What are the requirements for a foreign bank to be treated as a financial holding company?
(a) Foreign banks as financial holding companies. A foreign bank that operates a branch or agency or owns or controls a commercial lending company in the United States, and any company that owns or controls such a foreign bank, will be treated as a financial holding company if:
(1) The foreign bank, any other foreign bank that maintains a U.S. branch, agency, or commercial lending company and is controlled by the foreign bank or company, and any U.S. depository institution subsidiary that is owned or controlled by the foreign bank or company, is and remains well capitalized and well managed; and
(2) The foreign bank, and any company that owns or controls the foreign bank, has made an effective election to be treated as a financial holding company under this subpart.
(b) Standards for “well capitalized.” A foreign bank will be considered “well capitalized” if either:
(1) (i) Its home country supervisor, as defined in § 211.21 of the Board's Regulation K ( 12 CFR 211.21 ), has adopted risk-based capital standards consistent with the Capital Accord of the Basel Committee on Banking Supervision (Basel Accord);
(ii) The foreign bank maintains a Tier 1 capital to total risk-based assets ratio of 6 percent and a total capital to total risk-based assets ratio of 10 percent, as calculated under its home country standard; and
(iii) The foreign bank's capital is comparable to the capital required for a U.S. bank owned by a financial holding company; or
(2) The foreign bank has obtained a determination from the Board under § 225.91(c) that the foreign bank's capital is otherwise comparable to the capital that would be required of a U.S. bank owned by a financial holding company.
(c) Standards for “well managed.” A foreign bank will be considered “well managed” if:
(1) The foreign bank has received at least a satisfactory composite rating of its U.S. branch, agency, and commercial lending company operations at its most recent assessment;
(2) The home country supervisor of the foreign bank consents to the foreign bank expanding its activities in the United States to include activities permissible for a financial holding company; and
(3) The management of the foreign bank meets standards comparable to those required of a U.S. bank owned by a financial holding company.
Title 12 published on 2012-01-01
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