The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10111 Tj
December 1, 1986
J
PROPOSAL TO CHARGE FEES FOR CERTAIN SUPERVISORY ACTIVITIES
Comments Dee by January 5, 1987
To All Member Banks, Bank Holding Companies, Edge Corporations,
and Branches and Agencies o f Foreign Banks in the Second Federal
Reserve District, and Others Concerned:
Following is the text of a statement issued by the Board of Governors of the Federal Reserve
System:
The Federal Reserve Board has issued for public comment a proposal to charge fees for the proc
essing of applications and for the supervision and general oversight of Edge corporations. Comment
should be received by January 5.
Under the Board’s proposal, fixed fees would be imposed to recover the costs for the processing of
bank holding company, international banking, and other applications. The proposal also calls for a
schedule of annual assessments for the supervision of Edge corporations based on their total assets.
The Board is seeking public comment on whether such a system of fees should be imposed, whether
the proposed fee schedules are equitable and appropriate, and whether the Board should consider
charging for bank holding company inspections.
Printed on the following pages is the text of the proposal, which has been reprinted from the
Comments thereon should be submitted by January 5, 1987, and may be sent to the
Board of Governors, as specified in the notice, or to our Domestic Banking Applications Division.
F e d e ra l R e g ister.
E.
G e r a l d C o r r ig a n ,
P re sid e n t.
FEDERAL RESERVE SYSTEM
12CFR Parts 211 and 262
[Docket No. R-0584]
Ruies of Procedure; Assessment of
Fees for Supervision of Edge
Corporations and for Processing
Applications
agency : Board of Governors of the
Federal Reserve System.
ACTION: Proposed rulemaking.
summary : The
Board of Governors of
the Federal Reserve System, as part of
an ongoing program of budgetary
restraint, has decided to seek public
comment on a limited proposal to assess
fees for certain of its supervisory
services. The Board is advancing this
proposal as a possible revenue
enhancing measure to supplement prior
Board actions to streamline operations
and eliminate unnecessary functions.
This proposal is designed to recover part
of the identifiable costs for certain
supervisory functions. The Board is
seeking comment on whether such a
system of fees should be imposed and, if
so, whether the proposed fee schedules
are equitable and appropriate.
The Board has proposed that fees be
assessed for supervision of Edge
corporations and for a variety of final
applications that are filed by bank
holding companies, state member banks,
and companies or individuals seeking to
acquire control of such banking
organizations. The Board has proposed
to assess fees for general supervision
and inspection o n ly in the case of Edge
corporations in an effort to avoid
duplicating assessm ents by other bank
regulatory agencies. In addition, the
Board has proposed fixed fee schedules
that are limited to recovering costs for
the supervisory activities and the
processing of applications on an average
basis rather than a variable fee schedule
based upon costs in an individual case.
date : Comments must be received by
January 5,1987.
ADDRESS: All comments, which should
refer to Docket No. R-0584, should be
mailed to William W. Wiles, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington.
DC 20551, or should be delivered to the
Office of the Secretary, Room 2223,
Eccles Building, 20th Street and
Constitution Avenue, NW, between the
hours of 8:45 a.m. and 5:15 p.m.
weekdays. Comments may be inspected
in Room 1122, Eccles Building between
8:45 a.m. and 5:15 p.m. weekdays.
FOR FURTHER INFORMATION CONTACT:
Frederick M. Struble, Associate
Director, (202) 452-3794, Don E. Kline,
A ssociate Director, (202) 452-3421,
Kevin M. Raymond, Supervisory
Financial Analyst (202) 452-2573, or
James V. Houpt, Supervisory Financial
Analyst, (202) 452-3358: Division of
Banking Supervision and Regulation; or
for users of Telecommunications
Devices for the Deaf, Earnestine Hill or
Dorothea Thompson, (202) 452-3244,
Board of Governors of the Federal
Reserve System, Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
Background
Federal and state supervision and
regulation of banking organizations is
designed to achieve a variety of public
policy objectives, including: (1)
Promoting the stability of the banking
system and, more generally, the stability
of financial markets and the economy at
large, (2) protecting depositors and the
viability of the federal deposit insurance
fund, (3) preserving competition in local
and regional banking markets, and (4)
limiting dislocations in local
communities resulting from bank
failures. Individual banking
organizations benefit from the system of
government supervision and regulation
designed to further these public policy
objectives. Indirectly, they benefit from
the stability of the system as a whole,
from the public confidence that such
stability engenders, and from efforts to
limit or contain problems encountered
by individual banking organizations.
More directly, they benefit from
regulations, off-site review, and on-site
inspections and examinations designed
to prevent problems from developing
and to assist in identifying and
correcting problems that may develop.
