(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) For purposes of this
part, a top-tier foreign banking organization with 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 of the Board’s Regulation Q; or
(C) That the U.S. intermediate holding company,
if it were subject to 12 CFR 217.402 of the Board’s Regulation Q,
would be identified as a global systemically important BHC.
(5) 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) 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 other 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 will 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.
(i) 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.
(ii)
If the Board permits a foreign banking organization to form two or
more U.S. intermediate holding companies under this section, each
U.S. intermediate holding company must determine its category pursuant
to section 252.5 of this part as though the U.S. intermediate holding
companies were a consolidated company.
(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 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 applicable capital adequacy standards
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 capital adequacy standards on the date that the foreign
banking organization becomes subject to paragraph (a)(1)(ii) of this
section, on the date that the foreign banking organization becomes
subject to this subpart.
(2) Capital planning.
(i) A U.S. intermediate holding company
with total consolidated assets of $100 billion or more must comply
with 12 CFR 225.8 in the same manner as a bank holding company.
(ii) A U.S. intermediate
holding company with total consolidated assets of $100 billion or
more must comply with 12 CFR 225.8 on the date prescribed in the transition
provisions of 12 CFR 225.8.
(3) 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 252.155(a).
(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 252.153(a)(1)(ii), on the date that the foreign banking
organization becomes subject to this subpart.
(4) Liquidity requirements.
(i) A U.S. intermediate
holding company must comply with the liquidity risk management requirements
in section 252.156 and conduct liquidity stress tests and hold a liquidity
buffer pursuant to section 252.157.
(ii) A U.S. intermediate holding company
must comply with liquidity risk-management, liquidity stress test,
and liquidity buffer requirements beginning on the date that it is
required to be established or designated under this subpart.
(5) Stress test requirements.
(i) (A) A U.S.
intermediate holding company with total consolidated assets of $100
billion or more must comply with the requirements of subpart E of
this part in the same manner as a bank holding company;
(B) A U.S. intermediate holding
company must comply with the requirements of subpart E beginning the
later of:
(1) The stress test
cycle of the calendar year after the calendar year in which the U.S.
intermediate holding company becomes subject to regulatory capital
requirements; or
(2) The transition period provided under subpart E.
(ii) (A) A Category II U.S. intermediate
holding company or a Category III U.S. intermediate holding company
must comply with the requirements of subpart F of this part in the
same manner as a bank holding company;
(B) A Category II U.S. intermediate holding
company or Category III U.S. intermediate holding company must comply
with the requirements of subpart F beginning the later of:
(1) The stress test cycle of the calendar
year after the calendar year in which the U.S. intermediate holding
company becomes subject to regulatory capital requirements; or
(2) The transition
period provided under subpart F.
