maintain on deposit with the Federal Reserve Bank o f its district. (A) Time deposits o f $ 1 0 0 ,0 0 0 or more; and (B) Tim e deposits o f $ 1 0 0 ,0 0 0 or more repre sented by promissory notes, acknow ledge ments o f advance, due bills, or similar obliga tions as provided in § 2 0 4 .1(f); and (C) T im e d ep osits represented by in elig ib le bankers’ acceptances or obligations issued by a member bank’s affiliate, as provided in § 2 0 4 .1 (0 . (1) If not a reserve city— (i) 3 per cent of (A) its savings deposits and (B) its time deposits, open accounts that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period o f not less than 3 months; and (ii) 1 per cent o f its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity o f 4 years or more: per cent o f its time deposits outstanding on or issued after December 25, 1975, that have an initial maturity o f 180 days or more but less than 4 years; 3 per cent o f its time deposits up to $5 million, outstanding on or issued after October 16, 1975, that have an initial maturity o f less than 180 days, plus 6 per cent o f such deposits in excess o f $5 million: That in no event shall the reserves required on its aggregate amount o f time and savings deposits be less than 3 per cent. In addition, a member bank shall maintain a reserve balance equal to 2 per cent o f its time deposits o f the following types: 2Vi Provided, however, However, the supplementary 2 per cent reserve re quirement shall not apply to a savings deposit, or a time deposit, open account that constitutes deposits of individuals, such as Christmas club accounts and va cation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period o f not less than 3 months. (a) (iii) 7 per cent o f its net demand deposits if its aggregate net demand deposits are $2 million or less, $ 1 4 0 ,0 0 0 plus per cent of its net demand deposits in excess of $2 million if its aggregate net demand deposits are in excess o f $2 million but not more than $10 million, $ 9 0 0 ,0 0 0 plus per cent of its net demand deposits in excess o f $10 mil lion if its aggregate net demand deposits are in excess of $10 million but not more than $100 million, or $ 1 1 ,4 7 5 ,0 0 0 plus 123/4 per cent of its net demand deposits in excess o f $ 10 0 million. (b) 9Vz (c) IVA (d) (2) If in a reserve city (except as to any bank located in such a city that is permitted by the Board o f Governors of the Federal Reserve System, pursuant t F or th is R egulation to com plete retain : 1) P rin te d R egulation pam phlet d ated Ju ly 6, 1978. 2) T his S up plem en t. (D estroy S up plem en t effective F e b ru a ry 14, 1979.) O C T O B E R 1979 to § 204.2(a) (2), to maintain the reserves specified in paragraph (a) (1) o f this section)— (i) 3 per cent o f (A) its savings deposits and (B ) its time deposits, open account, that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts, that are made under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period o f not less than 3 months; and (ii) 1 per cent o f its time deposits outstanding on or issued after October 16, 1975, that have an initial maturity of 4 years or more; per cent o f its time deposits outstanding on or issued after December 25. 1975, that have an initial maturity of 180 days or more but less than 4 years; 3 per cent o f its time deposits up to $5 million, outstanding on or issued after October 16, 1975, that have an initial maturity o f less than 180 days plus 6 per cent o f such deposits in excess o f $5 million: That in no event shall the reserve required on its aggregate amount of time and savings deposits be less than 3 per cent. In addition, a member bank shall maintain a reserve balance equal to 2 per cent of its time deposits o f the following types: 2Vi Provided, however, (A) Time deposits of $ 1 0 0 ,0 0 0 or more; and (B) Time deposits o f $ 1 0 0 ,0 0 0 or more repre sented by promissory notes, acknow ledge ments o f advance, due bills, or similar obliga tions as provided in § 2 0 4 .1 (0 ; and (C) T im e d ep osits represented by in elig ib le bankers’ acceptance or obligations issued by a member bank’s affiliate, as provided in § 2 0 4 .1 (0 . However, the supplementary 2 per cent reserve re quirement shall not apply to a savings deposit, or time deposit, open account that constitutes deposits of in dividuals, such as Christmas club accounts and vaca tion club accounts, that are made under written con tracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period of not less than 3 months. (iii) $ 4 9 ,7 2 5 ,0 0 0 plus 16'A per cent o f its net de mand deposits in excess o f $400 million. (b) C urrency and coin. The United States cur rency and coin of a member bank or a United States branch or agency of a foreign bank shall be counted as reserves in determining