Individual organizations submitting
applications to the Board of Governors
of the Federal Reserve System ("Board”)
also benefit directly. The process of
review sometimes detects existing
problems of applicant organizations or
organizations to be acquired. Such
review may also identify potential
problems that might arise as a result of
the transaction that is the subject of the
application. In addition to such
screening, it is through the application
process that individual organizations
are able to expand and increase profit
opportunities in a manner consistent
with established public policy
objectives.
Individual banking organizations, as
direct beneficiaries, have been asked to
bear a significant portion of the costs of
bank supervision and regulation. Statechartered banking organizations, in
2
Printed in New York from Federal Register, Vol. 51, No. 223
general, pay assessm ents and fees that
cover the operating costs of the bank
supervisory agencies of their state. In
one-half of the states, the assessm ents
and fees paid by state chartered banks
go into the general funds of the state,
and the agency operates on an annual
appropriation by the legislature: in
another 22 states the revenues are
deposited in a special fund to be used
only to cover the expenses of the
banking agency, and the agency’s
budget is subject to approval by the
legislature. In the three other states, all
revenues are deposited with and
controlled by the banking department,
subject to the review of either the
legislature or a state finance
department. The extent to which
operating budgets coincide with
revenues collected varies from state to
state. In cases where a misalignment
exists, it appears that revenues
generally exceed costs.
At the federal level, the supervisory
costs incurred by individual bank
supervisory agencies are paid in a
variety of w ays, including general
assessm ents, hourly charges for
examinations, fees assessed for
processing applications and deposit
insurance premiums. In part, such costs
are also met from returns on
investments or by means other than a
direct charge to individual banking
organizations.
The Board currently does not levy
charges for any of its supervisory or
regulatory activities. Prior to 1930, the
Federal Reserve System w as required
by law to charge for its examination of
member banks, but in that year
Congress, at the recommendation of the
Board, and because of concerns about
double assessm ent by the Board and
state supervisors, amended section 9 of
the Federal Reserve Act to eliminate
mandatory assessm ent of Federal
Reserve member banks for examination
expenses. The Board w as given explicit
authority to decide whether to assess
state member banks for the cost of their
examinations or to absorb these costs.
(See 12 U.S.C. 326, as amended June 26,
1930 (46 Stat 814).J The Board has not
charged state member banks for
supervision sin ce 1935. It has never
charged for supervision of bank holding
companies or of foreign branches of U.S.
banks. Prior to 1958 the Board at times
levied charges to cover part of its costs
incurred in conducting examinations of
Edge corporations. The Board has not
levied such charges since 1958.
Purpose of the Proposed Rulemaking
The Board is seeking comment on this
proposal to depart from past practice
and begin to charge fees to banking
organizations for supervisory and
regulatory oversight. The Board will
evaluate whether the budgetary benefits
of such a proposal in the form of
additional revenue would be
outweighed by possible adverse effects.
This proposal is advanced as a
budgetary matter, to explore possible
sources of additional revenue to
complement actions already taken to
streamline operations and eliminate
unnecessary functions. The Board
believes that in light of its expanded
supervisory responsibilities since the
passage of the Bank Holding Company
Act in 1956, and in light of the fact that
certain of these supervisory
responsibilities would not result in the
sort of double assessments that
provided the basis for its efforts to
eliminate fees and assessments in the
past, it may be appropriate to request
the individual organizations that benefit
most directly from Board supervisory
activities to assume a portion of the
costs of that supervision.
The proposal, therefore, is designed to
recover the costs of certain supervisory
activities—to shift a portion of the costs
of such supervision to those entities
which receive the greatest direct benefit
of such supervision—but to do so in a
manner that, in the Board’s view, will
not be so burdensome as to alter
business decisions. It should be stressed
that the Board is making this proposal in
the context of ongoing budgetary
review, and it seeks comments upon the
scope of services for which fees might
be charged, the appropriate levels of
such fees, and any adverse effects upon
either the activities of banking
institutions or the supervisory process
that may result from the imposition of
such fees.
There are two basic areas of Board
responsibility for which the Board may
impose fees: (1) General supervision,
including inspection, examination,
review of various types of reports of
condition, and such oversight of
corrective measures as maybe
necessary, and (2) applications,
including those for acquisition of a bank,
for geographic expansion or expansion
into a new type of business activity, for
change in business structure, and for
acquisition of or change in control of a
banking organization. The Board has
considered assessment of fees in the
first of these two areas and has
proposed a very limited fee schedule in
the supervisory area relating only to
Edge corporations (as defined in section
25(a) of the Federal Reserve Act, 12
U.S.C. 611 e t seq). In the applications
area, however, the Board has proposed
a broader range of fee schedules
covering virtually all types of
applications that come before the Board
except those for Federal Reserve System
membership.
