Full text of Federal Reserve Bank of New York Circulars : [Rules Regarding Delegation of Authority of the Board of Governors of the Federal Reserve System]

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AT^ol

May 29, 197^
To the Addressee:
E n c l o s e d is a copy of the Rules Regarding Delegation of Authority
o f the B o a r d of Governors of the Federal Reserve System, as amended effective
April U, 197*+.

The reprinted Rules replace the April 2, 1970 prin t i n g of the

Rules, toge t h e r with all amendments thereto, including the amendments sent to
y o u wit h o u r C ircular No. 737^, dated April 8, 197^.




Circulars Division
Federal Reserve Bank o f New York




BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM

RULES REGARDING DELEGATION OF AUTHORITY

(12 CFR 265)

As amended effective April 4, 1974

Any inquiry relating to this regulation should be addressed to the Federal
Reserve Bank of the Federal Reserve District in which the inquiry arises.

CONTENTS

Se c .

265.1— D e l e g a t i o n

of

Se c .

265.1a— S p e c i f i c

F u n c t io n s

D ele­
3

(a) Any Board M ember designated by
the C h a i r m a n ......................................

3

(b) The Committee on Organization,
Compensation, and Building Plans

3

Sec.

to

265.2— S p e c i f i c
gated
and

F u n c t io n s
to

to

B an ks

B oard

3

M em bers

gated

(a) The Secretary of the B o a r d .................
(b) The General Counsel of the Board . .
(c) The Director of the Division of Super­
vision and Regulation .....................
(d) The Director of the Division of F ed ­
eral Reserve Bank Operations . . .
(e) The Director of the Division of Per­
sonnel Administration .....................
(f) Each Federal Reserve B a n k ..............
(g) The Director of the Division of Inter­
national Finance ...............................

F u n c t io n s

G e n e r a l l y ....................................

D ele­

Board E m p lo y e e s
F ederal

R eserve

...............................................

Se

c

. 2 6 5 .3 — R

4

e v ie w
gated

o f

L

A

c t io n

evel

at

D

e l e

4
4
4
6
6
6
13

­

.....................................

13

STATUTORY AUTHORITY

This regulation is issued under authority of
section 11 (k) of the Federal Reserve Act (12
U.S.C. 2 4 8 ( k ) ). which reads as follows:
Sec. 11. The Board of Governors of the F ed ­
eral Reserve System shall be authorized and em ­
powered:

(k) To delegate, by published order or rule
and subject to the Admininstrative Procedure Act,




any of its functions, other than those relating to
rulemaking or pertaining principally to monetary
and credit policies, to one or more hearing exam­
iners, members or employees of the Board, or
Federal Reserve Banks. The assignment of re­
sponsibility for the perform ance of any function
that the Board determines to delegate shall be a
function of the Chairman. The Board shall, upon
the vote of one member, review action taken at a
delegated level within such time and in such
manner as the Board shall by rule prescribe.

RULES REGARDING DELEGATION OF AUTHORITY*
(12 C F R 265)
As amended effective April 4, 1974

vided, That such acquisition does not result, ei­
ther directly or indirectly, in the acquisition by
such bank or corporation of effective control of
Pursuant to the provisions of section 11 (k ) of
any such company (other than a company p er­
the Federal Reserve Act (12 U.S.C. 2 4 8 ( k ) ) . the
forming nominee, fiduciary, or other banking
Board of Governors of the Federal Reserve Sys­
services incidental to the activities of a foreign
tem delegates authority to exercise those of its
branch or affiliate of such bank or corporation);
functions described in this Part, subject to the
and to approve any such acquisition that may ex­
limitations and guidelines herein prescribed. The
ceed the limitations in section 2 5 (a ) of the F e d ­
Chairman of the Board of Governors assigns the
eral Reserve Act based on such a corporation's
responsibility for the perform ance of such dele­
capital and surplus.
gated functions to the persons herein specified. A
(3) To permit an Edge or Agreement corpora­
delegee may submit any matter to the Board for
tion to exceed the limitations in § 2 11.9(b) and
determination if he considers such submission ap­
(c) of this chapter (Regulation K ) . 1
propriate because of the importance or complex­
(4) Under § 21 1.4 of this chapter (Regulation
ity of the matter.
K ), to approve the issuance by an Edge or
Agreement corporation or a subsidiary thereof of
S ECTION 265.1a— SPECIFIC F U N C T IO N S
debentures, bonds, promissory notes (with a m a ­
D E L E G A T E D TO BOARD M EM BERS
turity of more than one year), or similar obliga­
(a)
Any Board member designated by the tions: Provided, That such corporation is deter­
mined to be in satisfactory condition and the
Chairman is authorized under sections 25 and
delegee is satisfied that the case involves no ques­
2 5 (a) of the Federal Reserve Act and Parts 211
tion of general policy.
and 213 of this chapter (Regulations K and M ) :
(b)
The Committee on Organization, Compen­
(1) To approve the establishment, directly or
sation,
and
Building Plans, consisting of three
indirectly, of a foreign branch or agency by a
members
of
the Board designated by the Chair­
member bank or corporation organized under
man, is authorized, pursuant to the twenty-second
section 25 (a) (an “Edge'’ corporation) or oper­
paragraph of section 4 of the Federal Reserve
ating under an agreement with the Board pur­
Act (12 U.S.C. 307) and subject to such general
suant to section 25 (an “Agreement” corpora­
guidelines as may be prescribed by the Board:
tion) which has already established, or has been
(1)
To approve (i) changes in the salary
authorized to establish, branches in two or more
structure for officers, other than the President
foreign countries.
and First Vice President, of each Federal Reserve
(2) To grant specific consent to the acquisi­
Bank and branch theieof, and (ii) the salary of
tion. either directly or indirectly, by a member
any officer of a Federal Reserve Bank holding a
bank or an Edge or Agreement corporation of
position below that of Senior Vice President, sub­
stock of (i) a company chartered under the laws
ject, however, to approval of such salaries by the
of a foreign country or (ii) a company chartered
Board in connection with year-end salary reviews
under the laws of a State of the United States
and subject to guidelines approved by the Board
that is organized and operated for the purpose of
under which each Reserve Bank makes salary
financing exports from the United States: Pro­
recommendations.

