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Federal
reserve
Ba n k
DALLAS. TEXA S
of
Dallas
75222
C ircular No. 79-50
March 15, 1979
REVOCATION OF REGULATION S
TO ALL STATE MEMBER BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Effective March 10, 1979, the Board of Governors rescinded Regula
tion S ("Bank Service A rrangem ents"), due to a recent amendment of the Bank
Service Corporation A ct. Enclosed is a copy of the press release and Federal
Register document, which explains more fu lly the Board's action.
State member banks w ill continue to have the responsibility to notify
Reserve Banks of servicing arrangem ents. In order to facilitate compliance with
the Bank Service Corporation A ct, the Board has requested that the attached
reference material be sent to a ll State member banks for permanent retention.
Any questions regarding this matter should be directed to W .C . Red
dick of our Bank Supervision and Regulations Department, Ext. 6274. Addi
tional copies of this material w ill be furnished upon request to the Secretary's
Office, E xt. 6267.
Sincerely yours,
Robert H. Boykin
First Vice President
Enclosures (2)
Banks and others are encouraged to use the follow ing incoming W A T S numbers in contacting this Bank:
1-8 0 0 -4 9 2 -4 4 0 3 (intrastate) and 1-8 0 0 -5 2 7 -4 9 7 0 (interstate). F or 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)
FEDERAL
RESERVE
release
p r e s s
...... .
S-2403-A
For Immediate r e l e a s e
Msrch 5, 1979
The Federal Reserve Board announced today It is revoking
one of its regulations in the ongoing program to c la r ify and simplify
a l l o f Its regulations.
The Board decided to revoke Regulation S, which governed the
Board's power to regulate and examine banking services performed for
State-chartered member banks by outsiders. The regulation had been In
effect since A p ril 3, 1963, but a recent amendment to the Bank Service
Corporation Act has made the regulation unnecessary.
The Board also adopted modified interpretations to simplify
present interpretations and to conform them to the amended Act.
The
Act creates an exception to the general prohibition in Federal banking
laws against the purchase of stock by member banks.
The Act allows two
or more banks to engage in a joint venture by Investing up to 10 per
cent of th eir capital and surplus in a "bank service corporation" that
provides c le r ic a l services to banks.
Under the Regulatory Improvement Project the Board has now
revoked two regulations;
others;
reviewed, updated and sim plified a number of
approved a plan for a Federal Reserve Board service to dissem
inate regulatory materials more widely; and expand its rulemaking
procedures to improve the quality and public understanding o f
regulations.
The Board'8 order In this matter is attached.
*
*
*
*
*
*
*
*
its
12968
fective on M a rc h 10, 1979, th e B o a rd
has decided to: (1 ) R escind R egu lation
S as no lo n ger necessary; (2 ) revise and
update its interpretations o f th e Act;
and (3 ) send to S tate m em ber banks
th ro u g h th e R eserve B an k s an a n
nouncem ent an d exp lan ation o f the
n ew provisions. T h e B o a rd ’s actions
are intended fo r sim plification and
clarification, and th e revision o f the
interpretations will not impose any
n ew requirem ents not contained in the
Act.
E F F E C T I V E D A T E : M arch 10, 1979.
FOR
FURTHER
CONTACT:
Extract from
Federal R eg ister
VOL.
NO. 48
F rid ay , March 9, 1979
pp. 12968 - 12970
[6210-01-M]
[Reg. S. Docket No. R-0209]
PART 219— BANK SERVICE
ARRANGEMENTS
PART 250—MISCELLANEOUS
INTERPRETATIONS
Rescission of Regulation S; Amend
ment of Interpretation Regulations
A G E N C Y : B o a rd o f G o vern o rs o f the
F ed eral R eserve System.
A C T I O N : Revocation and am endm ent
o f interpretations.
S U M M A R Y : A s p art o f its R e g u lato ry
Im provem ent P roject, involving a sub
stantive review o f all F ed eral R eserve
regulations, th e B o a rd h as reviewed
R egu lation S, “B a n k Service A rr a n g e
m ents” (12 C F R P a rt 219), w hich im
plem ents the B a n k Service C o rp o ra
tion A ct (12 U .S .C . 1861-65). T h a t re g
ulation specifies th e m an n er o f assur
in g the B o a rd th a t th e p erform ance o f
b a n k services fo r S tate m em ber banks
w ill be subject to regulation and exam
ination by th e B o a rd w h en ever the
services are perfo rm ed b y anyone
o th e r th an th e b an k itself. O n the
basis o f its review an d in th e lig h t o f a
recent am endm ent o f th e A c t (P u b . L.
