(a) Prohibited corporate practices. A covered IHC may not directly:
(1) Issue any debt instrument
with an original maturity of less than 365 days (one year), including
short term deposits and demand deposits, to any person, unless the
person is an affiliate of the covered IHC;
(2) Issue any instrument, or enter into
any related contract, with respect to which the holder of the instrument
has a contractual right to offset debt owed by the holder or its affiliates
to the covered IHC or a subsidiary of the covered IHC against the
amount, or a portion of the amount, owed by the covered IHC under
the instrument;
(3)
Enter into a qualified financial contract that is not a credit enhancement
with a person that is not an affiliate of the covered IHC;
(4) Enter into an agreement
in which the covered IHC guarantees a liability of an affiliate of
the covered IHC if such liability permits the exercise of a default
right that is related, directly or indirectly, to the covered IHC
becoming subject to a receivership, insolvency, liquidation, resolution,
or similar proceeding other than a receivership proceeding under Title
II of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(12 U.S.C. 5381 through 5394) unless the liability is subject to requirements
of the Board restricting such default rights or subject to any similar
requirements of another U.S. federal banking agency; or
(5) Enter into, or otherwise
benefit from, any agreement that provides for its liabilities to be
guaranteed by any of its subsidiaries.
(b) Limit on unrelated liabilities.
(1) The aggregate amount, on
an unconsolidated basis, of unrelated liabilities of a covered IHC
may not exceed 5 percent of the covered IHC’s covered IHC total loss-absorbing
capacity amount, as calculated under section 252.165(c).
(2) For purposes of paragraph
(b)(1) of this section, an unrelated liability includes:
(i) With
respect to a non-resolution covered IHC, any non-contingent liability
of the non-resolution covered IHC owed to a person that is not an
affiliate of the non-resolution covered IHC other than those liabilities
specified in paragraph (b)(3) of this section, and
(ii) With respect to a resolution covered
IHC, any non-contingent liability of the resolution covered IHC owed
to a person that is not a subsidiary of the resolution covered IHC
other than those liabilities specified in paragraph (b)(3) of this
section.
(3) (i) The instruments that are used to satisfy the covered IHC’s
covered IHC total loss-absorbing capacity amount, as calculated under
section 252.165(a);
(ii) Any dividend or other liability
arising from the instruments that are used to satisfy the covered
IHC’s covered IHC total loss-absorbing capacity amount, as calculated
under section 252.165(c)(2);
(iii) An eligible covered IHC debt security
that does not provide the holder of the instrument with a currently
exercisable right to require immediate payment of the total or remaining
principal amount; and
(iv) A secured liability, to the extent that it is secured, or a
liability that otherwise represents a claim that would be senior to
eligible covered IHC debt securities in Title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (12 U.S.C. 5390(b))
and the Bankruptcy Code (11 U.S.C. 507).
(c) A covered IHC is not subject to paragraph (b)
of this section if all of the eligible covered IHC debt securities
issued by the covered IHC would represent the most subordinated debt
claim in a receivership, insolvency, liquidation, or similar proceeding
of the covered IHC.