S ECTION 265.1— D E L E G A T IO N OF
F U N C T IO N S G E N E R A L L Y

*This text corresponds to the Code of Federal Regula­
tions, Title 12, Chapter II, Part 265, cited as 12 CFR
265. The words “ this Part," as used herein, mean Rules
Regarding Delegation of Authority.




’ Subject, of course, to the limitations in section 25(a)
relating to aggregate liabilities outstanding on debentures,
bonds, and promissory notes.

3

§ 265.2

DELEGATION OF AUTHORITY

(2) To approve (i) changes in maximum and
minimum salaries for the respective grades of the
salary structure for nonofficial employees of each
Federal Reserve Bank and branch thereof, (ii)
an increase in the special maximum salary for
Grade 16 of such salary structure for each Re­
serve Bank or branch, and (iii) the payment of
salary to any such employee in excess of the
maximum or below the minimum for the grade
in which the employee's position is classified.
(3) To approve (i) am endments to the au­
thorization from the Board of Governors to the
Federal Reserve Banks for the payment of sepa­
ration allowances upon the involuntary termina­
tion of employment of any officer or employee of
a Federal Reserve Bank or branch, and (ii) pay­
ment of such a separation allowance to any
officer of a Reserve Bank or branch.
(4) To approve the payment of salary to any
officer (other than the President or First Vice
President) or employee of a Federal Reserve
Bank whose services are retained for more than
90 days after attainment of normal retirement
age.
(5) To approve amendments to the Guidelines
and Objectives for Health Insurance prescribed
by the Board of Governors for officers and em­
ployees of Federal Reserve Banks and their
branches. In the exercise of any authority dele­
gated under this paragraph ( b ) , the Committee
shall be guided by the objectives of promoting
the efficiency of Reserve Bank operations and of
maintaining the morale of Reserve Bank person­
nel and shall give appropriate attention to salary
levels and employment practices in the relevant
community but with due regard to the public
character of the Federal Reserve System.

the Bank Holding Company Act (12 U.S.C.
18 4 1 (g )), to determine whether a company that
transfers shares to any of the types of transferees
specified therein is incapable of controlling the
transferee.
(2) U nder the provisions of section 4 ( c ) ( 8 )
of the Bank Holding Company Act (12 U.S.C.
1843(c)), to determine that a company engaged
in activities of a financial, fiduciary, or insurance
nature falls within the exemption described
therein permitting retention or acquisition of con­
trol thereof by a bank holding company.
(3) Under
the
provisions
of
sections
1101-1103 of the Internal Revenue Code (26
U.S.C. 1101-1103), to make certifications (prior
and final) for Federal tax purposes with respect
to distributions pursuant to the Bank Holding
Company Act.
(4) U nder the provisions of section 4 ( c ) ( 8 )
of the Bank Holding Company Act (12 U.S.C.
1 8 4 3 ( c ) ( 8 ) ) and § 222.4(a) of this chapter
(Regulation Y ), to issue an order for a hearing
to be conducted for the purpose of determining
whether a company engaged in activites of a fin­
ancial, fiduciary, or insurance nature falls within
the exemption described therein permitting reten­
tion or acquisition of control thereof by a bank
holding company.
(5) Pursuant to the provisions of Part 261 of
this chapter, to make available information of the
Board of the nature and in the circumstances de­
scribed in § 261.6(b) and § 261.7 of that Part.
(c)
The Director of the Division of Supervi­
sion and Regulation (or. in his absence, the Act­

ing Director) is authorized:
( 1 ) U nder the provisions of the seventh
paragraph of section 9 of the Federal Reserve
Act (12 U.S.C. 325), to select or to approve the
appointment of Federal Reserve Bank examiners,
assistant examiners, and special examiners.
(2) Under the provisions of the nineteenth
paragraph of section 2 5 ( a ) of the Federal Re­
serve Act (12 U.S.C. 625) and § 211.9(e) of
this chapter (Regulation K ), to require submis­
sion and publication of reports by an “Edge A ct”
corporation.
(3) U nder the provisions of section 5 of the
Bank Holding Company Act (12 U.S.C. 1844),
after having received clearance from the Bureau
of the Budget (where necessary) and in accord­
ance with the law of Administrative Procedure (5

SECTIO N 265.2— S PE C IFIC F U N C T IO N S
D E L E G A T E D TO BOARD E M P L O Y E E S A N D
TO F E D E R A L RESERVE BANKS
(a) The Secretary of the Board (or. in his ab­
sence. the Acting Secretary) is authorized, under
the provisions of Part 261 of this chapter, to
make available, upon request, information in the
records of the Board.
(b) The General Counsel of the Board (or, in
his absence, the Acting General Counsel) is au­
thorized:
(1) U nder the provisions of section 2 (g) of