95-630, 92 Stat. 3677), th a t becom es e f
IN F O R M A T IO N
C a rl V. H o w ard , A ttorney, L e g a l D i
vision, B o a rd o f G o vern o rs o f the
F ed eral R eserve System , W a s h in g
ton. D .C . 20551 (202/452-3786).
S U P P L E M E N T A R Y IN F O R M A T IO N :
T h e B a n k Service C orporation Act
(th e " A c t ” ) (12 U .S .C . 1861-65), as
o riginally
adopted,
required
that,
w h en a State m em ber ban k has bank
services p erfo rm ed fo r it (such as
check sorting and posting o f interest
o n savings accounts), satisfactory as
surances m ust be fu rn ish ed to the
B o a rd th at the p erform ance o f the
services w ill be subject to the B o a rd ’s
regulation an d exam ination to the
sam e extent as if th e services w ere
b ein g p erfo rm ed b y th e ban k itself on
its o w n premises. T h e purpose w as to
m ake certain th a t the ap propriate
F ed eral ban k in g agency w ould not be
frustrated in its exam ination o f a bank
subject prim arily to its supervision be
cause th e b a n k ’s records have been
tran sferred to an o th er organization or
som e o th e r organization is carryin g
out p art o r all o f th e b a n k ’s functions.
R eg u lation S, “B a n k Service A rra n g e
m ents” (12 C F R P a rt 219), w as issued
by the B o a rd in 1963 to im plem ent the
A ct b y specifying w h en and in w h at
fo rm assurances sh all be provided to
the F ed eral R eserve System.
H ow ever, th e C ongress has taken a
m ore direct ap proach to supervision o f
ban k service arrangem ents th ro u gh an
am endm ent o f th e A ct contained in
section 308 o f th e Financial Institu
tions R e g u lato ry and Interest R a te
C on tro l A c t o f 1978 (P u b . L. 95-630; 92
Stat. 3677). E ffective M a rc h 10, 1979,
the perfo rm an ce o f ban k services fo r
S tate m em ber banks o r th eir subsid
iaries o r affiliates, w ill be subject to
regulation an d exam ination by the
B o a rd as a m atter o f law w ith o ut the
necessity i o r “ assurances.” A State
m em ber b an k w ill be requ ired to
n o tify th e B o a rd o f the existence o f a
b a n k service arran gem en t w ith in 30
days a fte r th e m aking o f th e service
c o n tra c t. o r th e perform an ce o f the
service, w hich ever occurs first.
In the course o f review ing R e g u la
tion S in its R e g u la to ry Im provem ent
P roject, th e B o a rd h as concluded th at
the regulation will no lo n ger b e neces
sary and sh o u ld be rescinded in the
ligh t o f the legislative change. T h e
provisions regard in g “assurances” will
becom e obsolete. T h e o nly provision o f
th e regulation th at w ill continue to
have effect is th e ru le th at th e p er
form ance o f legal, advisory, and ad
m inistrative services, such as tran sp or
tation o r gu ard services, is not subject
to exam ination unless specifically re
quested b y th e B oard . T h is rule, w hich
essentially is an interpretation o f the
term "b a n k services” in section 1 (b ) o f
the A ct (12 U .S .C . 1861(b)), w ill b e in
corporated in the B o a rd ’s published
interpretations. N o new regulatory
provisions are considered necessary to
reflect th e recent am endm ent o f the
Act.
A s in th e past, the letter notifying
the B o a rd o f the ban k service arran g e
m ent is to be sent to th e F ed eral R e
serve B an k in w hose'district th e State
m em ber ban k has its m ain office. I f a
ban k has an existing bank service a r
rangem en t on M a rc h 10, 1979, and has
already fu rn ish ed assurances re gard
ing the arrangem ent in com pliance
w ith R eg u lation S, no additional noti
fication regard in g th e arrangem ent is
necessary.