compliance with the re serve requirements of this section. (c) Reserve percentages against certain deposits by foreign banking offices. Deposits represented by promissory notes, acknowledgements o f advance, due bills, or similar obligations described in § 204.1 ( 0 to foreign offices o f other banks," or to institu tions the time deposits of which are exempt from the rate lim itations o f R egulation Q pursuant to § 217.3(g) thereof, shall not be subject to paragraph (a) o f this section or to § 204.3 (a)(1) and (2); but during each week of the four-week period beginning May 2 2 , 1975, and during each successive four-week ( “ maintenance” ) period, a member bank shall main tain with the Reserve Bank of its district a daily aver age balance equal to zero per cent o f the daily average amount of such deposits during the four-week compu tation period ending on the Wednesday fifteen days before the beginning of the maintenance period. An excess or deficiency in reserves in any week of a maintenance period under this paragraph shall be sub je c t to § 2 0 4 .3 (a )(3 ), as if computed under § 2 04 .3 (a )(2 ), and deficiencies under this paragraph shall be subject to § 2 0 4 .3 (b ).1 2 (d) Foreign branch transactions with parent bank. During each week o f the four-week period be ginning May 22, 1975, and during each week of each successive four-week ( “ m aintenance” ) period, a member bank having one or more foreign branches shall maintain with the Reserve Bank o f its district, as a reserve against its foreign branch deposits, a daily average balance equal to zero per cent of the daily average total of— (i) net balances due from its domestic offices such branches, and (ii) assets (including participations) held by such branches which were acquired from its domestic of fices (other than assets representing credit extended to persons not residents of the United States), during the four-week computation period ending on the Wednes day fifteen days before the beginning of the mainte nance period. (e) Foreign branch credit extended to United States residents. During each week of the four-week period beginning May 2 2 , 1975, and during each week of each successive four-week maintenance pe riod, a member bank having one or more foreign branches shall maintain with the Reserve Bank of its district, as a reserve against its foreign branch de posits. a daily average balance, equal to zero per cent " Any banking office located outside the States of the United States and the District of Colum bia of a bank or ganized under dom estic or foreign law. 12 The term “ com putation period" in § 204.3(a)(3) and (b) shall, for this purpose, be deem ed to refer to each week of a m aintenance period under this paragraph. o f the daily average credit outstanding from such branches to United States residents1 (other than assets 3 acquired and net balances due from its domestic of fices) during the four-week computation period end ing on the Wednesday fifteen days before the begin ning of the maintenance period: That this paragraph does not apply to credit extended (1) in the aggregate amount of $ 1 0 0 ,0 0 0 or less to any United States resident, (2) by a foreign branch which at no time during the computation period had credit out standing to United States residents exceeding $1 mil lion, (3) to enable the borrower to comply with the requirements o f the O ffice o f Foreign Direct Invest ments, Department o f Com m erce,1 (4) under binding 4 commitments entered into before May 17, 1973, or (5) to an institution that will be maintaining reserves on such credit under subsection (c) o f this section or § 2 1 1.3(g) o f Regulation K. Provided, Mem ( 0 M arginal Reserve Requirem ents. (1) During the seven-day reserve mainte nance period beginning October 25, 1979, and dur ing each seven-day reserve maintenance period thereafter, a member bank shall maintain a daily average reserve balance against its time deposits equal to 8 per cent o f the amount by which the daily average of its total managed liabilities during the seven-day computation period ending eight days prior to the beginning o f the corresponding sevenday reserve maintenance period exceeds the mem ber bank’s managed liabilities base. For a member bank that, on a daily average basis, is a net bor rower of total managed liabilities during the four teen-day base period ending September 26, 1979, its managed liabilities base shall be the daily aver age of its total managed liabilities during the base period or S100 million, whichever is greater. For a member bank that, on a daily average basis, is a net lender of total managed liabilities during the fourteen-day base period ending Septem ber 26, 1979, its managed liabilities base shall be the sum of its negative total managed liabilities and $100 million. A member bank’s managed liabilities are the total of the following: ber banks. 