4

DELEGATION OF AUTHORITY

§ 2 6 5 .2

U.S.C. 553), to promulgate registration, annual
report, and other forms for use in connection
with the administration of such Act.
(4) Under the provisions of section 12(g) of
the Securities Exchange Act (15 U.S.C. 181( g) ) :
(i) to accelerate the effective date of a regis­
tration statement filed by a member State bank
with respect to its securities;
(ii) to accelerate termination of the registra­
tion of such a security that is no longer held of
record by 300 persons; and
(iii) to extend the time for filing a registration
statement by a member State bank.
(5) U nd er the provisions of section 12(d) of
the Securities Exchange Act (15 U.S.C. 7 8 /( d ) ) ,
to accelerate the effective date of an application
by a member State bank for registration of a se­
curity on a national securities exchange.
(6) Under the provisions of section 12(f) of
the Securities Exchange Act (15 U.S.C. 7 8 /( f ) ) ,
to issue notices with respect to an application by
a national securities exchange for unlisted trading
privileges in a security of a member State bank.
(7) U nder the provisions of section 12(h) of
the Securities Exchange Act (15 U.S.C. 7 8 / ( h ) ) ,
to issue notices with respect to an application by
a member State bank for exemption from regis­
tration.
(8) U nder the provisions of § 206.5(f) and
(i) of this chapter (Regulation F ) , to permit the
mailing of proxy and other soliciting materials by
a member State bank before the expiration of the
time prescribed therein.
(9) U nder the provisions of §§ 206.41,
206.42, and 206.43 (Instructions as to Financial
Statements 9, 4, and 3, respectively) of this
chapter (Regulation F ) , to permit the omission
of financial statements from reports by a member
State bank a n d / o r to require other financial state­
ments in addition to, or in substitution for, the
statements required therein.
(10) To exercise the functions described in
subparagraph (4) of paragraph (f) of this sec­
tion in cases in which the conditions specified
therein as prerequisites to exercise of such func­
tions by the Federal Reserve Banks are not pres­
ent or in which, even though such conditions are
present, the appropriate Federal Reserve Bank
considers that nevertheless it should not take ac­
tion on the member bank’s request, and to exer­
cise the functions described in subparagraphs




( 1 ), ( 2 ), and (7) of paragraph (f) of this sec­
tion in cases in which the appropriate Federal
Reserve Bank considers that it should not take
action to approve the member bank ’s request.
(11) U nder sections 25 and 2 5 (a ) of the F e d ­
eral Reserve Act and Parts 211 and 213 of this
chapter (Regulations K and M ) , to approve in­
creases and reductions in the capital stock and
amendments to the articles of association of a
corporation organized under section 2 5 ( a ) and
additional investments by a member bank in the
stock of a corporation operating under an agree­
ment with the Board pursuant to section 25.
(12) To exercise the functions described in
subparagraphs (15) (i) and (ii) of paragraph
( f ) ; and to exercise the functions described in
subparagraph (15) (iii) of paragraph (f) in those
cases in which the appropriate Federal Reserve
Bank concludes that, because of unusual consid­
erations, or for other good cause, it should not
take action.
(13) U nder the provisions of § § 207.2(f),
2 2 0.2(e ), and 221.3(d) of this chapter (Regula­
tions G, T, and U, respectively), to approve issu­
ance of the list of OTC margin stocks and to
add, omit, or remove any stock in circumstances
indicating that such change is necessary or appro­
priate in the public interest.
(14) U nder the provisions of the seventh p a r­
agraph of section 25 of the Federal Reserve Act
(12 U.S.C. 602), to require submission of a re­
port of condition respecting any foreign bank in
which a member bank holds stock acquired under
the provisions of § 213.4 of this chapter (Regula­
tion M ).
(15) U nder the twelfth pargraph of section 13
of the Federal Reserve Act (39 Stat. 754) and
§ 203.2 of this chapter (Regulation C), to permit
any member bank to accept drafts or bills of ex­
change drawn upon it for the purpose of furnish­
ing dollar exchange.
(16) Under the provisions of section 4 ( b ) of
the Federal Deposit Insurance Act (12 U.S.C.
1814(b), to certify to the Federal Deposit In ­
surance Corporation that, with respect to the ad­
mission of a State-chartered bank to Federal Re­
serve membership, the factors specified in section
6 of that Act (12 U.S.C. 1816) were considered.
(17) U nder section 1 8 ( c ) ( 4 ) of the Federal
Deposit Insurance Act (12 U.S.C. 1 8 2 8 ( c ) ( 4 ) ) ,
to furnish to the Comptroller of the Currency
5

DELEGATION OF AUTHORITY

§ 2 6 5 .2

and the Federal Deposit Insurance Corporation
reports on competitive factors involved in a bank
merger required to be approved by one of those
agencies if each of the appropriate departments
or divisions of the appropriate Federal Reserve
Bank and the Board of Governors is of the view
that the proposed merger either would have no
adverse competitive effects or would have only
slightly adverse competitive effects, and if no
member of the Board has indicated an objection
prior to the forwarding of the report to the ap­
propriate agency.
(18) U nder the provisions of § 207.4(a) (2) (ii)
of this chapter (Regulation G) to approve repay­
ments of the ‘deficiency’ on stock option loans in
lower amounts and over longer periods of time
than those specified in the regulation.
(19) Pursuant to the provisions of Part 261 of
this chapter to make available reports and other
information of the Board acquired pursuant to
Part 207, 220, 221, and 224 (Regulations G, T,
U, and X ) of the nature and in the circum­
stances described in § 2 6 1 .6 ( a ) ( 2 ) and (3) of
Part 261.
(d)
The Director of the Division of Federal
Reserve Bank Operations (or, in his absence, the
Acting Director) is authorized:

(e) The Director of the Division of Personnel
Administration (or, in his absence, the Acting

Director) is authorized, under the provisions of
the twenty-first paragraph of section 4 of the
Federal Reserve Act (12 U.S.C. 306), to approve
the appointment of assistant Federal Reserve
agents (including representatives and alternate
representatives of such agents).
(f) Each Federal Reserve Bank is authorized,
as to member banks or other indicated organiza­
tions headquartered in its district:
(1)
U nder the provisions of the third p ara­
graph of section 9 of the Federal Reserve Act
(12 U.S.C. 321), section 5155 of the Revised
Statutes (12 U.S.C. 36), and § 208.8 of this
chapter (Regulation H ) , to approve the establish­
ment by a State member bank of a domestic
branch if the proposed branch has been approved
by the appropriate State authority and if the Re­
serve Bank is satisfied that approval is warranted
after giving consideration to:
(i)
the bank’s capitalization in relation to the
character and condition of its assets and to its
deposit liabilities and other corporate responsibil­
ities, including the volume of its risk assets and
of its marginal and inferior quality assets, all