A s a fu rth e r e ffo rt to Im prove its
regulations, the B o a rd is revising, u p
dating, an d stream lining its interpreta
tions. T h e o nly substantive rulings
bein g added are taken from : (1 ) A n in
terpretation p ublished in th e Federal
Reserve B u lletin (48 Fed. Res. Bull.
1429 (1962)) bu t not in th e Code o f
Federal R egulations; an d (2 ) the last
sentence o f section 219.4 relatin g to
legal, advisory, an d adm inistrative
services (discussed above).
T h e B o a rd is also ad din g a short
sum m ary p a ra g ra p h at the beginning
o f each interpretation to facilitate the
p u blic’s fin d in g o f in form ation and
lessen th e bu rd en o f readin g m aterials
th a t m ay not be relevant to the re
search er’s interest. O f course, if reli
ance is to be placed upon th e in terpre
tation, the fu ll text m ust be consulted
since th e sum m ary is only a p a ra
p h rase o f the ru lin g ra th e r th an the
ru lin g Itself.
T h e B o a rd is asking th e F ed eral R e
serve B an k s to n otify State m em ber
bank s o f th e statutory and regulatory
changes an d to exp la in com pliance
w ith the am ended Act.
T h e procedures o f 5 U .S .C . 553(b) re
g ard in g notice, public participation
an d d eferred effective date w ere not
fo llo w ed in connection w ith these reg
u latory changes because: (1 ) T h e
B o a rd fin ds th at p ublic participation
is unnecessary since th e rescission o f
th e regulation w ill resu lt in neither
th e gran tin g o f au th o rity to th e p er
sons regulated, n o r th e im position or
re la x in g o f an y requirem ents; an d (2 )
ru lem akin g procedures do n o t a p p ly to
12969
interpretive rules. F o r sim ilar reasons,
the expanded rulem aking procedures
set fo rth in th e B o ard 's policy state
m ent o f J an u ry 15, 1979 (44 F .R . 3957)
do not apply.
To
im plem ent
these
regulato ry
changes, th e fo llo w in g actions are
b eing taken u n der th e B o a rd ’s au th o r
ity in 12 U .S .C . 1861-65:
PART 219—[REVOKED]
1. 12 C F R
voked.*
P a rt 219 is h ereby re
PART 250 MISCELLANEOUS
INTERPRETATIONS
2. T h e table o f contents o f 12 C F R
P a rt 250 is am ended b y adding at the
end o f th e table a new heading and
th ree new section titles to read as fo l
lows:
B a n k S e r v ic e A r r a n g e m e n t s
Sec.
250.300 Kinds of bank servicers subject to
Board examination under the Bank
Service Corporation Act.
250.301 Scope of investment authority and
notification requirement under the
Bank Service Corporation Act.
250.302 Applicability of Bank Service Cor
poration Act to bank credit card service
organisation.
3. 12 C F R P a rt 250 is am ended by
adding n ew sections §§ 250.300-250.302
im m ediately after a n ew heading,
"B A N K
S E R V IC E
ARRANGE
M E N T S ,” to read as follows:
B a n k S er v ic e A r r a n g e m e n t s
§ 250.300 Kinds of bank servicers subject
to Board examination under the Bank
Service Corporation Act
Sum m ary. T h e p erform ance o f bank
services fo r State m em ber banks is
subject to th e B o a rd ’s regulation and
exam ination, regardless o f the nature
o f the b an k servicer, including ser
vicers th a t are national banks; State
nonm em ber insured banks; non-profit,
no-stock credit card servicing organiza
tions; an d servicing subsidiaries o f
b an k h o ldin g companies.