13 (a) Any individual residing (at the time the credit is extended) in any State of the U nited States or the D istrict of Colum bia: (b) any corporation, partnership, association or other entity organized therein of any other entity w herever organized. C redit extended to a foreign branch, office, sub sidiary, affiliate or other foreign establishm ent (“ foreign affiliate") controlled by one or more such dom estic corpora tions will not be deem ed to be credit extended to a United States resident if the proceeds will be used in its foreign business or that of other foreign affiliates of the controlling dom estic corporation(s). 14 The branch may in good faith rely on the borrow er's certification that the funds will be so used. (i)(A) time deposits o f $ 1 0 0 ,0 0 0 or more with original maturities o f less than one year; (B ) time deposits o f $ 1 0 0 ,0 0 0 or more with origi nal maturities of less than one year representing bor rowings in the form o f promissory notes, acknowl edgements of advance, due bills, or similar obliga tions as provided in § 2 0 4 .1(f); and (C) time deposits with remaining maturities o f less than one year represented by ineligible bankers’ ac ceptances or obligations issued by a member bank’s a ffilia te , as provided in § 2 0 4 .1 ( f ) . H ow ever, managed liabilities do not include savings deposits, or time deposits, open account that constitute deposits of individuals, such as Christmas club accounts and vacation club accounts that are made under written contracts providing that no withdrawal shall be made until a certain number o f periodic deposits have been made during a period of not less than 3 months; (ii) any obligation with an original maturity o f less than one year that is issued or undertaken as a means of obtaining funds to be used in its banking business in the form of a promissory note, acknowledgement of advance, due bill, ineligible bankers’ acceptance, repurchase agreement (except on a U .S. or agency security), or similar obligation (written or oral) issued to and held for the account of a domestic banking office or agency1 o f another commercial bank or trust 5 company that is not required to maintain reserves pur suant to this Part, a savings bank (mutual or stock), a building or savings and loan association, a coopera tive bank, a credit union, or an agency o f the United States, the Export-Import Bank of the United States, Minbanc Capital Corporation and the Government Development Bank for Puerto Rico; (iii) any obligation with an original maturity of less than one year that is issued or undertaken as a means of obtaining funds to be used in its banking business in the form o f a repurchase agreement aris ing from a transfer o f direct obligations of, or obliga tions that are fully guaranteed as to principal and interest by, the United States or any agency thereof that the institution is obligated to repurchase (except repurchase agreements issued to a domestic banking office or agency o f a member bank, or other organiza tion that is required to maintain reserves under this 15 Any banking office or agency in any State of the U nited States or the D istrict o f Colum bia o f a bank or ganized under dom estic or foreign law. Part pursuant to the Federal Reserve Act, or to a Federal Reserve B ank1 ) to the extent that the amount 7 o f such repurchase agreem ents exceeds the total amount o f United States and agency securities held by the member bank in its trading account; (iv) any obligation that arises from a borrowing by a member bank from a dealer in securities that is not a member bank or other organization that is required to maintain reserves pursuant to this Part,1 for one busi 6 ness day, o f proceeds o f a transfer of deposit credit in a Federal Reserve Bank (or other immediately availa ble funds), received by such dealer on the date o f the loan in connection with clearance of securities trans actions; (v) borrowings with an original maturity of less than one year from foreign offices o f other banks and from institutions that are exempt from interest rate limitations pursuant to § 2 1 7.3(g ) o f Regulation Q; (vi) net balances due from the member bank’s do mestic offices to its foreign branches; (vii) assets (including participations) held by the member bank’s foreign branches that were acquired from the member bank’s domestic offices; and (viii) credit outstanding from its foreign branches to U .S . residents'® (other than assets acquired and net balances due from its domestic offices). That this paragraph does not apply to credit extended (1) in the aggregate amount o f $ 1 0 0 ,0 0 0 or less to any United States resident, (2) by a foreign branch which at no time during the computation period had credit outstanding to United States residents exceeding 51 million, (3) under binding commitments entered into before May 17, 1973, or (4) to an institution that will Provided, 16 Edge Corporations engaged in banking, A greem ent Corporations, operations subsidiaries of m em ber banks, and U .S. branches and agencies of foreign banks with world wide banking assets in excess of $1 billion. 