(1) U nder the provisions of the sixteenth p ar­
agraph of section 4 of the Federal Reserve Act
(12 U.S.C. 304), to classify member banks for
the purposes of electing Federal Reserve Bank
class A and class B directors, giving consideration
to (i) the statutory requirement that each of the
three groups shall consist as nearly as may be of
banks of similar capitalization and (ii) the desir­
ability that every member bank have the opportu­
nity to vote for a class A or a class B director at
least once every three years.
(2) U n der the provisions of the third para­
graph of section 16 of the Federal Reserve Act
(12 U.S.C. 4 1 3 ) , to apportion credit among the
Reserve Banks for unfit notes that are destroyed,
giving consideration to the net number of notes
of each denomination that were issued by each
Reserve Bank during the preceding calendar year.
(3) U nder the provisions of section 19(b) of
the Federal Reserve Act (12 U.S.C. 461) and
§ 204.2(a) (2) of this chapter (Regulation D), to
permit a member bank in a reserve city to main­
tain reserves at the ratios prescribed for banks




not in reserve cities, provided such bank holds
demand deposits of not more than $25 million,
or, demand deposits less than the am ount of de­
mand deposits of the largest bank in the city that
is permitted to maintain reserves at such lower
ratio, whichever is larger, giving consideration to
factors such as the am ount of the bank’s re­
sources, total deposits, demand deposits, demand
deposits owing to banks, types of depositors and
borrowers, turnover of demand deposits, geo­
graphical location within the city, and competi­
tive position with relation to other banks in the
city.
(4)
U nder the provisions of §§ 21 6 .5 (b ),
2 1 6 .5 (d ), and 216.6 of this chapter (Regulation
P ), with respect to Federal Reserve Banks and
branches: (i) to require reports on security de­
vices; (ii) to require special reports; and (iii) to
determine, in view of the provisions of §§ 216.3
and 216.4, whether security devices and proce­
dures are deficient in meeting the requirements of
Part 216, to determine whether such require­
ments should be varied in the circumstances of a
particular banking office, and to require correc­
tive action.

6

DELEGATION OF AUTHORITY

§ 2 6 5 .2

(i) in conformity with the requirements of
Federal law, and
(ii) adequate in relation to the character and
condition of its assets and to its deposit liabilities
and other corporate responsibilities, including the
volume of its risk assets and of its marginal and
inferior quality assets, all considered in relation
to the strength of its management.

considered in relation to the strength of its m an­
agement;
(ii) the ability of bank’s management to cope
successfully with existing or foreseeable problems,
and to staff the proposed branch without any sig­
nificant deterioration in the overall management
situation;
(iii) the convenience and needs of the com ­
munity;
(iv) the competitive situation (either actual or
p otential);
(v) the prospects for profitable operations of
the proposed branch within a reasonable time,
and the ability of the bank to sustain the opera­
tional losses of the proposed branch until it be­
comes profitable; and
(vi) the reasonableness of bank's investment
in bank premises after the expenditure for the
proposed branch.
(2) U nder the provisions of the sixth p ara­
graph of section 9 of the Federal Reserve Act
(12 U.S.C. 324) and the provisions of section
5199 of the Revised Statutes (12 U.S.C. 60), to
permit a State member bank to declare dividends
in excess of net profits for the calendar year
combined with the retained net profits of the pre­
ceding two years, less any required transfers to
surplus or a fund for the retirement of any pre­
ferred stock, if the Reserve Bank is satisfied that
approval is warranted after giving consideration
to:
(i) the bank’s capitalization in relation to the
character and condition of its assets and to its
deposit liabilities and other corporate responsibil­
ities, including the volume of its risk assets and
of its marginal and inferior quality assets, all
considered in relation to the strength of its m an­
agement; and
(ii) the bank’s capitalization after payment of
the proposed dividend.
(3) U nder the provisions of the tenth p ara­
graph of section 9 of the Federal Reserve Act
(12 U.S.C. 328), to approve or deny applications
by State banks for waiver of the required six
months’ notice of intention to withdraw from
Federal Reserve membership.
(4) U nder the provisions of the eleventh para­
graph of section 9 of the Federal Reserve Act
(12 U.S.C. 329), to permit a State member bank
to reduce its capital stock if its capitalization
thereafter will be:




(5 ) U nder the provisions of the seventeenth
paragraph of section 9 of the Federal Reserve
Act (12 U.S.C. 334), to extend the time, for
good cause shown, within which an affiliate of a
State member bank must file reports.
(6) U nder the provisions of the seventh p a ra ­
graph of section 13 of the Federal Reserve Act
(12 U.S.C. 372), to permit a m ember bank to
accept commercial drafts in an aggregate amount
at any one time up to 100 per cent of its capital
and surplus.
(7) U nder the provisions of section 24A of
the Federal Reserve Act (12 U.S.C. 3 7 I d ) , to
permit a State m ember bank to invest in bank
premises in an amount in excess of its capital
stock, if the Reserve Bank is satisfied that ap­
proval is warranted after giving consideration to:
(i) the bank's capitalization in relation to the
character and condition of its assets and to its
deposit liabilities and other corporate responsibil­
ities, including the volume of its risk assets and
of its marginal and inferior quality assets, all
considered in relation to the strength of its m a n ­
agement: And provided , T hat
(ii) upon completion of the proposed invest­
ment, the bank’s aggregate investment (direct and
indirect) in bank premises plus the indebtedness
of any wholly-owned bank premises subsidiary
will not exceed 40 per cent of its total capital
funds (including capital notes and debentures)
plus reserves other than valuation reserves.
(8) U nder the provisions of the ninth p a ra ­
graph of section 2 5 ( a ) of the Federal Reserve
Act (12 U.S.C. 615), to extend the time in
which an “ Edge Act" corporation must divest it­
self of stock acquired in satisfaction of a debt
previously contracted.
(9) U nder the provisions
paragraph of section 2 5 (a )
serve Act (12 U.S.C. 6 28),
of corporate existence of an
tion.
7

of the twenty-second
of the Federal R e­
to extend the period
“Edge Act” corpora­