T ext (a ) Since the enactment o f the
B a n k Service C orporation A ct (th e
“ A c t” ) (12 U .S .C . 1861-65), th e B o a rd
h as on several occasions considered
w h eth er perform ance o f " b a n k serv
ices” (a s th at term is defin ed in sec
tion 1 (b ) o f the A c t) fo r State m em ber
banks is subject to regulation and ex
am ination by the B o a rd under section
5 o f the A ct if (1 ) the bank servicer is
not a " b a n k service corporation” (a s
th a t term is defined in the A ct), o r (2 )
th e b an k servicer is a ban k itself. In
each instance, based on th e reasoning
set fo rth below, the B o ard expressed
* 12 CFR 219.101 is a cross reference to 12
CFR 225.115. The revocation of the former
Is not intended to result In the revocation of
the latter.
the view th a t section 5 o f the A ct a p
plied to an y organization th at p er
form ed
b an k
services
fo r
State
m em ber banks. Including national
banks; an o th er State m em ber bank;
State n onm em ber insured banks; serv
icing subsidiaries o f b an k h olding com
panies; an d non-profit, no stock credit
card servicing organizations.
( b ) T h e Senate Com m ittee on B a n k
ing and C urrency stated w ith regard
to section 5 o f the Act, as enacted in
1962, th a t th e F ed eral supervisory
agencies ‘‘m ust be able to exam ine all
o f th e ban k s’ records, an d they must
be able to exercise p ro p e r supervision
over all the bank s’ activities, w h eth er
perform ed b y the banks’ em ployees on
th eir prem ises or b y anyone else on or
o ff the ban k s’ premises. T h is exam ina
tion and this supervision cannot be
frustrated b y a tran sfer o f the ban k s’
records to som e other organization or
by h avin g som e o th er organization
carry out all or p art o f th e ban k s’
functions.” (S . R ep. N o. 2105, 87th
Cong. 3 (1962)). Sim ilarly, the C om
m ittee on B an k in g an d C urren cy o f
the H ouse o f Representatives stated
th at “ it w o u ld obviously be unwise to
perm it bank s to avoid th e exam ination
and supervision o f vital bank ing fu n c
tions by th e sim ple expedient o f fa rm
in g out such functions.” (H .R . R ep .
N o . 2062, 87th C ong. 3 (1962)).
(c ) Section 5 o f th e A c t is not lim ited
b y its term s to “ ban k service corp ora
tions” as defin ed in th e Act; nor, in
the B o a rd ’s opinion based on the legis
lative history o f the Act, should such a
lim itation b e implied. T h e B o a rd con
cludes th a t th e p erform ance o f ban k
services fo r State m em ber banks by o r
ganizations th a t are n o t ban k service
corporations is also subject to B o a rd
regulation and exam ination.
( d ) I f the bank servicer is a national
ban k or a S tate nonm em ber insured
bank, its perform ance o f ban k services
fo r State m em ber banks is subject to
B o a rd regulation and exam ination, de
spite th e fact th at th e servicer is sub
ject prim arily to regulation and exam i
nation b y one o f th e o th er F ed eral
banking agencies. B y th e sam e token,
the perform ance o f ban k services by a
State m em ber b an k fo r a national
ban k o r S tate nonm em ber insured
ban k is subject to regulation an d e x
am ination b y th e C om p tro ller o f the
C urren cy o r the F ed e ra l D eposit In
surance Corporation, respectively. T h e
purpose o f section 5 o f th e A ct is to
m ake certain th at th e ap propriate
F ed eral bank ing agency w ill be able e f
fectively to exercise its responsibilities
w ith reapect to a ban k subject p rim a r
ily to its supervision.
( e ) It is im portant to note th a t the
scope o f th e B o a rd ’s regulation and
exam ination under section 5 o f th e
A c t does not extent to all affairs o f
th e ban k servicer, b u t o nly to th e
“ ban k services” perfo rm ed fo r a
m em ber ban k an d only to the
extent as if the services w ere
p erfo rm ed by the S tate m em ber
itself on its ow n premises.
S tate
sam e
being
ban k
§ 250.301 Scope o f investment authority
and notification requirement under the
Bank Service Corporation Act.
Sum mary, ( a ) T h e au th ority o f S tate
m em ber banks under th e B a n k Service
C orporation A ct to invest in b an k serv
ice corporations is lim ited to invest
m ents in corporations th at p erfo rm
“ bank services” solely.
( b ) A State m em ber ban k is required
by the Act to notify the B o a rd only o f
the perform ance o f “b a n k services”
fo r it.
(c ) “ B a n k services” w ill not usually
be regard ed as including legal, adviso
ry, and adm inistrative services, such as
transportation or gu ard services.
