12 CFR 211.26 - Examination of offices and affiliates of foreign banks.
(a)Conduct of examinations -
(1)Examination of branches, agencies, commercial lending companies, and affiliates. The Board may examine:
(b)Coordination of examinations. To the extent possible, the Board shall coordinate its examinations of the U.S. offices and U.S. affiliates of a foreign bank with the licensing authority and, in the case of an insured branch, the Federal Deposit Insurance Corporation (FDIC), including through simultaneous examinations of the U.S. offices and U.S. affiliates of a foreign bank.
(c)Frequency of on-site examination -
(i) The Board;
(2)18-month cycle for certain small institutions -
(i)Mandatory standards. The Board may conduct a full-scope, on-site examination at least once during each 18-month period, rather than each 12-month period as required in paragraph (c)(1) of this section, if the branch or agency -
(A) Has total assets of less than $1 billion;
(B) Has received a composite ROCA supervisory rating (which rates risk management, operational controls, compliance, and asset quality) of 1 or 2 at its most recent examination;
(C) Satisfies the requirement of either the following paragraph (c)(2)(i)(C)(1) or (2):
(1) The foreign bank's most recently reported capital adequacy position consists of, or is equivalent to, tier 1 and total risk-based capital ratios of at least 6 percent and 10 percent, respectively, on a consolidated basis; or
(2) The branch or agency has maintained on a daily basis, over the past three quarters, eligible assets in an amount not less than 108 percent of the preceding quarter's average third-party liabilities (determined consistent with applicable federal and state law) and sufficient liquidity is currently available to meet its obligations to third parties;
(D) Is not subject to a formal enforcement action or order by the Board, FDIC, or OCC; and
(E) Has not experienced a change in control during the preceding 12-month period in which a full-scope, on-site examination would have been required but for this section.
(ii)Discretionary standards. In determining whether a branch or agency of a foreign bank that meets the standards of paragraph (c)(2)(i) of this section should not be eligible for an 18-month examination cycle pursuant to this paragraph (c)(2), the Board may consider additional factors, including whether -
(B) The results of any off-site surveillance indicate a deterioration in the condition of the office;
(D) The condition of the foreign bank gives rise to such a need.
(3)Authority to conduct more frequent examinations. Nothing in paragraphs (c)(1) and (2) of this section limits the authority of the Board to examine any U.S. branch or agency of a foreign bank as frequently as it deems necessary.