DELEGATION OF AUTHORITY

§ 2 6 5 .2

(10) U nder the provisions of section 5 ( a ) of
the Bank Holding Com pany Act (12 U.S.C.
1844(a)), to extend the time within which a
bank holding company must file a registration
statement.
(11) U nder the provisions of section 4(a) of
the Bank Holding Com pany Act (12 U.S.C.
1 8 4 3 ( a ) ), to extend the time within which a
bank holding company must divest itself of inter­
ests in nonbanking organizations.
(12) U nder the provisions of section 4(c) (2)
of the Bank Holding Com pany Act (12 U.S.C.
1 8 4 3 ( c ) ), to extend the time within which a
bank holding company must divest itself of inter­
ests in a nonbanking organization acquired in sat­
isfaction of a debt previously contracted.
(13) U nder the provisions of section 5 (c ) of
the Bank Holding Com pany Act (12 U.S.C.
1 8 4 4 (c )), to require reports under oath to deter­
mine whether a company is complying with the
provisions of such Act and the Board’s regula­
tions promulgated thereunder.
(14) U nder the provisions of § 208.10(c) of
this chapter (Regulation H ) , to extend the time
within which a member bank that has given no ­
tice of intention to withdraw from membership
must surrender its Federal Reserve Bank stock
and its certificate of membership.
(15) U nder the provisions of §§ 2 1 6 .5(b),
2 1 6 .5 (d ), and 216.6 of this chapter (Regulation
P ), with respect to State member banks only: (i)
to require reports on security devices; (ii) to re­
quire special reports; and (iii) to determine, in
view of the provisions of §§ 216.3 and 216.4,
whether security devices and procedures are defi­
cient in meeting the requirements of Part 216, to
determine whether such requirements should be
varied in the circumstances of a particular bank­
ing office, and to require corrective action.
(16) U nder § 208.9(a) of this chapter (Regu­
lation H ), for good cause shown, to extend the
time for publication of reports of condition, such
extensions not ordinarily to be for more than 10
days except in very unusual circumstances be­
yond control of the reporting bank.
(17) U nder the provisions of § 2 07.1(b) of
this chapter (Regulation G ) , to approve applica­
tions for termination of registration by persons
who are registered pursuant to § 20 7 .1 (a ).
(18) U nder the provisions of the second p ara­
graph of section 2 5 ( a ) of the Federal Reserve




Act (12 U.S.C. 612) and § 211.3 of this chapter
(Regulation K ) , to approve am endments to the
Articles of Association of any “Edge Act” corpo­
ration to reflect the following: (i) any increase in
the capital stock of such corporation where all
additional shares are to be acquired by existing
shareholders; (ii) any change in the location of
the home office of such corporation within the
city where such corporation is presently located;
and (iii) any change in the number of members
of the Board of Directors of such corporation.
(19) U nder § 225.4(d) of this chapter (Regu­
lation Y ),
(i) to notify a bank holding company that has
informed it of a proposed acquisition of a going
concern that, because the circumstances sur­
rounding the application indicate that additional
information is required or that the acquisition
should be considered by the Board, the acquisi­
tion should not be consummated until specifically
authorized by the Reserve Bank or by the Board.
(ii) to permit a bank holding company that
has informed it of a proposed acquisition of a
going concern to make the acquisition before the
expiration of the 45-day period referred to in
that paragraph, because exigent circumstances
justify consummation of the acquisition at an ear­
lier time.
(20) U nder § 2 2 5 .4 ( b ) ( 1 ) of this chapter
(Regulation Y ), and subject to § 265.3 if a per­
son submitting adverse comments that the Re­
serve Bank has decided are not substantive files a
petition for review by the Board of that decision,
(i) to permit a bank holding company that
has furnished it with a copy of a duly published
notice of a proposal to engage de novo in activi­
ties specified in § 225.4(a) (or retain shares in a
company established de novo and engaging in
such activities) if its evaluation of the considera­
tions specified in section 4 ( c ) ( 8 ) of the Bank
Holding Com pany Act leads it to conclude that
the proposal can reasonably be expected to pro­
duce benefits to the public.
(ii) to notify a bank holding company that
has furnished it with a duly published notice of
the kind described in subdivision (i) of this subparagraph that the proposal should not be con­
summated until specifically authorized by the Re­
serve Bank or by the Board or that the proposal
should be processed in accordance with the pro­
cedures of § 225.4(b) ( 2 ).
8