Text ( a ) Section 2 (a ) o f the B an k
Service C orporation A ct (12 U.S.C.
1861-65) provides th at “ no lim itation
or p rohibition otherw ise im posed by
any provision o f F ed eral la w exclusive
ly relatin g to banks sh a ll prevent any
tw o o r m ore banks from investing not
m ore th an 10 p er centum o f th e paidin and unim paired capital and un im
paired surplus o f each o f them in a
ban k service corporation.” T h is 10 p er
cent investm ent ceiling applies to
loans an d o th er advances o f funds, as
w ell as th e purchase o f stock. T h e Act,
however, does not authorize a State
ban k to invest in a bank service corpo
ration if th e ban k is not perm itted to
do so u n der th e applicable State law.
( b ) “ B a n k service corp oration” is de
fin ed in section 1(c) o f th e A ct to
m ean “ a corporation organized to p er
fo rm ban k services fo r two o r m ore
banks, each o f w hich owns part o f the
capital stock o f such corporation, and
at least one o f w hich is subject to e x
am ination b y a F ed eral supervisory
agen cy ." Section 4 o f th e A ct states
th at “no ban k service corporation m ay
engage in an y activity o th e r th an the
p erform ance o f ban k services fo r
ban k s." T h u s, th e investm ent au th o ri
ty created b y section 2 (a ) is lim ited to
corporations th at are en gaged solely in
th e provision o f “ ban k services” to
banks, as th at term is defin ed in the
Act.
(c ) In addition to its gran t o f invest
m ent authority, th e A ct also requires
S tate m em ber banks to n otify the
B o a rd w ith in 30 days o f th e execution
o f a contract fo r “ ban k services” o r
th e actual provision o f such services,
w hichever occurs first. M oreover, the
A ct authorizes th e B o a rd to regu late
and exam ine th e p erform ance o f
“ bank services.” T h u s, the scope o f the
A ct's notification and exam ination re
quirem ents also is lim ited to “ ban k
services.”
12970
( d ) T h e term “b an k services” is de
fin e d in section 1 (b ) o f th e A c t to
m ean ‘‘services such as check an d de
posit sorting an d posting, com putation
an d posting o f interest an d o th e r cred
its and charges, prep aratio n an d m ail
ing o f checks, statements, notices, and
sim ilar items, o r any o th er clerical,
bookkeeping, accounting, statistical, or
sim ilar functions p erfo rm ed fo r a
ban k .”
(e ) B e a rin g im portantly u p o n the
m eaning o f "b a n k services” is th e fo l
low in g quotation fro m th e R e p o rt o f
th e Senate Com m ittee o n B an k in g and
C urrency: “ T h e au th ority to exam ine
an d supervise banks is b ro a d an d m ust
b e vigorously exercised. A t th e same
tim e sound discretion m ust be used.
B a n k s have alw ays em ployed others to
do m any things fo r them , an d they
w ill have to continue to do so, an d the
b ill is not intended to prevent this or
to m a k e jt m ore difficult. F o r exam ple,
bank s have em ployed law yers to p re
p a re trust an d estate accounts and to
prosecute judicial proceedings fo r the
settlem ent o f such accounts. B ank s
h ave em ployed accountants to prepare
earnin gs
statem ents
an d
balance
sheets. B an k s have em ployed public
relations an d advertising firm s. A n d
banks h ave em ployed individuals or
firm s to p erfo rm all kinds o f adm inis
trative activities, including arm ored
car an d o th er transportation services,
g u ard services and, in m any cases,
o th er m echanical services needed to
ru n th e b a n k ’s buildings. It is not e x
pected th a t th e b an k supervisory
agencies w ould fin d it necessary to e x
am ine o r regulate any o f these agents
o r representatives o f a bank, except
u n der th e m ost un usual circum
stances. T h e au th ority is intended to
b e lim ited to b an k in g functions as
such.” (S . R ep . N o. 2105, 87th C ong. 3
(1962)).
( f ) O n th e basis o f th e A c t’s defin i
tion o f " b a n k services” , th e lim itation
contained in section 4 o f th e Act, and
th e preceding quotation fro m the
A c t’s legislative history, it is ap paren t
th a t the term “b an k services" is essen
tially lim ited to clerical and sim ilar
services. F o r exam ple, the term w ould
n ot u su ally b e regard ed as including
legal, advisory, and adm inistrative
services, such as transportation or
g u ard services.
