(a) Requirement to form a U.S.
intermediate holding company.
(1) Formation. A foreign banking organization with average U.S. non-branch assets
of $50 billion or more must establish a U.S. intermediate holding
company, or designate an existing subsidiary that meets the requirements
of paragraph (a)(2) of this section, as its U.S. intermediate holding
company.
(2) Structure. The U.S. intermediate holding company must be:
(i) Organized under
the laws of the United States, any one of the fifty states of the
United States, or the District of Columbia; and
(ii) Be governed by a board of directors
or managers that is elected or appointed by the owners and that operates
in an equivalent manner, and has equivalent rights, powers, privileges,
duties, and responsibilities, to a board of directors of a company
chartered as a corporation under the laws of the United States, any
one of the fifty states of the United States, or the District of Columbia.
(3) Notice. Within 30 days of establishing
or designating a U.S. intermediate holding company under this section,
a foreign banking organization must provide to the Board:
(i) A description of the U.S. intermediate
holding company, including its name, location, corporate form, and
organizational structure;
(ii)
A certification that the U.S. intermediate holding company meets the
requirements of this section; and
(iii) Any other information that the Board determines is appropriate.
(b) Holdings
and regulation of the U.S. intermediate holding company.
(1) General. Subject to paragraph (c) of this section, a foreign
banking organization that is required to form a U.S. intermediate holding
company under paragraph (a) of this section must hold its entire ownership
interest in any U.S. subsidiary (excluding each section 2(h)(2) company
or DPC branch subsidiary, if any) through its U.S. intermediate holding
company.
(2) Reporting. Each U.S. intermediate holding company shall submit
information in the manner and form prescribed by the Board.
(3) Examinations
and inspections. The Board may examine or inspect any U.S. intermediate
holding company and each of its subsidiaries and prepare a report
of their operations and activities.
(4) Global systemically important banking
organizations. For purposes of this part, a top-tier foreign
banking organization with average U.S. non-branch assets that equal
or exceed $50 billion is a global systemically important foreign banking
organization if any of the following conditions are met:
(i) The top-tier foreign banking
organization determines, pursuant to paragraph (b)(6) of this section,
that the top-tier foreign banking organization has the characteristics
of a global systemically important banking organization under the
global methodology; or
(ii) The
Board, using information available to the Board, determines:
(A) That the top-tier foreign banking
organization would be a global systemically important banking organization
under the global methodology;
(B) That
the top-tier foreign banking organization, if it were subject to the
Board’s Regulation Q, would be identified as a global systemically
important BHC under 12 CFR 217.402; or
(C) That the U.S. intermediate holding company, if it were subject
to 12 CFR 217.402, would be identified as a global systemically important
BHC.
(5) Notice. Each top-tier foreign
banking organization that controls a U.S. intermediate holding company
shall submit to the Board by January 1 of each calendar year through
the U.S. intermediate holding company:
(i) Notice of whether the home-country
supervisor (or other appropriate home country regulatory authority)
of the top-tier foreign banking organization of the U.S. intermediate
holding company has adopted standards consistent with the global methodology;
and
(ii) Notice of whether the
top-tier foreign banking organization prepares or reports the indicators
used by the global methodology to identify a banking organization
as a global systemically important banking organization and, if it
does, whether the top-tier foreign banking organization has determined
that it has the characteristics of a global systemically important
banking organization under the global methodology pursuant to paragraph
(b)(6) of this section.
(6) Global systemically important banking
organization under the global methodology. A top-tier foreign
banking organization that controls a U.S. intermediate holding company
and prepares or reports for any purpose the indicator amounts necessary
to determine whether the top-tier foreign banking organization is
a global systemically important banking organization under the global
methodology must use the data to determine whether the top-tier foreign
banking organization has the characteristics of a global systemically
important banking organization under the global methodology.
(c) Alternative organizational structure.
(1) General. Upon a written request by a foreign
banking organization, the Board may permit the foreign banking organization
to: Establish or designate multiple U.S. intermediate holding companies;
not transfer its ownership interests in certain subsidiaries to a
U.S. intermediate holding company; or use an alternative organizational
structure to hold its combined U.S. operations.
(2) Factors. In making a determination under paragraph (c)(1) of this section,
the Board may consider whether applicable law would prohibit the foreign
banking organization from owning or controlling one or more of its
U.S. subsidiaries through a single U.S. intermediate holding company, or whether
circumstances otherwise warrant an exception based on the foreign
banking organization’s activities, scope of operations, structure,
or similar considerations.
(3) Request.
(i) Contents. A request submitted under this section must include an explanation
of why the request should be granted and any other information required
by the Board.
