(a) General.
(1) Definition of banking organization. For
purposes of this section, a banking organization is defined
as a member bank and its affiliates.
(2) A banking organization is considered to be operating a branch
in a foreign country if it has an affiliate that is a member bank,
Edge or agreement corporation, or foreign bank that operates an office
(other than a representative office) in that country.
(3) For purposes of this subpart, a foreign
office of an operating subsidiary of a member bank shall be treated
as a foreign branch of the member bank and may engage only in activities
permissible for a branch of a member bank.
(4) At any time upon notice, the Board
may modify or suspend branching authority conferred by this section
with respect to any banking organization.
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(b) (1) Establishment of foreign branches.
(i) Foreign branches may be established
by any member bank having capital and surplus of $1,000,000 or more,
an Edge corporation, an agreement corporation, any subsidiary the
shares of which are held directly by the member bank, or any other
subsidiary held pursuant to this subpart.
(ii) The Board grants its general consent
under section 25 of the FRA (12 U.S.C. 601-604a) for a member bank
to establish a branch in the Commonwealth of Puerto Rico and the overseas
territories, dependencies, and insular possessions of the United States.
(2) Prior notice. Unless otherwise provided
in this section, the establishment of a foreign branch requires 30
days’ prior written notice to the Board.
(3) Branching
into additional foreign countries. After giving the Board 12
business days’ prior written notice, a banking organization that operates
branches in two or more foreign countries may establish a branch in
an additional foreign country.
(4) Additional branches within a foreign country. No prior notice is required to establish additional branches in
any foreign country where the banking organization operates one or
more branches.
(5) Branching by nonbanking affiliates. No
prior notice is required for a nonbanking affiliate of a banking organization
(i.e., an organization that is not a member bank, an Edge or agreement corporation,
or foreign bank) to establish branches within a foreign country or
in additional foreign countries.
(6) Expiration
of branching authority. Authority to establish branches, when
granted following prior written notice to the Board, shall expire
one year from the earliest date on which the authority could have
been exercised, unless extended by the Board.
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(c) Reporting. Any banking organization that
opens, closes, or relocates a branch shall report such change in a
manner prescribed by the Board.
(d) Reserves of foreign branches of member banks. Member banks shall
maintain reserves against foreign branch deposits when required by
Regulation D (12 CFR 204).
(e) Conditional
approval; access to information. The Board may impose such conditions
on authority granted by it under this section as it deems necessary,
and may require termination of any activities conducted under authority
of this section if a member bank is unable to provide information
on its activities or those of its affiliates that the Board deems
necessary to determine and enforce compliance with U.S. banking laws.
