Unless otherwise specified, for the purposes
of this subpart—
(a) An affiliate of an organization
means—
(1) any entity of
which the organization is a direct or indirect subsidiary; or
(2) any direct or indirect subsidiary of
the organization or such entity.
(b) Capital and
surplus means, unless otherwise provided in this part:
(1) For organizations subject to the
capital rule:
(i)
tier 1 and tier 2 capital included in an organization’s risk-based
capital (under the capital rule); and
(ii) the balance of allowance for loan
and lease losses or adjusted allowance for credit losses, as applicable,
not included in an organization’s tier 2 capital for calculation of
risk-based capital, based on the organization’s most recent consolidated
Report of Condition and Income.
(iii) For qualifying community banking organizations (as defined
in section 217.12 of this chapter) that are subject to the community
bank leverage ratio framework (as defined in section 217.12 of this
chapter), tier 1 capital (as defined in section 217.2 of this chapter
and calculated in accordance with section 217.12(b) of this chapter)
plus allowances for loan and lease losses or adjusted allowance for
credit losses, as applicable.
(2) For all other organizations, paid-in
and unimpaired capital and surplus, and includes undivided profits
but does not include the proceeds of capital notes or debentures.
(c)
Capital rule means part 217 of this chapter.
*(d) Directly
or indirectly, when used in reference to activities or investments
of an organization, means activities or investments of the organization
or of any subsidiary of the organization.
(e) Eligible country means any country—
(1)
for which an allocated transfer-risk reserve is required pursuant
to section 211.43 of this part and that has restructured its sovereign
debt held by foreign creditors; and
(2) any other country that the Board deems to be eligible.
(f) An Edge corporation is engaged in banking if it is
ordinarily engaged in the business of accepting deposits in the United
States from nonaffiliated persons.
(g) Engaged in business or engaged in activities in the United States means maintaining
and operating an office (other than a representative office) or subsidiary
in the United States.
(h) Equity means an ownership
interest in an organization, whether through—
(1) voting or nonvoting shares;
(2) general or limited partnership interests;
(3) any other form of interest conferring
ownership rights, including warrants, debt, or any other interests
that are convertible into shares or other ownership rights in the
organization; or
(4) loans that
provide rights to participate in the profits of an organization, unless
the investor receives a determination that such loans should not be
considered equity in the circumstances of the particular investment.
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(i) Foreign or foreign country refers to one or
more foreign nations, and includes the overseas territories, dependencies,
and insular possessions of those nations and of the United States,
and the Commonwealth of Puerto Rico.
(j) Foreign bank means an organization that—
(1) is organized under the laws of a foreign country;
(2) engages in the business of banking;
(3) is recognized as a bank by the
bank supervisory or monetary authority of the country of its organization
or principal banking operations;
(4) receives deposits to a substantial extent in the regular course
of its business; and
(5) has the
power to accept demand deposits.
(k) Foreign branch means an office of an organization (other than a representative
office) that is located outside the country in which the organization
is legally established and at which a banking or financing business
is conducted.
(l) Foreign person means an office
or establishment located outside the United States or an individual
residing outside the United States.
(m) Investment means—
(1) the ownership or control
of equity;
(2) binding commitments
to acquire equity;
(3) contributions
to the capital and surplus of an organization; or
(4) the holding of an organization’s subordinated
debt when the investor and the investor’s affiliates hold more than
5 percent of the equity of the organization.
(n) Investment grade means a security that is rated in one of the
four highest rating categories by—
(1) two or more NRSROs; or
(2) one NRSRO if the security has been
rated by only one NRSRO.
(o) Investor means
an Edge corporation, agreement corporation, bank holding company,
or member bank.
(p) Joint venture means an organization
that has 20 percent or more of its voting shares held directly or
indirectly by the investor or by an affiliate of the investor under
any authority, but which is not a subsidiary of the investor or of
an affiliate of the investor.
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(q) Loans and extensions
of credit means all direct and indirect advances of funds to a
person made on the basis of any obligation of that person to repay
the funds.
(r) NSRO means a nationally recognized statistical
rating organization as designated by the Securities and Exchange Commission.
(s) Organization means a corporation, government, partnership,
association, or any other entity.
(t) Person means an
individual or an organization.
(u) Portfolio investment means an investment in an organization other than a subsidiary or
joint venture.
(v) Representative office means an office
that—
(1) engages solely
in representational and administrative functions (such as soliciting
new business or acting as liaison between the organization’s head
office and customers in the United States); and
(2) does not have authority to make any
business decision (other than decisions relating to the premises or
personnel) for the account of the organization it represents, including
contracting for any deposit or deposit-like liability on behalf of
the organization.
(w) Subsidiary means an
organization that has more than 50 percent of its voting shares held
directly or indirectly, or that otherwise is controlled or
capable of being controlled, by the investor or an affiliate of the
investor under any authority. Among other circumstances, an investor
is considered to control an organization if—
(1) the investor or an affiliate is
a general partner of the organization; or
(2) the investor and its affiliates directly
or indirectly own or control more than 50 percent of the equity of
the organization.
(x) Tier 1 capital has the
same meaning as provided in section 217.2 of this chapter. A qualifying
community banking organization (as defined in section 217.12 of this
chapter) that is subject to the community bank leverage ratio framework
(as defined in section 217.12 of this chapter), calculates its tier
1 capital in accordance with section 217.12(b) of this chapter.
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(y) Well capitalized means—
(1) in relation to a parent member or insured bank, that the standards
set out in section 208.43(b)(1) of Regulation H (12 CFR 208.43(b)(1))
are satisfied;
(2) in relation to
a bank holding company, that the standards set out in section 225.2(r)(1)
of Regulation Y (12 CFR 225.2(r)(1)) are satisfied; and
(3) in relation to an Edge or agreement
corporation, that it has tier 1 and total risk-based capital ratios
of 6.0 and 10.0 percent, respectively, or greater.
(z) Well managed means that the Edge or agreement corporation,
any parent insured bank, and the bank holding company either received
a composite rating of 1 or 2 or is considered satisfactory under the
applicable rating system, and has at least a satisfactory rating for
management if such a rating is given, at their most recent examination
or review.
