(a)
General provisions.1 Direct and indirect investments
shall be made in accordance with the general-consent, limited-general-consent,
prior-notice, or specific-consent procedures contained in this section.
(1) Minimum capital
adequacy standards. Except as the Board may otherwise determine,
in order for an investor to make investments pursuant to the procedures
set out in this section, the investor, the bank holding company, and
the member bank shall be in compliance with applicable minimum standards
for capital adequacy set out in the capital rule; provided that, if
the investor is an Edge or agreement corporation, the minimum capital
required is total and tier 1 capital ratios of 8 percent and 4 percent,
respectively.
(2) Composite rating. Except as the Board may
otherwise determine, in order for an investor to make investments
under the general consent or limited general consent procedures of
paragraphs (b) and (c) of this section, at the most recent examination
the investor and any parent insured bank must have either received
a composite rating of at least 2 or be considered satisfactory under
the applicable rating system.
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(3) Board’s authority
to modify or suspend procedures. The Board, at any time upon
notice, may modify or suspend the procedures contained in this section
with respect to any investor or with respect to the acquisition of
shares of organizations engaged in particular kinds of activities.
(4) Long-range investment plan. Any investor
may submit to the Board for its specific consent a long-range investment
plan. Any plan so approved shall be subject to the other procedures
of this section only to the extent determined necessary by the Board
to assure safety and soundness of the operations of the investor and
its affiliates.
(5) Prior specific consent for initial investment. An investor shall apply for and receive the prior specific consent
of the Board for its initial investment under this subpart in its
first subsidiary or joint venture, unless an affiliate previously
has received approval to make such an investment.
(6) Expiration
of investment authority. Authority to make investments granted
under prior-notice or specific-consent procedures shall expire one
year from the earliest date on which the authority could have been exercised,
unless the Board determines a longer period shall apply.
(7) 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 subpart if an investor 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.
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(b) General
consent. The Board grants its general consent for a well-capitalized
and well-managed investor to make investments, subject to the following:
(1) Well-capitalized and well-managed investor. In order to qualify
for making investments under authority of this paragraph (b), both
before and immediately after the proposed investment, the investor,
any parent insured bank, and any parent bank holding company shall
be well capitalized and well managed.
(2) Individual
limit for investment in subsidiary. In the case of an investment
in a subsidiary, the total amount invested directly or indirectly
in such subsidiary (in one transaction or a series of transactions)
does not exceed—
(i) 10 percent of the investor’s tier
1 capital, where the investor is a bank holding company; or
(ii) 2 percent of the investor’s
tier 1 capital, where the investor is a member bank; or
(iii) the lesser of 2 percent
of the tier 1 capital of any parent insured bank or 10 percent of
the investor’s tier 1 capital, for any other investor.
(3) Individual limit for investment in joint venture. In the case
of an investment in a joint venture, the total amount invested directly
or indirectly in such joint venture (in one transaction or a series
of transactions) does not exceed—
(i) 5 percent of the investor’s
tier 1 capital, where the investor is a bank holding company; or
(ii) 1 percent of the
investor’s tier 1 capital, where the investor is a member bank; or
(iii) the lesser of
1 percent of the tier 1 capital of any parent insured bank or 5 percent
of the investor’s tier 1 capital, for any other investor.
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(4) Individual limit for portfolio investment. In the case of a
portfolio investment, the total amount invested directly or indirectly
in such company (in one transaction or a series of transactions) does
not exceed the lesser of $25 million, or—
(i) 5 percent of the
investor’s tier 1 capital in the case of a bank holding company or
its subsidiary, or Edge corporation engaged in banking; or
(ii) 25 percent of the investor’s
tier 1 capital in the case of an Edge corporation not engaged in banking.
(5) Investment in a general partnership or unlimited-liability
company. An investment in a general partnership or unlimited-liability
company may be made under authority of paragraph (b) of this section,
subject to the limits set out in paragraph (c) of this section.
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(6) Aggregate investment limits.
(i) Investment limits. All investments made, directly or indirectly,
during the previous 12-month period under authority of this section,
when aggregated with the proposed investment, shall not exceed—
(A) 20 percent of the investor’s tier 1 capital, where the investor
is a bank holding company;
(B) 10 percent of the investor’s tier 1 capital, where the investor
is a member bank; or
(C)
the lesser of 10 percent of the tier 1 capital of any parent insured
bank or 50 percent of the tier 1 capital of the investor, for any
other investor.
(ii) Downstream
investments. In determining compliance with the aggregate limits set
out in this paragraph (b), an investment by an investor in a subsidiary
shall be counted only once, notwithstanding that such subsidiary may,
within 12 months of the date of making the investment, downstream
all or any part of such investment to another subsidiary.
(7) Application of limits. In determining compliance with the limits
set out in this paragraph (b), an investor is not required to combine
the value of all shares of an organization held in trading or dealing
accounts under section 211.10(a)(15) of this part with investments
in the same organization.
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(c) Limited general consent.
(1) Individual
limit. The Board grants its general consent for an investor that
is not well capitalized and well managed to make an investment in
a subsidiary or joint venture, or to make a portfolio investment,
if the total amount invested directly or indirectly (in one transaction
or in a series of transactions) does not exceed the lesser of $25
million or—
(i) 5 percent of the investor’s tier
1 capital, where the investor is a bank holding company;
(ii) 1 percent of the investor’s
tier 1 capital, where the investor is a member bank; or
(iii) the lesser of 1 percent
of any parent insured bank’s tier 1 capital or 5 percent of the investor’s
tier 1 capital, for any other investor.
(2) Aggregate
limit. The amount of general-consent investments made by any
investor directly or indirectly under authority of this paragraph
(c) during the previous 12-month period, when aggregated with the
proposed investment, shall not exceed—
(i) 10 percent of the
investor’s tier 1 capital, where the investor is a bank holding company;
(ii) 5 percent of
the investor’s tier 1 capital, where the investor is a member bank;
and
(iii) the lesser
of 5 percent of any parent insured bank’s tier 1 capital or 25 percent
of the investor’s tier 1 capital, for any other investor.
(3) Application of limits. In calculating compliance
with the limits of this paragraph (c), the rules set forth in paragraphs
(b)(6)(ii) and (b)(7) of this section shall apply.
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(d) Other eligible investments under general
consent. In addition to the authority granted under paragraphs
(b) and (c) of this section, the Board grants its general consent
for any investor to make the following investments:
(1) Investment
in organization equal to cash dividends. Any investment in an
organization in an amount equal to cash dividends received from that
organization during the preceding 12 calendar months; and
(2) Investment acquired from affiliate. Any investment that is acquired
from an affiliate at net asset value or through a contribution of
shares.
(e) Investments ineligible for general consent. An investment in
a foreign bank may not be made under authority of paragraphs (b) or
(c) of this section if—
(1) after the investment, the foreign bank
would be an affiliate of a member bank; and
(2) the foreign bank is located in a country
in which the member bank and its affiliates have no existing banking
presence.
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(f) Prior
notice. An investment that does not qualify for general consent
under paragraph (b), (c), or (d) of this section may be made after
the investor has given the Board 30 days’ prior written notice, such
notice period to commence at the time the notice is received, provided
that—
(1) the Board may waive
the 30-day period if it finds the full period is not required for
consideration of the proposed investment, or that immediate action
is required by the circumstances presented; and
(2) the Board may suspend the 30-day period
or act on the investment under the Board’s specific-consent procedures.
(g) Specific
consent. Any investment that does not qualify for either the
general-consent or the prior-notice procedure may not be consummated without
the specific consent of the Board.