DELEGATION OF AUTHORITY

§ 2 6 5 .2

(iii)
to permit a bank holding company that
has furnished it with a duly published notice of
the kind described in subdivision (i) of this subparagraph to consummate the proposal before the
expiration of the 45-day period referred to in
§ 225.4(b) (1), because exigent circumstances jus­
tify consummation at an earlier time.
(21) U nder § 2 2 5 .4 ( c ) ( 2 ) of this chapter
(Regulation Y) to permit or stay a proposed de
novo modification or relocation of activities en­
gaged in by a bank holding company on the
same basis as de novo proposals under subpara­
graph (20) of this paragraph.
(22) U nder the provisions of section 3 ( a ) ( 1 )
of the Bank Holding Company Act (12 U.S.C.
1842), to approve the formation of a bank hold­
ing company through the acquisition by a com­
pany of a controlling interest in the voting shares
of one or more banks, if all of the following con­
ditions are met:
(i) no member of the Board has indicated an
objection prior to the Reserve Bank’s action.
(ii) all relevant departments of the Reserve
Bank recommended approval.
(iii) no substantive objection to the proposal
has been made by a bank supervisory authority,
the United States Department of Justice, or a
member of the public.
(iv) no significant policy issue is raised by the
proposal as to which the Board has not expressed
its view.
(v) considerations relating to the convenience
and needs of the communities to be served are
consistent with or lend weight toward approval of
the application.
(vi) in the event any debt incurred by the
holding company to purchase shares of any bank
involved in the proposal:
(a) an agreed plan for amortization of the
debt within a reasonable time exists, such period
normally not exceeding 12 years.
(b) the interest rate on any loan to purchase
the bank shares will be comparable with other
stock collateral loans by the lender to persons of
comparable credit standing.
(c) no compensating balances, specifically at­
tributable to the loan, will be deposited in the
lending institution and the am ount of any corre­
spondent account which the proposed subsidiary
bank will maintain with the lending institution
should not exceed the amount necessary to com­




9

pensate the lending bank for correspondent ser­
vices rendered by it to the proposed subsidiary
bank(s).
(vii) the Reserve Bank determines that the
managerial and financial resources, including the
equity to debt relationships, of Applicant, it’s ex­
isting subsidiaries, and any proposed subsidiary
bank, are adequate, or will be adequate within a
reasonable period of time after consummation of
the proposal, and any debt service requirements
to which the holding company may be subject
are such as to enable it to maintain the capital
adequacy of any proposed subsidiary bank in the
forseeable future.
(viii) if Applicant or any of Applicant’s exist­
ing or proposed nonbanking subsidiaries compete
in the same geographic and product market as
any proposed subsidiary bank, the resulting orga­
nization will control no more than 10 per cent of
that product or service line after consummation
of the proposal.
(ix) total nonbank gross revenues of Appli­
cant and its subsidiaries do not exceed 20 per
cent of total operating income of the proposed
banking subsidiaries.
(x) if Applicant, engages, or is to engage, in
nonbanking activities requiring the Board’s ap­
proval under section 4 ( c ) ( 8 ) of the Act, the Re­
serve Bank must also have delegated authority to
approve the section 4 ( c ) ( 8 ) activities.
(xi) if the proposal involves the acquisition of
the controlling stock of only one bank, and any
debt is incurred by the holding company to p u r­
chase shares of the bank, the amount of the loan
does not exceed 75 per cent of the purchase price
of the shares of the proposed subsidiary bank.
(xii) if the proposal involves the acquisition of
the controlling stock of more than one bank, the
following additional conditions must be met:
(a) in the event any debt is incurred by the
holding company to purchase shares of any p ro ­
posed subsidiary b a n k ( s) , the total amount of the
debt does not exceed 20 per cent of the equity
capital accounts of the holding company.
(b) the Applicant will control no more than
15 per cent of total deposits in commercial banks
in the State.
(xiii) neither Applicant nor the b an k (s) to be
acquired has entered into or proposes to enter
into any agreement with any director, officer, em ­
ployee or shareholder of the b an k (s) that con­

§ 2 6 5 .2

DELEGATION OF AUTHORITY

tains any condition that limits or restricts in any
manner the right of such persons to compete
with Applicant or any of Applicant’s existing or
proposed subsidiaries.
(23) U nder the provisions of section 3 ( a ) ( 3 )
of the Bank Holding Com pany Act (12 U.S.C.
1842), to approve the acquisition by a bank
holding company of additional shares in a bank
that are to be acquired through exercise of rights
received, on a pro rata basis, by the bank’s share­
holders.
(24) U nder the provisions of section 3 ( a ) ( 3 )
of the Bank Holding Company Act (12 U.S.C.
1842), to approve the acquisition by a bank
holding company of a controlling interest in the
voting shares of an additional bank, if all of the
following conditions are met:
(i) no member of the Board has indicated an
objection prior to the Reserve Bank’s action.
(ii) all relevant departments of the Reserve
Bank recommend approval.
(iii) no substantive objection to the proposal
has been made by a bank supervisory authority,
the United States Department of Justice, or a
member of the public.
(iv) no significant policy issue is raised by the
proposal as to which the Board has not expressed
its view.
(v) considerations relating to the convenience
and needs of the communities to be served are
consistent with or lend weight toward approval of
the application.
(vi) in the event any debt is incurred by the
holding company to purchase shares of any bank
involved in the proposal:
(a) an agreed plan for amortization of the
debt within a reasonable time exists, such period
normally not exceeding 12 years.
(b) the interest rate on any loan to purchase
the bank shares will be comparable with other
stock collateral loans by the lender to persons of
comparable credit standing.
(c) no compensating balances, specifically at­
tributable to the loan, will be deposited in the
lending institution and the amount of any corre­
spondent account which the proposed subsidiary
bank will maintain with the lending institution
should not exceed the amount necessary to com­
pensate the lending bank for correspondent ser­
vices rendered by it to the proposed subsidiary
bank.




