(a) In general. An election described in section 225.91 is effective
on the thirty-first day after the date that an election was received
by the appropriate Federal Reserve Bank, unless the Board notifies
the foreign bank or company prior to that time that—
(1) the election is ineffective; or
(2) the period is extended
with the consent of the foreign bank or company making the
election.
(b) Earlier notification that an election is effective. The Board
or the appropriate Federal Reserve Bank may notify a foreign bank
or company that its election to be treated as a financial holding
company is effective prior to the thirty-first day after the election
was filed with the appropriate Federal Reserve Bank. Such notification
must be in writing.
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(c) Under
what circumstances will the Board find an election to be ineffective? An election to be treated as a financial holding company shall not
be effective if, during the period provided in paragraph (a) of this
section, the Board finds that—
(1) the foreign bank certificant, or any
foreign bank that operates a branch or agency or owns or controls
a commercial lending company in the United States and is controlled
by a foreign bank or company certificant, is not both well capitalized
and well managed;
(2)
any U.S. insured depository institution subsidiary of the foreign
bank or company (except an institution excluded under paragraph (d)
of this section) or any U.S. branch of a foreign bank that is insured
by the Federal Deposit Insurance Corporation has not achieved at least
a rating of “satisfactory record of meeting community needs” under
the Community Reinvestment Act at the institution’s most recent examination;
(3) any U.S. depository
institution subsidiary of the foreign bank or company is not both
well capitalized and well managed; or
(4) the Board does not have sufficient
information to assess whether the foreign bank or company making the
election meets the requirements of this subpart.
(d) How is CRA
performance of recently acquired insured depository institutions considered? An insured depository institution will be excluded for purposes
of the review of CRA ratings described in paragraph (c)(2) of this
section consistent with the provisions of section 225.82(d).
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(e) Factors used in the Board’s determination
regarding comparability of capital and management.
(1) In general. In determining whether a foreign bank is well capitalized and well
managed in accordance with comparable capital and management standards,
the Board will give due regard to national treatment and equality
of competitive opportunity. In this regard, the Board may take into
account the foreign bank’s composition of capital, tier 1 capital
to total assets leverage ratio, accounting standards, long-term debt
ratings, reliance on government support to meet capital requirements,
the foreign bank’s anti-money laundering procedures, whether the foreign
bank is subject to comprehensive supervision or regulation on a consolidated
basis, and other factors that may affect analysis of capital and management.
The Board will consult with the home-country supervisor for the foreign
bank as appropriate.
(2) Assessment of consolidated supervision. A foreign bank that is not subject to comprehensive supervision
on a consolidated basis by its home-country authorities may not be
considered well capitalized and well managed unless—
(i) the
home country has made significant progress in establishing arrangements
for comprehensive supervision on a consolidated basis; and
(ii) the foreign bank is
in strong financial condition as demonstrated, for example, by capital
levels that significantly exceed the minimum levels that are required
for a well capitalized determination and strong asset quality.
