(a) Prohibited corporate practices. A global systemically important
BHC 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 a subsidiary
of the global systemically important BHC;
(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 a subsidiary of the global systemically important BHC against the
amount, or a portion of the amount, owed by the global systemically
important BHC under the instrument;
(3) Enter into a qualified financial contract
that is not a credit enhancement with a person that is not a subsidiary
of the global systemically important BHC;
(4) Enter into an agreement in which the
global systemically important BHC guarantees a liability of a subsidiary
of the global systemically important BHC if such liability permits
the exercise of a default right that is related, directly or indirectly,
to the global systemically important BHC 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 begin to 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 global systemically important
BHC owed to persons that are not affiliates of the global systemically
important BHC may not exceed 5 percent of the systemically important
BHC’s external total loss-absorbing capacity amount, as calculated
under section 252.63(b).
(2) For purposes of paragraph (b)(1) of this section, an unrelated
liability is any non-contingent liability of the global systemically
important BHC owed to a person that is not an affiliate of the global
systemically important BHC other than:
(i) The instruments
that are used to satisfy the global systemically important BHC’s external
total loss-absorbing capacity amount, as calculated under section
252.63(b);
(ii)
Any dividend or other liability arising from the instruments that
are used to satisfy the global systemically important BHC’s external
total loss-absorbing capacity amount, as calculated under section
252.63(b);
(iii)
An eligible 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 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 BHC is not subject to paragraph
(b) of this section if all of the eligible debt securities issued
by the covered BHC would represent the most subordinated debt claim
in a receivership, insolvency, liquidation, or similar proceeding
of the covered BHC.
