[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24439-24440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12134]
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FEDERAL RESERVE SYSTEM
12 CFR Part 211
[Regulation K; Docket No. R-0911]
International Banking Operations
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: This final rule amends the provisions of Regulation K
regarding interstate banking operations of foreign banking
organizations. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (Interstate Act) removed geographic restrictions
on interstate banking by foreign banks effective September 29, 1995,
and requires certain foreign banks without U.S. deposit-taking offices
to select a home state for the first time. The final rule requires
these foreign banks to select a home state by June 30, 1996, and
removes outdated restrictions on certain mergers by U.S. bank
subsidiaries of foreign banks outside the home state of the foreign
bank. Obsolete and superseded provisions of Regulation K concerning
home state selection also are deleted.
EFFECTIVE DATE: May 9, 1996.
FOR FURTHER INFORMATION CONTACT: Ann E. Misback, Managing Senior
Counsel (202/452-3788), Douglas M. Ely, Senior Attorney (202/452-5289),
Andres L. Navarrete, Attorney (202/452-2300), Legal Division; Michael
G. Martinson, Assistant Director (202/452-3640), Division of Banking
Supervision and Regulation, Board of Governors of the Federal Reserve
System. For users of Telecommunication Device for the Deaf [TDD] only,
please contact Dorothea Thompson (202/452-3544), Board of Governors of
the Federal Reserve System, 20th and C Streets NW., Washington, D.C.
20551.
SUPPLEMENTARY INFORMATION:
The Interstate Act amended section 5 of the International Banking
Act of 1978 (IBA), which governs interstate banking and branching
operations of foreign banks. The Interstate Act also amended the Bank
Holding Company Act of 1956 (BHC Act), the Federal Deposit Insurance
Act and several other statutes regarding interstate banking operations
of bank holding companies, national banks and state banks. In order to
implement certain of these changes, the final rule amends the
provisions of Regulation K regarding interstate banking operations of
foreign banking organizations (12 CFR 211.22).
On December 26, 1995, the Board of Governors of the Federal Reserve
[[Page 24440]]
System (the Board) requested public comment on a proposed rule (the
Proposed Rule) that would require foreign banks with only agencies and
subsidiary commercial lending companies in the United States to select
a home state, or have a home state designated by the Board. 60 FR
67100. The Proposed Rule also would remove a restriction on the ability
of foreign banks to effect major bank mergers through U.S. subsidiary
banks located outside the foreign banks' home states, and would delete
certain outdated rules governing home state selection.
The comment period ended on February 5, 1996. The Board received a
single public comment on the Proposed Rule from a trade association.
The Board has considered the comment and has made changes to address it
in the final rule. Except as discussed below, the Board's final rule
remains unchanged from the Proposed Rule. In addition, the Board
requested and received comments on other aspects of the Interstate Act
as it applies to foreign banks. The Board will consider these comments
in connection with future review of the provisions of Regulation K
concerning the interstate operation of foreign banks.
The commenter generally supported the provisions of the Proposed
Rule, including its provisions requiring certain foreign banks to
select a home state as contemplated by the Interstate Act. The
commenter suggested, however, that the deadline for home state
selection by these banks be 60 days from the publication of the final
rule, rather than March 31, 1996, as proposed in the Proposed Rule. The
commenter requested this extension in order to give these banks
adequate time to assess the consequences of their decision.
Although the Interstate Act removed the geographic restrictions of
the IBA on the interstate acquisition of banks by foreign banks, the
home state of a foreign bank continues to affect its options for
establishing additional branches in the United States under the IBA. In
particular, the location of a foreign bank's home state is a factor
determining the ability of the foreign bank to establish further
interstate branches pursuant to section 5 (a)(1) and 5 (a)(2) of the
IBA, as amended by the Interstate Act. 12 U.S.C. Sec. 3103 (a)(1),
(a)(2).
Accordingly, the final rule allows additional time for home state
selection by establishing June 30, 1996, as the deadline for such
selection. This extension affords foreign banks affected by the rule
ample time in which to make an informed home state selection.
The proposed rule provided that, in the event a foreign bank
required to select a home state fails to do so, the Board would
exercise its authority to determine a foreign bank's home state. In
such cases, the Board generally will designate as a foreign bank's home
state the state in which the total assets of all its offices, net of
claims on affiliates or other offices of the foreign bank, is the
largest, as reflected in the foreign bank's most recent report of
condition, unless other circumstances warrant designation of a
different home state.
Paperwork Reduction Act
In accordance with section 3506 of the Paperwork Reduction Act of
1995 (44 U.S.C. Ch. 35; 5 CFR 1320 Appendix A.1), the Board reviewed
the rule under the authority delegated to the Board by the Office of
Management and Budget. No collections of information pursuant to the
Paperwork Reduction Act are contained in the rule.
Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub.
L. 96-354, 5 U.S.C. 601 et seq.), the Board certifies that the final
rule would not have a significant economic impact on a substantial
number of small entities that are subject to its regulation.
List of Subjects in 12 CFR Part 211
Exports, Federal Reserve System, Foreign banking, Holding
companies, Investments, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, the Board amends 12 CFR
Part 211 as set forth below:
PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)
1. The authority citation for Part 211 continues to read as
follows:
Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 et
seq., 3901 et seq.
2. In Sec. 211.22, paragraph (a) is revised; paragraph (c) is
removed; and paragraph (d) is redesignated as paragraph (c) to read as
follows:
Sec. 211.22 Interstate banking operations of foreign banking
organizations.
(a) Determination of home state. (1) A foreign bank (except a
foreign bank to which paragraph (a)(2) of this section applies) that
has any combination of domestic agencies or subsidiary commercial
lending companies that were established before September 29, 1994, in
more than one state and have been continuously operated shall select
its home state from those states in which such offices or subsidiaries
are located. A foreign bank shall do so by filing with the Board a
declaration of home state by June 30, 1996. In the absence of such
selection, the Board shall designate the home state for such foreign
banks.
(2) A foreign bank that, as of September 29, 1994, had declared a
home state or had a home state determined pursuant to the law and
regulations in effect prior to that date shall have that state as its
home state.
(3) A foreign bank that has any branches, agencies, subsidiary
commercial lending companies, or subsidiary banks in one state, and has
no such offices or subsidiaries in any other states, shall have as its
home state the state in which such offices or subsidiaries are located.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, May 9, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-12134 Filed 5-14-96; 8:45 am]
BILLING CODE 6210-01-P
