(a) Except as otherwise provided
in this section (1) any foreign bank that maintains a branch or agency
in a State, (2) any foreign bank or foreign company controlling a
foreign bank that controls a commercial lending company organized
under State law, and (3) any company of which any foreign bank or
company referred to in (1) and (2) is a subsidiary shall be subject
to the provisions of the Bank Holding Company Act of 1956, and to
sections 105 and 106 of the Bank Holding Company Act Amendments of
1970 in the same manner and to the same extent that bank holding companies
are subject to such provisions.
(b) Until December
31, 1985, a foreign bank or other company to which subsection (a) applies
on the date of enactment of this Act may retain direct or indirect
ownership or control of any voting shares of any nonbanking company
in the United States that it owned, controlled, or held with power
to vote on the date of enactment of this Act or engage in any nonbanking
activities in the United States in which it was engaged on such date.
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(c) (1) After December 31, 1985, a
foreign bank or other company to which subsection (a) applies on the
date of enactment of this Act or on the date of the establishment
of a branch in a State an application for which was filed on or before
July 26, 1978 may continue to engage in nonbanking activities in the
United States in which directly or through an affiliate it was lawfully
engaged on July 26, 1978 (or on a date subsequent to July 26, 1978,
in the case of activities carried on as the result of the direct or
indirect acquisition, pursuant to a binding written contract entered
into on or before July 26, 1978, of another company engaged in such
activities at the time of acquisition), and may engage directly or
through an affiliate in nonbanking activities in the United States
which are covered by an application to engage in such activities which
was filed on or before July 26, 1978; except that the Board by order,
after opportunity for hearing, may terminate the authority conferred
by this subsection (c) on any such foreign bank or company to engage
directly or through an affiliate in any activity otherwise permitted
by this subsection (c) if it determines having due regard to the purposes
of this Act and the Bank Holding Company Act of 1956, that such action
is necessary to prevent undue concentration of resources, decreased
or unfair competition, conflicts of interest, or unsound banking practices
in the United States. Notwithstanding subsection (a) of this section,
a foreign bank or company referred to in this subsection may retain
ownership or control of any voting shares (or, where necessary to
prevent dilution of its voting interest, acquire additional voting
shares) of any domestically-controlled affiliate covered in 1978 which
since July 26, 1978, has engaged in the business of underwriting,
distributing, or otherwise buying or selling stocks, bonds, and other
securities in the United States, notwithstanding that such affiliate
acquired after July 26, 1978, an interest in, or any or all of the
assets of, a going concern, or commences to engage in any new activity
or activities. Except in the case of affiliates described in the preceding
sentence, nothing in this subsection (c) shall be construed to authorize
any foreign bank or company referred to in this subsection (c), or
any affiliate thereof, to engage in activities authorized by this
subsection (c) through the acquisition, pursuant to a contract entered
into after July 26, 1978, of any interest in or the assets of a going
concern engaged in such activities. Any foreign bank or company that
is authorized to engage in any activity pursuant to this subsection
(c) but, as a result of action of the Board, is required to terminate
such activity may retain the ownership of control of shares in any
company carrying on such activity for a period of two years from the
date on which its authority was so terminated by the Board. As used
in this subsection, the term “affiliate” shall mean any company more
than 5 per centum of whose voting shares is directly or indirectly
owned or controlled or held with power to vote by the specified foreign
bank or company, and the term “domestically-controlled affiliate covered
in 1978” shall mean an affiliate organized under the laws of the United
States or any State thereof if (i) no foreign bank or group of foreign
banks acting in concert owns or controls, directly or indirectly,
45 per centum or more of its voting shares, and (ii) no more than
20 per centum of the number of directors as established from time
to time to constitute the whole board of directors and 20 per centum
of the executive officers of such affiliate are persons affiliated
with any such foreign bank. For the purpose of the preceding sentence,
the term “persons affiliated with any such foreign bank” shall mean
(A) any person who is or was an employee, officer, agent, or director
of such foreign bank or who otherwise has or had such a relationship
with such foreign bank that would lead such person to represent the
interests of such foreign bank, and (B) in the case of any director
of such domestically controlled affiliate covered in 1978, any person
in favor of whose election as a director votes were cast by less than
two-thirds of all shares voting in connection with such election other
than shares owned or controlled, directly or indirectly, by any such
foreign bank.
1-572.1
(2) The authority conferred
by this subsection on a foreign bank or other company shall terminate
2 years after the date on which such foreign bank or other company
becomes a “bank holding company” as defined in section 2(a) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); except that
the Board may, upon application of such foreign bank or other company,
extend the 2-year period for not more than one year at a time, if,
in its judgment, such an extension would not be detrimental to the
public interest, but no such extensions shall exceed 3 years in the
aggregate.
1-572.2
(3) (A) If any foreign bank or
foreign company files a declaration under section 4(l)(1)(C)
of the Bank Holding Company Act of 1956, any authority conferred by
this subsection on any foreign bank or company to engage in any activity
that the Board has determined to be permissible for financial holding
companies under section 4(k) of such Act shall terminate immediately.
(B) If a foreign bank
or company that engages, directly or through an affiliate pursuant
to paragraph (1), in an activity that the Board has determined to
be permissible for financial holding companies under section 4(k)
of the Bank Holding Company Act of 1956 has not filed a declaration
with the Board of its status as a financial holding company under
such section by the end of the 2-year period beginning on the date
of the enactment of the Gramm-Leach-Bliley Act, the Board, giving
due regard to the principle of national treatment and equality of
competitive opportunity, may impose such restrictions and requirements
on the conduct of such activities by such foreign bank or company
as are comparable to those imposed on a financial holding company
organized under the laws of the United States, including a requirement
to conduct such activities in compliance with any prudential safeguards
established under section 114 of the Gramm-Leach-Bliley Act.
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(d) Nothing in this section shall be construed to
define a branch or agency of a foreign bank or a commercial lending
company controlled by a foreign bank or foreign company that controls
a foreign bank as a “bank” for the purposes of any provisions of the
Bank Holding Company Act of 1956, or section 105 of the Bank Holding
Company Act Amendments of 1970, except that any such branch, agency
or commercial lending company subsidiary” shall be deemed a “bank”
or “banking subsidiary”, as the case may be, for the purposes of applying
the prohibitions of section 106 of the Bank Holding Company Act Amendments
of 1970 and the exemptions provided in sections 4(c)(1), 4(c)(2),
4(c)(3), and 4(c)(4) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)(1), (2), (3), and (4)) to any foreign bank or other company
to which subsection (a) applies.
[12 USC 3106. As amended
by acts of Oct. 15, 1982 (96 Stat. 1539); Aug. 10, 1987 (101 Stat.
584); Dec. 19, 1991 (105 Stat. 2295); and Nov. 12, 1999 (113 Stat.
1383).]
[Subsection (e) amended section 2(h) of the Bank Holding Company
Act (at
4-064) and provided an exemption from the Bank Holding Company
Act for foreign banks’ nonbanking activities.]