Fees for Supervision of Edge
Corporations
As noted above, the Board based its
recommendation that Congress free it
from the requirement to charge for its
supervision of state member banks on
the argument that banking organizations
should not be required to pay a double
assessment for government supervision.
The Board also cited this consideration
in deciding not to charge for the
supervision of Edge corporations, noting
that many of them are subsidiaries of
commercial banks, which are assessed
on the basis of their consolidated assets
(including those of the Edge
corporations) to cover costs of
supervising and regulating the entire
organization.
In recent years, however, significant
numbers of Edge corporations have been
established by foreign banks and by
nonbanking firms, which are not subject
to assessment by other U.S. banking
agencies. Double assessment is not an
issue in these cases. Moreover, while
most Edge corporations continue to be
owned by institutions that do pay
assessments or fees to other banking
agencies for their general supervision,
only the Board specifically examines
and supervises these Edge corporations.
Section 25(a) of the Federal Reserve Act
permits the Board to assess fees for
supervision of Edge corporations (12
U.S.C. 611).
The Board considered two approaches
to recover the costs of supervising Edge
corporations—charging on the basis of
examiner time devoted to examinations
or charging annual assessments on the
basis of an organization’s size. While
each approach has certain advantages,
the Board has proposed to adopt a
schedule of annual assessments based
on the total assets of the Edge
corporations. A significant proportion of
the costs of supervising Edge
corporations are incurred for various
off-premises activities—collection and
review of reports and other data,
formulation of regulations, and
monitoring of activities for compliance.
Because on-site examinations are only
part of a comprehensive supervisory
system, the Board believes an annual
general assessment based on an
institution’s size is a more suitable
approach.
A general assessment would also be
easier to administer and of greater
benefit to the Board’s budgeting process
since the amounts assessed annually
3
would be more predictable. This
approach would avoid potential
disputes with Edge corporations about
the accuracy of examiners’ time records
and the efficiency of their work. It also
would avoid an additional
recordkeeping burden for examiners.
Moreover, a general assessment would
assist the examined institutions to
budget for this cost and would allow
corporations experiencing serious
difficulties to correct their problems
without additional administrative fees
for more frequent and longer
examinations.
Table 1 contains a proposed schedule
of annual assessments for Edge
corporations. The proposed schedule is
on a sliding scale based on the size and
type of institution to be supervised. In
Table 1, the Board distinguished
between banking Edge corporations,
which conduct banking activities in the
United States relating to foreign or
international transactions, and
investment Edge corporations, which are
essentially holding companies for
foreign investments. The measure of size
used for banking Edge corporations is
their total assets, plus the volume of
their outstanding standby letters of
credit. Account has not been taken of
other off-balance sheet items—either
because of a lack of data or because the
available data measure the volume of
trading rather than the risk to an Edge
corporation, as in the case of foreign
exchange activities. The same measure
would be used for investment Edge
corporations, in their case consolidating
the assets and standby letters of credit
of their subsidiaries. It should be
emphasized that the proposed schedule
is tentative and subject to change based
upon review of public comments.
Table 2 contains the general structure
and size of Edge corporations and
indicates revenues that would have
been collected from these corporations
in 1985. The size of banking Edges
amounts to less than half that of
investment Edges, while the estimated
revenue in 1985 from these two types of
Edge corporations would have been
about equal. The estimated revenue to
be derived from each type of Edge
corporation is generally consistent with
the relative amount of time the Board
devotes to supervising that type of
corporation. Less time is spent in
supervising investment Edge
corporations per dollars of assets, in
part because their overseas subsidiaries
(which account for virtually all of their
assets) are examined only every two or
three years. During the other years their
assets and activities are reviewed using
information available at the parent Edge
corporation. In addition, since certain
U.S. laws and regulations are directed
only toward a corporation's domestic
business, the examinations of foreign
activities can be narrower in scope than
those of banking Edge corporations.
The Board has not proposed to charge
for supervision of organizations other
than Edge corporations. However, the
Board requests comment on the concept
of expanding such supervisory fees or
assessm ents to cover bank holding
company inspection and supervision.
Fees for Processing Bank Holding
Company, International Banking, and
Other Applications
The analysis performed by the Board
on the various types of applications that
it Processes is, as a general rule, not
duplicated by other banking agencies.
