(a) Notice by the Board. If a foreign bank or company
has made an effective election to be treated as a financial holding
company under this subpart and the Board finds that the foreign bank,
any foreign bank that maintains a U.S. branch, agency, or commercial
lending company and is controlled by the foreign bank or company,
or any U.S. depository institution subsidiary controlled by the foreign
bank or company, ceases to be well capitalized or well managed, the
Board will notify the foreign bank and company, if any, in writing
that it is not in compliance with the applicable requirement(s) for
a financial holding company and identify the areas of noncompliance.
(b) Notification by a
financial holding company required.
(1) Notice to
Board. Promptly upon becoming aware that the foreign bank, any
foreign bank that maintains a U.S. branch, agency, or commercial lending
company and is controlled by the foreign bank or company, or any U.S.
depository institution subsidiary of the foreign bank or company,
has ceased to be well capitalized or well managed, the foreign bank
and company, if any, must notify the Board and identify the area of
noncompliance.
(2) Triggering events for notice to the Board.
(i) Well capitalized. A foreign bank becomes aware that it is no longer well capitalized
at the time that the foreign bank or company is required to file a
report of condition (or similar supervisory report) with its home-country
supervisor or the appropriate Federal Reserve Bank that indicates
that the foreign bank no longer meets the well-capitalized standards.
(ii) Well managed. A foreign bank becomes aware
that it is no longer well managed at the time that the foreign bank
receives written notice from the appropriate Federal Reserve Bank
that the composite rating of its U.S. branch, agency, and commercial
lending company operations is not at least satisfactory.
4-057.21
(c) Execution of agreement
acceptable to the Board.
(1) Agreement
required; time period. Within 45 days after receiving a notice
under paragraph (a) of this section, the foreign bank or company must
execute an agreement acceptable to the Board to comply with all applicable
capital and management requirements.
(2) Extension
of time for executing agreement. Upon request by the foreign
bank or company, the Board may extend the 45-day period under paragraph
(c)(1) of this section if the Board determines that granting additional
time is appropriate under the circumstances. A request by a foreign
bank or company for additional time must include an explanation of
why an extension is necessary.
(3) Agreement
requirements. An agreement required by paragraph (c)(1) of this
section to correct a capital or management deficiency must—
(i) explain
the specific actions that the foreign bank or company will take to
correct all areas of noncompliance;
(ii) provide a schedule within which
each action will be taken;
(iii) provide any other information
that the Board may require; and
(iv) be acceptable to the Board.
4-057.22
(d) Limitations
during period of noncompliance. Until the Board determines that
a foreign bank or company has corrected the conditions described in
a notice under paragraph (a) of this section—
(1) the Board may impose any limitations
or conditions on the conduct or the U.S. activities of the foreign
bank or company or any of its affiliates as the Board finds to be
appropriate and consistent with the purposes of the Bank Holding Company
Act; and
(2) the foreign
bank or company and its affiliates may not commence any additional
activity in the United States or acquire control or shares of any
company under section 4(k) of the Bank Holding Company Act (12 USC
1843(k)) without prior approval from the Board.
(e) Consequences
of failure to correct conditions within 180 days.
(1) Termination
of offices and divestiture. If a foreign bank or company does
not correct the conditions described in a notice under paragraph (a)
of this section within 180 days of receipt of the notice or such additional
time as the Board may permit, the Board may order the foreign bank
or company to terminate the foreign bank’s U.S. branches and agencies
and divest any commercial lending companies owned or controlled by
the foreign bank or company. Such divestiture must be done in accordance
with the terms and conditions established by the Board.
(2) Alternative method of complying with a divestiture order. A
foreign bank or company may comply with an order issued under paragraph
(e)(1) of this section by ceasing to engage (both directly and through
any subsidiary that is not a depository institution or a subsidiary
of a depository institution) in any activity that may be conducted
only under section 4(k), (n), or (o) of the BHC Act (12 USC 1843(k),
(n) and (o)). The termination of activities must be completed within
the time period referred to in paragraph (e)(1) of this section and
subject to terms and conditions acceptable to the Board.
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(f) Consultation with other
agencies. In taking any action under this section, the Board
will consult with the relevant federal and state regulatory authorities
and the appropriate home-country supervisor(s) of the foreign bank.