(vii) the Reserve Bank determines that the
managerial and financial resources, including the
equity to debt relationships, of Applicant, its ex­
isting subsidiaries, and any proposed subsidiary
bank, are adequate, or will be adequate within a
reasonable period of time after consummation of
the proposal, and any debt service requirements
to which the holding company may be subject
are such as to enable it to maintain the capital
adequacy of any existing or proposed subsidiary
bank in the foreseeable future.
(viii) if Applicant or any of Applicant’s exist­
ing or proposed nonbanking subsidiaries compete
in the same geographic and product market as
any proposed subsidiary, the resulting organiza­
tion will not control more than 10 per cent of
that product or service line after consummation
of the proposal.
(ix) total nonbank gross revenues of Appli­
cant and its subsidiaries do not exceed 20 per
cent of total operating income of the company’s
existing or proposed bank subsidiaries.
(x) if Applicant engages, or is to engage, in
nonbanking activities requiring the Board’s ap­
proval under section 4 ( c ) ( 8 ) of the Act, the Re­
serve Bank must also have delegated authority to
approve the section 4 ( c ) ( 8 ) activities.
(xi) in the event any debt is incurred by A p­
plicant to purchase shares of the bank, the result­
ing total acquisition debt of the holding company
will not exceed 20 per cent of the company’s eq­
uity capital accounts after consummation of the
proposal.
(xii) Applicant is not one of the dominant
banking organizations in the State, and, unless
the proposed subsidiary is a proposed new bank,
Applicant will control no more than 15 per cent
of the total deposits in commercial banks in the
State after consummation of the proposal.
(xiii) if the bank to be acquired is an existing
bank and if no banking offices of Applicant’s ex­
isting subsidiary bank are located in the same
market as the proposed subsidiary, the proposed
subsidiary has no more than $25 million in total
deposits or controls no more than 15 per cent of
deposits in commercial banks in the market.
(xiv) if the bank to be acquired is an existing
bank and if any of Applicant’s existing subsidiary
banks compete in the same market as the pro­
posed subsidiary, Applicant will control no more
10

DELEGATION OF AUTHORITY

§ 2 6 5 .2

an additional extension of time, not to exceed 90
days, may be granted.

than 10 per cent of total deposits in commercial
banks in the market after consummation.
(xv) if the bank to be acquired is a proposed
new bank, bank subsidiaries of Applicant will not
hold in the aggregate more than 20 per cent of
the total deposits in commercial banks in the rel­
evant market area and Applicant will not be one
of the dominant banking organizations in the
State.
(xvi) Applicant has a proven record of fur­
nishing to its subsidiaries, when needed, special
services, management, capital funds and general
guidance.
(xvii) neither Applicant nor the bank to be
acquired has entered into or proposes to enter
into any agreement with any director, officer, em­
ployee or shareholder of the bank that contains
any condition that limits or restricts in any m an­
ner the right of such persons to compete with
Applicant or any of Applicant's existing or p ro­
posed subsidiaries.
(25) To set the salaries of its officers below
the level of Senior Vice Presidents (Salary Group
A ) , excluding the General Auditor, within officer
salary ranges approved and guidelines subse­
quently issued by the Board of Governors.

(28)
U nder the provisions of section 18(c) of
the Federal Deposit Insurance Act (12 U.S.C.
1 8 2 8 (c)), to approve a merger, consolidation,
acquisition of assets or assumption of liabilities,
where the resulting bank is a State m ember bank,
if all of the following conditions are met:
(i) no member of the Board has indicated an
objection prior to the Reserve Bank’s action.
(ii) all relevant departments of the Reserve
Bank recommended approval.
(iii) no substantive objection to the proposal
has been made by a bank supervisory authority,
the United States Department of Justice, or a
member of the public.
(iv) no significant policy issue is raised by the
proposal as to which the Board has not expressed
its view.
(v) if the banks do not have offices in the
same market, the bank to be acquired has no
more than $25 million in total deposits or con­
trols no more than 15 per cent of the total
deposits - in commercial banks in the market.
(vi) if the banks compete in the same banking
market, the resulting bank will control no more
than 10 per cent of total deposits 3 in commercial
banks in the market.
(vii) neither of the merging or consolidating
banks is a dominant banking organization in the
State and the resulting institution will control no
more than 15 per cent of the total deposits in
commercial banks in the State after consum m a­
tion of the proposal.4
(viii) the Reserve Bank determines that the
managerial and financial resources, including the
equity capital accounts of the resulting bank, are
adequate, or will be adequate within a reasonable
period of time after the proposal is consum ­
mated.

(26) U nder the provisions of the first para­
graph of Section 9 of the Federal Reserve Act
(12 U.S.C. 325) to approve applications for
membership in the Federal Reserve System if the
Reserve Bank is satisfied with respect to each of
the following criteria:
(i) the financial history and condition of the
applying bank and the general character of its
management;
(ii) the adequacy of its capital structure in
relation to the character and condition of its as­
sets and to its existing and prospective deposit
liabilities and other corporate responsibilities; and
its future earnings prospects;
(iii) the convenience and needs of the com ­
munity to be served by the bank; and
(iv) whether its corporate powers are consist­
ent with the purposes of the Federal Reserve Act
and the Federal Deposit Insurance Act.

2 If either of the proponent banks is a subsidiary of a
holding company and the parent company has another
bank subsidiary operating in the market of the bank to
be acquired, deposits of such offices should be included
in the computation of market shares.
:i See footnote 2, above.
4 If either of the proponent banks is a subsidiary of a
holding company, the deposits of the other subsidiary
banks of the holding company should be included in
determining whether the resulting institution will control
more than 15 per cent of the total deposits in commer­
cial banks in the State.