( g ) T h u s, State m em ber banks gen er
a lly m ay rely on th e A ct to ju stify in
vestm ent o nly in a corporation th at is
en gaged Solely in p erfo rm in g one or
m ore o f th e services contained in the
definition o f “b a n k services” in section
1(b), o r a service sim ilar to one o f
those services, and only if those serv
ices are provided solely to banks. In
vestm ent in a corporation providing
any o th er services, such as th e type o f
services described in th e above quo ta
tion fro m th e A c t’s legislative history,
gen erally is not perm itted o n th e basis
o f this Act, unless such services are le
gitim ately incidental to th e provision
o f “b an k services” by th at corporation.
(h )
Since the notification required
b y section 5 o f the Act, as amended,
also is based on th e provision o f “ban k
services,” such notification need only
be provided w ith re gard to th e provi
sion o f one or m ore o f th e services
enum erated in section 1 (b ) o f th e A ct
o r a service sim ilar to one o f those
services.
§ 250.302 Applicability of Bank Service
Corporation Act to bank credit card
service organization.
Sum mary. A lth o u g h a non-profit,
no-stock service organization in w hich
no ban k h as m ade an investm ent is
not a “ban k service corporation” as de
fin ed in th e B a n k Service C orporation
Act, th at organization’s credit card
servicing activities are “ban k services”
as defin ed in the A ct an d th us subject
to th e notification requirem ent o f sec
tion 5 o f th e Act.
T ex t ( a ) T h e B o a rd o f G o vern o rs
h as considered w h eth er th e B a n k
Service C orporation A ct (12 U .S .C .
1861-65), is applicable w h ere a ban k
credit card p lan o f a S tate m em ber
b an k a n d o th e r banks used th e facili
ties o f a non-profit, no-stock service
organization.
( b ) T h e functions o f th e service or
ganization include th e follow in g: (1 )
P e rfo rm in g cardh old er accounting fo r
p articipating banks; (2 ) developing in
fo rm atio n concerning each credit card
an d holder, including such h o ld er’s
current balance ow ing to th e card issu
in g b an k an d th e am ount o f such b a l
ance th at is delinquent; (3 ) assisting in
procedures relatin g to th e presenta
tion and settlem ent o f d rafts and
credit m em oranda; (4 ) developing p ro
cedures relatin g to credit card security
control; (5 ) upon telephonic request,
advising m erchants and participating
bank s respecting credit authorizations
above certain specified limits; and (6 )
com piling lists o f p articipating m er
chants.
(c ) T h e B o a rd expressed the view
th a t because the service organization
has no stock an d the S tate m em ber
ba n k does not otherw ise “ invest”
th erein b y “th e m ak in g o f a loan, or
otherwise, except a paym ent fo r rent
earned, goods sold an d delivered, or
services rendered p rio r to th e m aking
o f such p aym ent” (section 1(d) o f the
A ct), th e service organization is not a
“ b an k service corporation” w ithin the
m ean ing o f section 1(c) o f th e Act.
(d ) H ow ever, th e B o a rd concluded
th a t the functions described above do
constitute “b an k services” as defined
in section 1 (b ) o f the Act. Accordingly,
th e S tate m em ber ban k is requ ired to
n o tify the B o a rd (th r o u g h th e ap p ro
priate F ed eral R eserve B a n k ) o f the
perfo rm an ce o f th e services fo r the
b an k in accordance w ith section 5 o f
th e Act.
E ffective date: M a rc h 10,1979.
B o a rd o f G o vern o rs o f th e F ed eral
R eserve System , M a rc h 5,1979.
T h eo d o r e E . A l l i s o n ,
Secretary o f the Board.
[F R Doc. 79-7307 Filed 3-8-79; 8:45 ami
Reference M aterial
BANK SERVICE CORPORATION ACT
Under the Bank Service Corporation Act(12 U.S.C. 1861-65), State
member banks are subject to supervision by the Board of Governors of the
Federal Reserve System, and national banks are subject to supervision by the
Comptroller of the Currency.