17 R epurchase agreem ents entered into with nonexem pt entities, such as nonm em ber banks and nonbank dealers, are not subject to m arginal reserve requirem ents if such agree m ents are intended to provide collateral to such nonexem pt entities in order to engage in repurchase transactions with the Federal Reserve System O pen M arket A ccount. 18 (a) A ny individual residing (at the time the credit is extended) in any State of the U nited States or the District of Colum bia; (b) any corporation, partnership, association or other entity organized therein (“ dom estic corporation” ); and (c) any branch or office located therein of any other entity w herever organized. C redit extended to a foreign branch, office, subsidiary, affiliate or other foreign estab lishm ent (“ foreign affiliate") controlled by one or more such dom estic corporations will not be deem ed to be credit extended to a U nited States resident if the proceeds will be used in its foreign business or that of other foreign affiliates o f the controlling dom estic corporation! s). be maintaining reserves on such credit under para graphs (c) or ( 0 o f this section or under Regulation K. Provided, however. That in no event shall the re serves required on a member bank’s aggregate time and savings deposits be more than 10 per cent. (2) banks. United States branches and agencies of foreign During the seven-day reserve maintenance pe riod beginning November 8, 1979, a United States branch or agency of a foreign bank with worldwide banking assets in excess o f $1 billion shall maintain a daily average reserve balance against its liabilities equal to 8 per cent o f the amount by which the daily average of its total managed liabilities during the three seven-day computation periods beginning Octo ber 11, 18 and 25, 1979, exceeds the total o f the institution's managed liabilities base. During the seven-day reserve maintenance period beginning No vember 15, 1979, and during each seven-day reserve maintenance period thereafter, a United States branch or agency o f a foreign bank with worldwide banking assets in excess o f $1 billion shall maintain a daily average reserve balance against its liabilities equal to 8 per cent of the amount by which the daily average o f its total managed liabilities during the seven-day computation period ending eight days prior to the beginning of the corresponding seven-day reserve maintenance period exceeds the institution’s managed liabilities base. In determining managed liabilities of United States branches and agencies, the managed liabilities of all United States branches and agencies o f the same foreign parent bank and of its majorityowned (greater than 50 per cent) foreign banking sub sidiaries (the “ fam ily” ) shall be consolidated. Asset and liability amounts that represent intra-family trans actions between United States branches and agencies o f the same family shall not be included in computing the managed liabilities o f the family. United States branches and agencies of the same family shall desig nate one U .S. office to be the reporting office for purposes o f filing consolidated family reports re quired for determination of the family’s marginal re serve requirements. The reporting office shall file re ports and maintain marginal reserves required under this section for the family at the Federal Reserve Bank of the district in which the reporting office is located. For a family of United States branches and agencies that, on a daily average basis, is a net bor rower of total managed liabilities during the fourteenday base period ending September 2 6 . 1979, the managed liabilities base for the family shall be the daily average of the fam ily’s total managed liabilities during the base period or $100 million, whichever is greater. For a family of United States branches and agencies that, on a daily average basis, is a net lender o f total managed liabilities during the fourteen-day base period ending September 26, 1979, the managed liabilities base for the family shall be the sum of the fam ily’s negative total managed liabilities and $100 million. The total managed liabilities o f a family are the total o f each branch’s and agency’s: office or agency o f a member bank, or other organiza tion that is required to maintain reserves under this Part pursuant to the Federal Reserve A ct,1 or