(27) U nder the provisions of section 5 (c) of
the Bank Holding Com pany Act, as amended (12
U.S.C. 1 8 4 4 ( c ) ), to grant to a bank holding
company a 90-day extension of time in which to
file an annual report; and for good cause shown




11

§ 2 6 5 .2

DELEGATION OF AUTHORITY

(ix) considerations relating to the convenience
and needs of the communities to be served are
consistent with, or lend weight toward, approval
of the application.
(x) no bank involved in this proposal has en­
tered into or proposes to enter into any agree­
ment with any director, officer, employee or
shareholder of either bank that contains any con­
dition that limits or restricts in any manner the
right of such persons to compete with the result­
ing institution.
(29) U nder the provisions of Section 3 ( a ) of
the Bank Holding Company Act (12 U.S.C.
1842), to approve by a letter of notification with­
out compliance with section 262.3(h) of the
Board’s Rules of Procedures, the retention of
shares of bank stock acquired in a fiduciary ca­
pacity (with sole voting rights) for a two-year
period from the date of such acquisition, p ro­
vided that the Applicant undertakes uncondition­
ally to dispose of such shares or its sole discre­
tionary voting rights with respect to such shares
within two years from the date of such acquisi­
tion.
(30) U nder the provisions of section 3 ( a ) ( 5 )
of the Bank Holding Com pany Act (12 U.S.C.
1842), to approve the merger or consolidation of
a bank holding company with any other bank
holding company, if all of the following condi­
tions are met:
(i) no member of the Board has indicated an
objection prior to the Reserve Bank’s action.
(ii) all relevant departments of the Reserve
Bank recommended approval.
(iii) no substantive objection to the proposal
has been made by a bank supervisory authority,
the United States Department of Justice, or a
member of the public.
(iv) no significant policy issue is raised by the
proposal as to which the Board has not expressed
its view.
(v) considerations relating to the convenience
and needs of the communities to be served are
consistent with or lend weight toward approval of
the application.
(vi) in the event any debt is incurred by the
resulting or surviving holding company to effect
the merger or consolidation:
(a)
an agreed plan for amortization of the
debt within a reasonable time exists, such period
normally not exceeding 12 years.




12

(b) the interest rate on any loan involved will
be comparable with other stock collateral loans
by the lender to borrowers of comparable credit
standing.
(c) no compensating balances, specifically at­
tributable to the loan, will be deposited in the
lending institution and the amount of any corre­
spondent account which the subsidiary banks of
the resulting or surviving company will maintain
with the lending institution should not exceed the
am ount necessary to compensate the lending
bank for correspondent services rendered by it to
the depositing b an k (s).
(d) the total acquisition debt of the resulting
or surviving company will not exceed 20 per cent
of such com pany’s equity capital accounts after
consummation of the proposal.
(vii) the Reserve Bank determines that the
managerial and financial resources, including the
equity to debt relationships, of the merging or
consolidating companies, and their existing sub­
sidiaries, are adequate, or will be adequate within
a reasonable period of time after consummation
of the proposal, and any debt service require­
ments to which the resulting or surviving com­
pany may be subject are such as to enable it to
maintain the capital adequacy of any existing or
proposed subsidiary bank in the foreseeable fu­
ture.
(viii) if either of the merging or consolidating
companies or any of their subsidiaries compete in
the same geographic and product market as the
other merging or consolidating company or any
of its subsidiaries, the resulting or surviving orga­
nization will not control more than 10 per cent
of that product or service line after consumma­
tion of the proposal.
(ix) if the merging or consolidating bank
holding companies do not have subsidiary bank­
ing offices in the same market, the resulting or
surviving bank holding company will not acquire
a subsidiary bank with more than $25 million in
deposits or with more than 15 per cent of the
total deposits in commercial banks in the market.
(x) if any subsidiary bank(s) of either of the
merging or consolidating companies competes in
the same market as any subsidiary bank(s) of
the other merging or consolidating company, the
resulting or surviving company will control no
more than 10 per cent of total deposits in com ­

DELEGATION OF AUTHORITY

§ 265.3

person to compete with the resulting or surviving
company or any of its existing or proposed sub­
sidiaries.

mercial banks in the market after consummation
of the proposal.
(xi) neither merging or consolidating company
is one of the dominant banking organizations in
the State, and the resulting or surviving company
will control no more than 15 per cent of total de­
posits in commercial banks in the State after con­
summation of the proposal.
(xii) total nonbank gross revenues of the
merging or consolidating companies and their
subsidiaries do not exceed 20 per cent of the
total operating income of the merging or consoli­
dating companies’ bank subsidiaries.
(xiii) if either of the merging or consolidating
companies engages, or is to engage, in nonbank­
ing activities requiring the Board’s approval
under section 4 ( c ) ( 8 ) of the Act, the Reserve
Bank must also have delegated authority to ap­
prove the section 4 ( c ) ( 8 ) activities.
(xiv) Applicant has a proven record of fur­
nishing to its subsidiaries, when needed, special
services, management, capital funds and general
guidance.
(xv) neither bank holding company involved
in this proposal nor any of the subsidiary banks
of either bank holding company involved in this
proposal has entered into or proposes to enter
into any agreement with any officer, director, em ­
ployee or shareholder of the bank(s) involved in
this proposal that contains any condition that
limits or restricts in any manner the right of such




(g)
The Director of the Division of Interna­
tional Finance (or, in his absence, the Acting
Director) is authorized, under the provisions of
the sixth paragraph of section 14 of the Federal
Reserve Act (12 U.S.C. 358) to approve the es­
tablishment of foreign accounts with the Federal
Reserve Bank of New York.
SECTION 265.3— R EV IEW O F ACTION
AT D E L E G A T E D L E V E L
Any action taken at a delegated level shall be
subject to review by the Board only if such re­
view is requested by a member of the Board ei­
ther on his own initiative or on the basis of a pe­
tition for review by any person claiming to be
adversely affected by the action. Any such peti­
tion for review must be received by the Secretary
of the Board not later than the fifth day after the
date of such action. Notice of any such review
shall be given to the person with respect to
whom such action was taken and be received by
such person not later than the close of the tenth
day following the date of such action. Upon re­
ceipt of such notice, such person shall not pro­
ceed further in reliance upon such action until he
is notified of the outcome of review thereof by
the Board.

13