Section 5 of the Bank Service Corporation Act (but no other section)
has been amended by section 308 of the Financial Institutions Regulatory and
Interest Rate Control Act of 1978, effective March 10, 1979. That section, as
revised, reads as follows:
Whenever any bank which is regularly examined by a Federal
supervisory agency, or any subsidiary or affiliate of such bank which
is subject to examination by that agency, causes to be performed, by
contract or otherwise, any bank services for itself, whether on or off
its premises—
(1) such performance shall be subject to regulation and examin
ation by such agency to the same extent as if the services were being
performed by the bank itself on its own premises, and
(2) the bank shall notify such agency of the existence of a
service relationship within 30 days after the making of such service
contract or the performance of the service, whichever occurs first.
The definition of "bank services" in section 1(b) of the Act remains
the same and reads as follows:
The term 'bank services' means services such as check and deposit
sorting and posting, computation and posting of interest and other
credits and charges, preparation and mailing of checks, statements,
notices, and similar items, or other clerical, bookkeeping, accounting,
statistical, or similar functions performed for a bank.
The Board has previously elaborated on this definition in two interpretations (see
12 CFR 250.301 and 250.302). In the first, the Board concluded that the term is
-1-
essentially limited to clerical and similar services and would not usually relate to
legal, advisory, and administrative services, such as transportation or guard
services. In the other interpretation, the Board described operations of a bank
credit card service organization that would meet the definition.
The Board believes that a regulation in this area is no longer
necessary and thus has rescinded Regulation S effective March 10, 1979.
Existing interpretations of the Bank Service Corporation Act have been updated
and streamlined to reflect the statutory change. The only substantive rulings
that have been added to the interpretations are taken from: (1) an interpretation
previously published only in the Federal Reserve Bulletin explaining the scope of
investment authority in "bank service corporations" (48 Fed. Res. Bull. 1429
(1962)); and (2) the last sentence of section 219.4 of Regulation S, concerning the
performance of legal, advisory, and administrative services.
A State member bank is to give notice when bank services are
provided for it, or its affiliates or subsidiaries that are subject to Federal
Reserve examination, by any servicer, including national banks; non-member
insured banks; State member banks; non-profit, no-stock bank credit card service
organizations, and servicing subsidiaries of bank holding companies. Notification
should not be provided for the performance of legal, advisory, and administrative
services, such as transportation or guard services.
For notification purposes, a letter should be signed by a duly
authorized officer of the bank or of its affiliate or subsidiary for which services
are performed, and be provided to the (District Federal Reserve Bank).
This
letter is to be provided no later than 30 days after the making of a contract to
provide services, or no later than 30 days after the performance of the services,
whichever comes first. In lieu of a letter, the attached form may be used to
report the making of a contract to provide services, or the performance of
services.
-2-
If a bank has an existing bank service arrangement in effect on March
10, 1979, and has already furnished "assurances" regarding the arrangement in
compliance with Regulation S, no additional notification regarding the arrange
ment is necessary.
*
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
S-2403-C
NOTIFICATION OF PERFORMANCE OF BANK SERVICES
BANK NAME AND ADDRESS (Includes Street, City, State and ZIP Code)
Complete below (in space indicated) Federal Reserve Bank's Name and Address
In compliance with the requirement of the Bank Service Corporation Act we hereby notify
the Board of Governors of the Federal Reserve System of bank services provided by the
servicer reported below.
CORPORATE TITLE OF SERVICER
LOCATION(S) OF PREMISES WHERE SERVICES
ARE PERFORMED
ADDRESS OF SERVICER'S CORPORATE
HEADQUARTERS
NAME OF MANAGING OFFICER(S) AT PROCESSING
LOCATION(S)
BANK'S PRINCIPAL CONTACT AT CENTER(S)
(If other than Managing Officer(sj)
TELEPHONE NUMBER AT PROCESSING SITE
TELEPHONE NUMBER OF PRINCIPAL CONTACTS)
APPLICATIONS PROCESSED AND SERVICES PERFORMED (indicate both present and planned services)
TITLE OF OFFICER AUTHORIZED TO SIGN NOTIFICATION
SIGNATURE OF AUTHORIZED OFFICER
TELEPHONE NUMBER
'
' DATE SIGNED
@FedFRASER