Board fees for processing such
applications generally would not
duplicate assessm ents by other bank
supervisors. Similarly, authority sought
in applications before the Board is not
granted by any other federal banking
agency, although in some cases
organizations applying for authority to
form a bank holding company or to
acquire a national or state bank may be
required to submit concurrent
applications to other federal or state
agencies. The Board has traditionally
attributed both direct and support costs
to the processing of applications. The
total of such direct and support costs
incurred by the Board in processing
applications were estimated to be $18.0
million in 1985.
As in the case of Edge corporation
supervision fees, the Board compared
the advantages of basing a proposed fee
schedule on staff time involved in
processing an application with the
alternative of establishing a standard
schedule of fees that would be paid in
filing specific types of applications.
Although the hourly rate approach
would provide a more exact method for
charging applicants for the costs
involved in processing specific
applications, the Board believes that this
approach would have significant
administrative problems. There are a
variety of Reserve Bank and Board
functions involved in the applications
process, and these functions involve
personnel with a wide range of salary
levels. Since applications staff members
work on several applications at the
same time, accounting for the hours
spent on any given application and,
therefore, the resulting billing would be
quite complicated. Even more important,
however, is the fact that issues raised by
specific applications often have policy
implications that go well beyond the
acceptance or rejection of that
application. Thus the costs incurred in
addressing those issues should properly
be spread over subsequent applications
which raise the same issues.
Under a standard fee approach, on the
other hand, a fee schedule could be
established for each type of application
or for a group of applications, with the
fees set to reflect the relative amount of
staff time generally spent on the various
types of applications (or groups of
applications). Under this approach,
applicants would know in advance of
the costs of processing an application.
Those applicants raising significant
issues of first impression, resolution of
which would expedite processing of
future applications, would not bear a
disproportionate part of the costs of
resolving such questions. There appear
to be fewer administrative problems
associated with this type of approach,
since staff would not have to compile
complex records of time spent on
individual applications.
The proposed Table 3 would group the
types of applications processed by four
general categories and would establish a
fee schedule necessary to permit
recovery of 1985 processing costs. The
Board recognizes that the volume of
applications submitted varies from year
to year, and that revenues would vary
with the volume of applications.
The proposed fee schedule contained
in Table 3, does not vary according to
the size of the applicant or organization
to be acquired. As a general rule— to
which there are many exceptions— the
applications of larger organizations
within a given category are more
complex than those of smaller
organizations and require more
processing time. Accordingly, the Board
has also proposed, and seeks comment
upon Table 4, a flexible rate schedule
for different types of applications based
upon the size of the applicant. Table 4
contains the same four groupings or
categories of applications as Table 3.
There is a maximum level of fees
proposed on the theory that processing
costs do not continue to increase in
direct proportion to the size of a banking
organization applicant. Moreover, there
is no sliding scale for applications to
install automated teller machines since
the costs of processing these
applications do not vary with size. The
size of the applicant in Table 4 is to be
computed on a pro forma consolidated
assets basis, that is after including the
assets of any acquisition that may be
the subject of the application for which
the fee is assessed. Table 4 presents an
alternative to Table 3 that would
recover the same level of 1985 costs.
4
Both Table 3 and Table 4 are based on
a system of fees for all applications filed
with the Board except for those
involving membership in the Federal
Reserve System. The Board believes
that a fee for membership would in all
cases constitute a double charge against
state banks that must pay certain fees or
assessm ents to state supervisory
agencies. Moreover, such banks already
bear additional costs in the form of the
requirement to purchase stock in a
Federal Reserve Bank.
This proposal also contemplates a fee
only for final applications and notices
filed with and accepted by the Federal
Reserve System, including notices for
change in control of a bank holding
company or state member bank,
applications by U.S. banking
organizations to engage in activities in
other countries, and applications for
merger, acquisitions, branches and
automated teller facilities. There will be
no assessm ent for review of draft
applications.
Specific Issues for Comment
The Board requests comment on the
following issues raised by the proposed
rulemaking.
1. The board seeks comment initially,
and most importantly, on the
advisability of charging fees for any of
its supervisory or regulatory services.
The Board requests comment on
whether the assessm ent of fees would
adversely affect the examination or
inspection process or diminish
cooperation and communication
between the Board and supervised
institutions to a significant degree. The
board also seeks suggestions on how
this proposal may be modified to
minimize any such potential problems.
2. The Board seeks comment as a
general matter on the scope of
supervisory and application activities
for which fees should be assessed. More
particularly, the Board seeks comment
on whether it should assess fees for the
general supervision and inspection of
bank holding companies. Such fees
would not appear to duplicate charges
by other regulatory agencies and some
of the arguments in favor of fees for the
supervision of Edge corporations would
apply equally to bank holding
companies.