to a 6 Federal Reserve Bank1 ) to the extent that the amount 7 o f such repurchase agreements exceeds the total amount of United States and agency securities held by the institution in its trading account; (i)(A ) time deposits of $ 1 0 0 ,0 0 0 or more with original maturities o f less than one year; (iv) any obligation that arises from a borrowing from a dealer in securities that is not a member bank or other organization that is required to maintain re serves pursuant to this Part,1 for one business day, of 6 proceeds o f a transfer o f deposit credit in a Federal Reserve Bank (or other immediately available funds), received by such dealer on the date o f the loan in connection with clearance of securities transactions; (B ) time deposits o f $ 1 0 0 ,0 0 0 or more with origi nal maturities o f less than one year representing bor rowings in the form o f promissory notes, acknowl edgements of advance, due bills, or similar obliga tions as provided in § 2 0 4 .1(f); (C) obligations with remaining maturities o f less than one year represented by ineligible bankers' acceptances. (D) credit balances of $ 1 0 0 ,0 0 0 or more with an original maturity o f 30 days or more but less than one year. However, managed liabilities do not include savings deposits, or time deposits, open account that constitute deposits o f individuals, such as Christmas club accounts and vacation club accounts that are made under written contracts providing that no with drawal shall be made until a certain number o f peri odic deposits have been made during a period of not less than 3 months; (ii) any obligation with an original maturity of less than one year that is issued or undertaken as a means o f obtaining funds to be used in its banking business in the form o f a promissory note, acknowledgement o f advance, due bill, ineligible bankers’ acceptance, repurchase agreement (except on a U .S . or agency security), or similar obligation (written or oral) issued to and held for the account of a domestic banking office or agency1 o f another commercial bank or trust 5 company that is not required to maintain reserves pur suant to this Part, a savings bank (mutual or stock), a building or savings and loan association, a coopera tive bank, a credit union, or an agency o f the United States, the Export-Import Bank o f the United States, Minbanc Capital Corporation and the Government Development Bank for Puerto Rico; (iii) any obligation with an original maturity of less than one year that is issued or undertaken as a means o f obtaining funds to be used in its banking business in the form o f a repurchase agreement aris ing from a transfer of direct obligations of, or obliga tions that are fully guaranteed as to principal and interest by, the United States or any agency thereof that the institution is obligated to repurchase (except repurchase agreements issued to a domestic banking (v) borrowings with an original maturity of less than one year from foreign offices o f other banks and from institutions that are exempt from interest rate limitations pursuant to § 217.3(g ) o f Regulation Q; (vi) assets (including participations) held by the foreign parent bank (including branches and agencies located outside the States of the United States and the District o f Columbia) and by the foreign parent’s ma jority-owned (greater than 50 per cent) foreign subsi diaries (including branches and agencies located out side the States o f the United States and the District of Columbia) or parent holding company that were ac quired from the U .S . branch or agency (other than assets required to be sold by the Federal supervisory authority o f the branch or agency); and (vii) net balances due to the fam ily’s foreign par ent bank (including branches and agencies located outside the States o f the United States and the District o f Columbia) and to the foreign parent’s majorityowned (greater than 50 per cent) foreign banking sub sidiaries (including branches and agencies located outside the States o f the United States and the District o f Columbia) or parent holding company, after de ducting an amount equal to 8 per cent o f the U .S. branch and agency fam ily’s total assets (not including cash, cash items in the process o f collection, or bal ances due from the foreign parent bank (including branches and agencies located outside the States of the United States and the District o f Columbia), the parent's majority-owned (greater than 50 per cent) subsidiaries (including branches and agencies located outside the States o f the United States and the District o f Columbia) or parent holding company, and bal ances due from unrelated banks). Any excess or deficient in the marginal reserve bal ances required under this paragraph shall be subject to § 204.3 o f this Part.