(ii) Timing. The Board shall act on a request
for an alternative organizational structure within 90 days of receipt
of a complete request, unless the Board provides notice to the organization
that it is extending the period for action.
(4) Conditions. The Board may grant relief under this section upon such conditions
as the Board deems appropriate, including, but not limited to, requiring
the U.S. operations of the foreign banking organization to comply
with additional enhanced prudential standards, or requiring the foreign
banking organization to enter into supervisory agreements governing
such alternative organizational structure.
(d) Modifications. The Board may modify the
application of any section of this subpart to a foreign banking organization
that is required to form a U.S. intermediate holding company or to
such U.S. intermediate holding company if appropriate to accommodate
the organizational structure of the foreign banking organization or
characteristics specific to such foreign banking organization and
such modification is appropriate and consistent with the capital structure,
size, complexity, risk profile, scope of operations, or financial
condition of each U.S. intermediate holding company, safety and soundness,
and the financial stability mandate of section 165 of the Dodd-Frank
Act.
(e) Enhanced prudential standards
for U.S. intermediate holding companies.
(1) Capital requirements
for a U.S. intermediate holding company.
(i) (A) A U.S. intermediate holding
company must comply with 12 CFR part 217, other than subpart E of
12 CFR part 217, in the same manner as a bank holding company.
(B) A U.S. intermediate holding company
may choose to comply with subpart E of 12 CFR part 217.
(ii) A U.S. intermediate holding
company must comply with capital adequacy standards beginning on the
date it is required to established under this subpart, or if the U.S.
intermediate holding company is subject to capital adequacy standards
on the date that the foreign banking organization becomes subject
to section 252.142(a)(3), on the date that the foreign banking organization
becomes subject to this subpart.
(2) Risk-management
and risk-committee requirements.
(i) General. A U.S. intermediate holding company must establish and maintain
a risk committee that approves and periodically reviews the risk-management
policies and oversees the risk-management framework of the U.S. intermediate
holding company. The risk committee must be a committee of the board
of directors of the U.S. intermediate holding company (or equivalent
thereof). The risk committee may also serve as the U.S. risk committee
for the combined U.S. operations required pursuant to section 252.144(b).
(ii) Risk-management framework. The U.S. intermediate holding company’s
risk-management framework must be commensurate with the structure,
risk profile, complexity, activities, and size of the U.S. intermediate
holding company and consistent with the risk management policies for
the combined U.S. operations of the foreign banking organization.
The framework must include:
(A) Policies and procedures establishing risk-management governance,
risk-management procedures, and risk-control infrastructure for the
U.S. intermediate holding company; and
(B) Processes and systems for implementing and monitoring compliance
with such policies and procedures, including:
(1)
Processes and systems for identifying and reporting risks and
risk-management deficiencies at the U.S. intermediate holding company,
including regarding emerging risks and ensuring effective and timely
implementation of actions to address emerging risks and risk-management
deficiencies;
(2) Processes
and systems for establishing managerial and employee responsibility
for risk management of the U.S. intermediate holding company;
(3) Processes and systems for ensuring
the independence of the risk-management function of the U.S. intermediate
holding company; and
(4) Processes
and systems to integrate risk management and associated controls with
management goals and the compensation structure of the U.S. intermediate
holding company.
(iii) Corporate
governance requirements. The risk committee of the U.S. intermediate
holding company must meet at least quarterly and otherwise as needed,
and must fully document and maintain records of its proceedings, including
risk-management decisions.
(iv) Minimum member requirements. The risk committee
must:
(A) Include at
least one member having experience in identifying, assessing, and
managing risk exposures of large, complex financial firms; and
(B) Have at least one member who:
(1) Is not an officer or employee of the foreign banking organization
or its affiliates and has not been an officer or employee of the foreign
banking organization or its affiliates during the previous three years;
and
(2) Is not a member of
the immediate family, as defined in 12 CFR 225.41(b)(3), of a person
who is, or has been within the last three years, an executive officer,
as defined in 12 CFR 215.2(e)(1), of the foreign banking organization
or its affiliates.
(v) The U.S. intermediate holding company
must take appropriate measures to ensure that it implements the risk-management
policies for the U.S. intermediate holding company and it provides
sufficient information to the U.S. risk committee to enable the U.S.
risk committee to carry out the responsibilities of this subpart;
(vi) A U.S. intermediate holding
company must comply with risk-committee and risk-management requirements
beginning on the date that it is required to be established or designated
under this subpart or, if the U.S. intermediate holding company is
subject to risk-committee and risk-management requirements on the
date that the foreign banking organization becomes subject to section
252.147(a)(3), on the date that the foreign banking organization becomes
subject to this subpart.