3. In view of the tentative nature of
the proposed fee schedules, the Board
seeks comment on the following issues
with respect to fees for supervision of
Edge corporations:
(a) the distinction between banking &
investment Edges,
(b) the use of an annual assessment as
the basis for the fee schedules,
(c) the use of a sliding scale based on
size,
(d) how the size of Edge corporations
should be determined, including the use
of some off balanced sheet items in
determining size, and
(e) whether the proposed fee levels
are equitable and appropriate.
4. The Board seeks comment on the
following issues with respect to the fee
schedules for applications:
{a} the grouping of applications in
categories and appropriate placement of
each type of application,
(b) whether to choose the fee schedule
model or Table 3 or Table 4, and
(c) whether the proposed fees are
appropriate and equitable.
5. The Board requests comment upon
a variety of issues involved in
administering the proposed fee
schedules for applications should they
be adopted, including:
(a) When fees should be paid,
(b) Whether fees should be charged
for draft applications,
(c) Whether fees should be refunded
upon withdrawal of the application,
(d) Whether fees should be assessed
for emergency applications,
(ej Whether fees should be adjusted
for dual applications for the same
transaction,
(f) Whether fees should attach to
notices as w ell as applications, and
(g) Whether fees should be charged
for applications for membership in the
Federal Reserve System.
(h) Whether the Board should
separately recover the cost of publishing
notice of applications in the Federal
Register
T
a b l e
1 .— P
r o p o s e d
f o r
E
d g e
C
A
s s e s s m e n t
S
c h e d u l e
o r p o r a t io n s
T o ts l a s s e ts plus standby
tetters ot c red it (dollars in
m illions)
A ssess
this
am ount
Plus
2 5 to 1 0 0 ...................... .
1 0 0 to 5 0 0 ..............................
O v e r 5 0 0 ........................ .........
In v e s tm e n t E d g e s : 1
§ 0 to 1 0 m illio n ............ ........
1 0 to 1 0 0 .................................
1 0 0 to 1 ,0 0 0 ..........................
1 ,0 0 0 to 5 ,0 0 0 .......................
O v e r 5 ,0 0 0 ...... .......................
a b l e
F
2 .— E
E
r o m
R
s t im a t e d
C
d g e
s e s s m e n t
S
C
e v e n u e
B
o r p o r a t io n s
S
c h e d u l e s
N u m b er
of
c orpora
tions
S ize category 1
o l l e c t a b l e
a s e d
h o w n
T
in
A
o n
a b l e
s
1
Estim at
ed
re ve n u e
($ 0 0 0 )
A g g reg ate
ass ets + standby
L /C ($ 0 0 0 ,0 0 0 )
19
$94
§73
10 to 2 5 .................
12
194
69
2 5 to 1 0 0 ..............
27
1 ,5 0 9
254
1 00 to 1 ,0 0 0 ........
20
4 ,8 0 0
709
O v e r 5 0 0 ................
11
1 4 ,0 9 5
1 ,2 0 4
S u b to tal.............
89
2 0 ,6 9 2
2 ,3 0 9
Investm ent Edges:
Less th a n $ 1 0
m illion .................
16
50
10
10 to 1 0 0 ..............
15
622
58
1 0 0 to 1 ,0 0 0 .......
5
2 ,5 8 4
152
1 ,0 0 0 to 5 ,0 0 0 ....
9
2 5 ,2 8 0
1 ,1 6 3
O v e r 5 ,0 0 0 ...........
2
2 1,421
839
S u b to tal______
47
4 9 ,9 5 7
2 ,2 2 2
T o ta l__ _______
135
$ 7 0 ,6 4 9
$ 4,5 31
F
e d e r a l
p p l ic a t io n s
R
e s e r v e
S
c h e d u l e
S
f o r
u b m it t e d
t o
y s t e m
Prop o se d fe e
A ssets 1
30ver
S
e e
A
But not
o ver
This
am ount
Plus
Of
e xc e s s
$ 0 ............................
1 5 0 M ......................
IB ................. ...........
5 8 ............................
1 0 B ........................
5150M
IB
5B
108
-
$ 5 ,0 0 0
5 ,0 0 0
1 0 ,0 0 0
1 5 ,0 0 0
2 0 ,0 0 0
0
.0 0 0 0 0 5 8
S150M
.0 0 0 0 0 1 2
.0 0 0 0 0 0 9
IB
5B
------------ -------- —
C a te g o ry B *
$ 0 ............................
1 5 0 M ......................
IB ............................
5 B ........ ..................
1 0 B .........................
