(a) Permissible
activities and investments. In addition to its general banking
powers, and to the extent consistent with its charter, a foreign branch
of a member bank may engage in the following activities and make the
following investments, so far as is usual in connection with the business
of banking in the country where it transacts business.
(1) Guarantees. Guarantee debts, or otherwise agree to make payments on the occurrence
of readily ascertainable events (including, but not limited to, nonpayment
of taxes, rentals, customs duties, or costs of transport, and loss
or nonconformance of shipping documents) if the guarantee or agreement
specifies a maximum monetary liability; however, except to the extent
that the member bank is fully secured, it may not have liabilities
outstanding for any person on account of such guarantees or agreements
which, when aggregated with other unsecured obligations of the same
person, exceed the limit contained in section 5200(a)(1) of the Revised
Statutes (12 U.S.C. 84) for loans and extensions of credit;
(2) Government
obligations.
(i) Underwrite, distribute, buy, sell, and hold obligations of—
(A) the national government
of the country where the branch is located and any political subdivision
of that country;
(B) an agency or instrumentality
of the national government of the country where the branch is located
where such obligations are supported by the taxing authority, guarantee,
or full faith and credit of that government;
(C) the national government or political subdivision
of any country, where such obligations are rated investment grade;
and
(D) an agency or instrumentality
of any national government where such obligations are rated investment
grade and are supported by the taxing authority, guarantee, or full
faith and credit of that government.
(ii) No member bank, under authority
of this paragraph (a)(2), may hold, or be under commitment with respect
to, such obligations for its own account in relation to any one country
in an amount exceeding the greater of—
(A) 10 percent of its tier 1 capital; or
(B) 10 percent of the total deposits
of the bank’s branches in that country on the preceding year-end call
report date (or the date of acquisition of the branch, in the case
of a branch that has not been so reported);
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(3) Other investments.
(i) Invest in—
(A) the securities of the
central bank, clearinghouses, governmental entities other than
those authorized under paragraph (a)(2) of this section, and government-sponsored
development banks of the country where the foreign branch is located;
(B) other debt securities eligible to
meet local reserve or similar requirements; and
(C) shares of automated electronic-payments
networks, professional societies, schools, and the like necessary
to the business of the branch;
(ii) the total investments of a bank’s
branches in a country under this paragraph (a)(3) (exclusive of securities
held as required by the law of that country or as authorized under
section 5136 of the Revised Statutes (12 U.S.C. 24, Seventh)) may
not exceed 1 percent of the total deposits of the bank’s branches
in that country on the preceding year-end call report date (or on
the date of acquisition of the branch, in the case of a branch that
has not been so reported);
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(4) Real estate loans. Take liens
or other encumbrances on foreign real estate in connection with its
extensions of credit, whether or not of first priority and whether
or not the real estate has been improved;
(5) Insurance. Act as insurance agent or broker;
(6) Employee benefits program. Pay
to an employee of the branch, as part of an employee benefits program,
a greater rate of interest than that paid to other depositors of the
branch;
(7) Repurchase agreements. Engage in repurchase agreements involving
securities and commodities that are the functional equivalents of
extensions of credit;
(8) Investment in subsidiaries. With
the Board’s prior approval, acquire all of the shares of a company
(except where local law requires other investors to hold directors’
qualifying shares or similar types of instruments) that engages solely
in activities—
(i)
in which the member bank is permitted to engage; or
(ii) that are incidental to the activities
of the foreign branch.
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(b) Other activities. With the Board’s prior approval, engage in
other activities that the Board determines are usual in connection
with the transaction of the business of banking in the places where
the member bank’s branches transact business.
