(a) Definitions. For purposes
of this subpart, the following definitions apply:
(1) Debt and equity have
the same meaning as “total liabilities” and “total equity capital,”
respectively, as reported by a U.S. intermediate holding company or
U.S. subsidiary on the FR Y-9C, or other reporting form prescribed
by the Board.
(2) Debt-to-equity
ratio means the ratio of total liabilities to total equity capital
less goodwill.
(3) Eligible assets and liabilities of all U.S. branches and agencies of a foreign
bank have the same meaning as in section 252.158(a).
(b) Notice and maximum debt-to-equity
ratio requirement. Beginning no later than 180 days after receiving
written notice from the Council or from the Board on behalf of the
Council that the Council has made a determination, pursuant to section
165(j) of the Dodd-Frank Act, that the foreign banking organization
poses a grave threat to the financial stability of the United States
and that the imposition of a debt-to-equity requirement is necessary
to mitigate such risk:
(1) The U.S. intermediate holding company, or if the foreign banking
organization has not established a U.S. intermediate holding company,
and any U.S. subsidiary (excluding any section 2(h)(2) company or
DPC branch subsidiary, if applicable), must achieve and maintain a
debt-to-equity ratio of no more than 15-to-1; and
(2) The U.S. branches and agencies of the
foreign banking organization must maintain eligible assets in its
U.S. branches and agencies that, on a daily basis, are not less than
108 percent of the average value over each day of the previous calendar
quarter of the total liabilities of all branches and agencies operated
by the foreign banking organization in the United States.
(c) Extension. The Board may, upon
request by a foreign banking organization for which the Council has
made a determination pursuant to section 165(j) of the Dodd-Frank
Act, extend the time period for compliance established under paragraph
(b) of this section for up to two additional periods of 90 days each,
if the Board determines that such company has made good faith efforts
to comply with the debt to equity ratio requirement and that each
extension would be in the public interest. Requests for an extension
must be received in writing by the Board not less than 30 days prior
to the expiration of the existing time period for compliance and must
provide information sufficient to demonstrate that the foreign banking
organization has made good faith efforts to comply with the debt-to-equity
ratio requirement and that each extension would be in the public interest.
(d) Termination. The requirements
in paragraph (b) of this section cease to apply to a foreign banking
organization as of the date it receives notice from the Council of
a determination that the company no longer poses a grave threat to
the financial stability of the United States and that imposition of
the requirements in paragraph (b) of this section are no longer necessary.