S150M
IB
58
100
$ 2 ,5 0 0
2 .5 0 0
5 ,0 0 0
7 .5 0 0
1 0 ,0 0 0
0
.0 0 0 0 0 2 9
.0 0 0 0 0 0 6
.0 0 0 0 0 0 5
$150M
IB
5B
C a te g o ry C s
$ 0 ..........................
1 5 0 M ......................
IB .............................
5 B ............................
1 0 B ........................
S 1S 0 M
IB
58
108
—
$ 1 ,2 5 0
1 .2 5 0
2 ,5 0 0
3 ,7 5 0
5 ,0 0 0
0
.0 0 0 0 0 0 3
S 150M
IB
.0 0 0 0 0 0 2
.0 0 0 0 0 1 4
58
-
C a te g o ry D 2 $ 1 ,0 0 0
T
Regulatory Flexibility Act
3 .— P
a b l e
P
t h e
F
F
r o p o s e d
r o c e s s in g
e d e r a l
e e
A
p p l ic a t io n s
R
e s e r v e
S
S
c h e d u l e
S
f o r
u b m it t e d
t o
y s t e m
1985
AppIL
cations
volu m e
T o ta l
re ve m m
dollars in
Thou
sands)
$ 8 ,0 0 0
1 ,9 5 8
$ 1 5 ,6 6 4
5 ,0 0 0
130
650
P roposed
te e
T y p e of application
C a teg o ry A: B ank holding
com pany form ations, a c
quisition of b a n ks a nd
acquisition o f nonbanks
(going concerns); bank
holding co m p an y stock
redem ptions
a nd
chan g e s in control; inter
inve s tm e n t
ap-
C a teg o ry B: Initial foreign
b ranches. E d g e A c t a n d
other in te m atio n ai appli
cations, do m e stic bank
m ergers, a n d ch an g e s in
control for s ta te m e m b e r
0 .0 0 0 1 3 0
0 .0 0 0 1 2 0
0 .0 0 0 1 0 0
1 00
notifications;
s ta te
m e m b er b an k b ran ch es,
0 .0 0 0 0 7 8
500
bank
quisitions (d e no vo ) a nd
export trading co m p an y
25
tions,
service
in ve s tm e n ts
0 .0 0 0 1 0 0
0
bank pre m is e s a n d issu
0 .0 0 0 0 6 0
7 ,5 0 0
a nce o f capital n o te s by
s la te
m em ber
banks;
5 7 ,0 0 0
0 .0 0 0 0 5 5
0 .0 0 0 0 4 0
10
100
1 ,0 0 0
2 3 7 ,0 0 0
0 .0 0 0 0 3 2
5 ,0 0 0
additional foreign branch
and investm ent notificaC ategory
D:
12 CFR Part 211
in
1 ,0 0 0
The Board is sensitive to the impact of
the proposed rule on small entities.
Consequently, the Board is considering
the imposition of fees for supervision of
Edge corporations and for applications
on a sliding scale based upon the size of
the regulated organization. It has
proposed comparatively limited fee
assessm ents for smaller organizations.
Moreover, the proposed schedules are
designed only to recover partially those
costs associated with a particular
supervisory activity. The Board believes
the fees payable will be sufficiendy
small as to have no significant impact
on the financial stability of a reasonably
profitable institution.
The proposed regulation imposes no
additional information collection
requirements.
List of Subjects
c o rp o ra
2 ,0 0 0
1 B a n k in g E d g e corp o ration s co n d u c t b anking activities in
th e
U n ite d
S ta te s re la te d
to (oretgn o r internatio nal
tra n s ac tio n s , w h ile in v e s tm e n t E d g e s a re essen tially hold
in g c o m p a n ie s to r foreign in vestm en ts. T h e s ize categ o rie s
(or b a n kin g E d g e s re fe r to their e stim a te d a ssets, b a se d on
d a ta th e y subm it o n F R 2 8 8 6 b reports. T h e s ize categ o rie s
for in v e s tm e n t E d g e s re fe r to th e e stim a te d co n so lid ated
a s s e ts o t th e s e co rp o ratio n s a n d th eir m ajority-ow ned (or
o th e rw is e co n tro lled subsidiaries.
t h e
F
r o p o s e d
r o c e s s in g
1 T o ta l a ss ets a re to b e m e as u red on a pro fo rm a basis—
th a t is. th e a p p lic a n t's to tal a s s e ts if its a p p licatio n is
a pproved.
1 For types o f a p plications a n d notifications intended in
e a c h category, s ee T a b le . 3
1 5 ,0 0 0
5 5 ,0 0 0
4 ,0 0 0
6 ,0 0 0
P
1 T h e size c ateg o rie s fo r banking corporation s re fer to their
estim ated assets, b a se d on data th e s e corporations subm it
on F R 2 8 8 6 b reports. T h e size categ o rie s for investm ent
E d g es re fer to th e e stim a te d c o nsolidated assets of th e s e
corporation s a n d th eir m ajority-ow ned (or otherw ise c o n
trolled) subsidiaries, since these corporation s a re principally
holding co m p an ie s for foreign investm ents.
$0
10
0 .0 0 0 2 0 0
4 .— P
a b l e
C a te g o ry A *
L ess than $ 1 0
m illio n ...... ..........
C a teg o ry C: B a n k holding
co m p an y nonbartk a c
$ 2 ,0 0 0
T
B anking Edges:
national
Of
ex
cess
o ver
(dol
lars m
m il
lions)
B a n k in g E dges: 1
$ 0 to 1 0 m illio n ....................
1 0 to 2 5 ...................................
T
2 ,5 0 0
628
1 ,0 0 0
64
1 ,5 7 0
64
2 ,7 8 0
$ 1 7 ,9 4 8
ATM
b ra n c h e s -----------------------------
Banks, banking, Federal Reserve
System, Foreign banking, Reporting and
recordkeeping requirements, Export
trading companies, Allocated transfer
risk reserve. Reporting and disclosure of
international assets, Accounting for fees
on international loans.
12 CFR Part 262
Administrative practice and
procedure. Banks, banking, Federal
Reserve System, Holding companies.
5
For the reasons set forth above, the
Board proposes to amend 12 CFR Parts
211 and 262 as follows:
PART 211 “ -INTERNATIONAL
BANKING OPERATIONS
It is proposed to amend 12 CFR Part
211 as follows:
1. The authority citation for Part 211
continues to read as follows:
Authority: Federal Reserve Act (12 U.S.C.
211 e t seq.)\ Bank Holding Company Act of
1956, as amended (12 U.S.C. 1841 e t seq.); the
International Banking Act of 1978 (Pub. L. 95369: 92 Stat. 607; 12 U.S.C. 3101 e t seq.); the
Bank Export Services Act (Title II. Pub. 97290, 96 Stat. 1235); and the International
Lending Supervision Act (Title DC Pub. L. 98181, 97 Stat. 1153).
2. Section 211. 4 is amended by adding
paragraph (a)(7) to read as follows:
§ 211.4 Edge and Agreement
Corporations.
(a) 4 4 *
(7) Fees. Edge corporations shall be
assessed an annual fee by the Board for
supervision and inspection. The
schedule of such fees is provided in
§ 262.3(d) of the Board’s Rules of
Procedure, 12 CFR 262.3(d).
§ 262.3 Applications.
*
*
<!
A
(d)
(1) The Board shall assess fees for
the filing of all applications (except
applications for membership in the
Federal Reserve System) according to
the following schedule.
e e
S
c h e d u l e
S
t io n s
s e r v e
S
P
f o r
u b m it t e d
t o
r o c e s s in g
F
t h e
A
e d e r a l
R
e
S
c h e d u l e
f o r
E
d g e
o r p o r a t io n s
T o ta l a ss ets plus standby
letters of credit (dollars in
m illions)
A s se s s
this
am ount
Plus
Of
excess
o ver
(d o llars
in
mil
lions)
Processing fe a
B ut not
OV€?
O ver
$ 2 ,0 0 0
0 .0 0 0 2 0 0
.....
4 ,0 0 0
0 .0 0 0 1 3 0
10
2 5 to 1 0 0 .................. „ ........
6 ,0 0 0
0 .0 0 0 1 2 0
25
1 5 .0 0 0
0 .0 0 0 1 0 0
1 00
5 5 .0 0 0
0 .0 0 0 0 7 8
500
1 .0 0 0
0 .0 0 0 1 0 0
0
2 ,0 0 0
0.G 0C0S0
10
10 to 2 5 ......................
1 0 0 to 5 0 0 ...
This
a m ount
Pluo
__________
Of
QKC0SS
$ 0 ter 1 0 m illio n ..
10 to 1 0 0 ....
,_____
100 to 1 ,0 0 0 ................. ..
1 .0 0 0 to 5 .0 0 0 ....... ...........
C a teg o ry A *
$ 0 ............................
1 5 0 M ......................
S 1S 0 M
S 5 .0 00
5 .0 0 0
1B
1 8 ............................
5B
5 B ______________
10B
1 0 B ........................
O v e r 5 ,0 0 0 ___
.0 0 0 0 0 5 8
S 150M
1 0.0 00
.0 0 0 0 0 1 2
1B
1 5 .0 0 0
.0 0 0 0 0 0 9
5B
.0 0 0 0 0 2 9
S150M
Category B 1
S 15 0 M
$ 2 ,5 0 0
1 5 0 M ......................
1B
2 ,5 0 0
o
1 B ............................
5B
5 .0 0 0
.0 0 0 0 0 0 6
18
5 B ..... ........... ..........
108
7 ,5 0 0
.0 0 0 0 0 0 5
5B
1 0 8 ........................
1 0 ,0 0 0
.
•
1 B ...........................
IB
5B
2 ,5 0 0
0000003
1B
5 B ............. ..............
10B
3 .7 5 0
.0 0 0 0 0 0 2
5B
1 0 B ........................
.0 0 0 0 0 1 4
S150M
5 .0 0 0
form ations, acquisition of banks and acquisition o f nonbanks,
(going co n ce rn s ); b a n k holding c o m pany stock redem otions,
a n d c h an g e s in control: international inve s tm e n t applications.
"C a te g o ry B a p plications include: initial foreign b ran cn es.
E d g e A c t a nd o th e r international applications, d o m estic bank
m erg ers, a n d c h a n g e s in control for s ta te m e m b e r b anks.
‘ C a te g o ry C applications include: B ank holding co m p an y
n o n b an k acquistions (d e novo) and export trading co m p an y
notifications: s ta te m e m b e r bank bra n ch e s , bank service
corporation s, in ve s tm e n ts in bank pre m is e s and issuance of
c ap ita l n o te s by s ta te m em b er banks: additional foreign
b ran ch a n d in ve s tm e n t notifications.
"C a te g o ry D includes A T M b ran ch es. All A T M b ran ch es
pay the s a m e p rocessing fee
(2) The Board shall assess annual fees
4.
Paragraphs 262,3 (d) through (1) are
for the supervision and inspection of
redesignated as paragraphs 262.3 (e)
Edge corporations (as defined in section
through (m).
6
100
0 .0 0 0 0 4 0
1 ,0 0 0
2 3 7 .0 0 0
0 .0 0 0 0 3 2
5 .0 0 0
1 B anking E d g e corporatio n s c o n d u c t b an kin g a ctivtaas in
th e U nited S ta te s re la te d to foreign o r in tern atio n al tra n s a c
tions. w hile in ve s tm e n t E dges a re e ss en tially hotdsng c o m p a
nies for foreign in vestm en ts. T h e s ize c ate g o rie s for banking
E d g es re fer to their estim a te d a s s ets, b a se d on d a ta they
subrrw o n F R 2 8 8 6 b reports. T h e s iz e c ateg o rie s for in ve s t
m e n t E d g es re fe r to th e estim a te d c o n so lid a te d a s s e ts of
th e s e c o rporation s and their m a ic n ty -o w n e d (or oth e rw ise
co n tro lled ) subsidiaries.
Board of Governors of the Federal Reserve
System. November 12,1986.
William W. Wiles,
[FR Doc. 86-25926 Filed 11-18-56: 8:45 am]
$ 1 ,2 5 0 I 0
1 ,2 5 0
0 .0 0 0 0 5 5
S e c r e ta r y o f th e B oard.
C ategory C *
S15C M
.
7 ,5 0 0
5 7 .0 0 0
0
2 0 .0 0 0
$ 0 ................. ..........
$0
In ve s tm e n t Edges: 1
C ateg o ry D 1 $ 1 ,0 0 0
It is proposed to amend 12 CFR Part
262 as follows:
'T o ta l ass ets are to be m easured on a pro form a b asis—
a t is, th e a p p lic a n t's total a ssets it its application is
3.
The authority citation for Part 262 is th
a p p ro ve d .
revised to read as follows:
3 C a te g o ry A applications include: bank holding co m p an y
§ 2S223 [Amended]
C
p p l ic a
y s t e m
A sse ts 1
1 5 0 M ............. .
Authority: Administrative Procedure Act (5
U.S.C. 552); Bank Holding Company Act (12
U.S.C. 1841 e t seq.); Federal Reserve Act (12
U.S.C. 211 e ts e q .y , International Banking Act
of 1978 (12 U.S.C. 3101 e t s e q .) and the
International Lending Supervision Act (12
U.S.C. 3901 e t seq.).
s s e s s m e n t
B anking Edges: *
F
SO............................
PART 262—RULES OF PROCEDURE
25(a) of the Federal Reserve Act, 12
U.S.C. 611 e t seq.) according to the
following schedule.
5. A new paragraph (d) is added to
§ 262.3 to read as follows:
SILLING CODE 6210-01-K)
@FedFRASER