(1) commercial and other banking activities;
(2) financing, including commercial
financing, consumer financing, mortgage banking, and factoring;
(3) leasing real or personal property,
or acting as agent, broker, or advisor in leasing real or personal
property consistent with the provisions of Regulation Y (12 CFR 225);
(4) acting as fiduciary;
(5) underwriting credit life insurance
and credit accident and health insurance;
(6) performing services for other direct
or indirect operations of a U.S. banking organization, including representative
functions, sale of long-term debt, name saving, holding assets acquired
to prevent loss on a debt previously contracted in good faith, and
other activities that are permissible domestically for a bank holding
company under sections 4(a)(2)(A) and 4(c)(1)(C) of the BHC Act (12
U.S.C. 1843(a)(2)(A), (c)(1)(C));
(7) holding the premises of a branch of an Edge or agreement corporation
or member bank or the premises of a direct or indirect subsidiary,
or holding or leasing the residence of an officer or employee of a
branch or subsidiary;
(8) providing
investment, financial, or economic advisory services;
(9) general insurance agency and brokerage;
(10) data processing;
(11) organizing, sponsoring, and managing
a mutual fund, if the fund’s shares are not sold or distributed in
the United States or to U.S. residents and the fund does not exercise
managerial control over the firms in which it invests;
(12) performing management consulting services,
if such services, when rendered with respect to the U.S. market, shall
be restricted to the initial entry;
(13) underwriting, distributing, and dealing in debt securities outside
the United States;
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(14) underwriting and
distributing equity securities outside the United States as follows:
(i) Limits for well-capitalized and well-managed
investor.
(A) General. After providing 30 days’ prior
written notice to the Board, an investor that is well capitalized
and well managed may underwrite equity securities, provided that commitments
by an investor and its subsidiaries for the shares of a single organization
do not, in the aggregate, exceed—
(1)
15 percent of the bank holding company’s tier 1 capital, where the
investor is a bank holding company;
(2) 3 percent of the investor’s tier 1 capital, where the
investor is a member bank; or
(3) the lesser of 3 percent of any parent insured bank’s tier
1 capital or 15 percent of the investor’s tier 1 capital, for any
other investor.
(B) Qualifying criteria. An investor will be
considered well capitalized and well managed for purposes of paragraph
(a)(14)(i) of this section only if each of the bank holding company,
member bank, and Edge or agreement corporation qualify as well capitalized
and well managed.
(ii) Limits for investor that is not well
capitalized and well managed. After providing 30 days’ prior
written notice to the Board, an investor that is not well capitalized
and well managed may underwrite equity securities, provided that commitments
by the investor and its subsidiaries for the shares of an organization
do not, in the aggregate, exceed $60 million; and
(iii) Application
of limits. For purposes of determining compliance with the limitations
of this paragraph (a)(14), the investor may subtract portions of an
underwriting that are covered by binding commitments obtained by the
investor or its affiliates from sub-underwriters or other purchasers;
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(15) dealing in equity securities outside
the United States as follows:
(i) Grandfathered
authority. By an investor, or an affiliate, that had commenced
such activities prior to March 27, 1991, and subject to the limitations
in effect at that time (see 12 CFR 211, revised January 1,
1991); or
(ii) Limit on shares of a single issuer. After
providing 30 days’ prior written notice to the Board, an investor
may deal in the shares of an organization where the shares held in
the trading or dealing accounts of an investor and its affiliates
under authority of this paragraph (a)(15) do not in the aggregate
exceed the lesser of—
(A) $40 million; or
(B) 10 percent
of the investor’s tier 1 capital;
(iii) Aggregate
equity limit. The total shares held directly and indirectly by
the investor and its affiliates under authority of this paragraph
(a)(15) and section 211.8(c)(3) of this part in organizations engaged
in activities that are not permissible for joint ventures do not exceed—
(A) 25 percent of the bank
holding company’s tier 1 capital, where the investor is a bank holding
company;
(B) 20 percent of the investor’s
tier 1 capital, where the investor is a member bank;
6 and
(C) the lesser of 20 percent of any parent
insured bank’s tier 1 capital or 100 percent of the investor’s tier
1 capital, for any other investor;
(iv) Determining
compliance with limits.
(A) General. For purposes of determining compliance with all limits set out in
this paragraph (a)(15)—
(1) long and short positions in
the same security may be netted; and
(2) except as provided in paragraph (a)(15)(iv)(B)(4) of this section, equity securities held in order to hedge bank-permissible
equity derivatives contracts shall not be included.
(B) Use of
internal hedging models. After providing 30 days’ prior written
notice to the Board the investor may use an internal hedging model
that—
(
1) nets long and short positions
in the same security and offsets positions in a security by futures,
forwards, options, and other similar instruments referenced to the
same security, for purposes of determining compliance with the single
issuer limits of paragraph
(a)(15)(ii) of this section;
7 and
(2) offsets its long positions in equity securities by futures,
forwards, options, and similar instruments, on a portfolio basis,
and for purposes of determining compliance with the aggregate equity
limits of paragraph (a)(15)(iii) of this section.
(3) with respect to all equity securities
held under authority of paragraph (a)(15) of this section, no net
long position in a security shall be deemed to have been reduced by
more than 75 percent through use of internal hedging models under
this paragraph (a)(15)(iv)(B); and
(4) with respect to equity securities acquired to hedge bank-permissible
equity derivatives contracts under authority of paragraph (a)(1) of
this section, any residual position that remains in the securities
of a single issuer after netting and offsetting of positions relating
to the security under the investor’s internal hedging models shall
be included in calculating compliance with the limits of this paragraph
(a)(15)(ii) and (iii).
(C) Underwriting commitments. Any
shares acquired pursuant to an underwriting commitment that are held
for longer than 90 days after the payment date for such underwriting
shall be subject to the limits set out in paragraph (a)(15) of this
section and the investment provisions of sections 211.8 and 211.9
of this part.
(v) Authority to deal in shares of U.S.
organization. The authority to deal in shares under paragraph
(a)(15) of this section includes the authority to deal in the shares
of a U.S. organization—
(A) with respect to foreign persons only; and
(B) subject to the limitations on owning or
controlling shares of a company in section 4(c)(6) of the BHC Act
(12 U.S.C. 1843(c)(6)) and Regulation Y (12 CFR 225).
(vi) Report
to senior management. Any shares held in trading or dealing accounts
for longer than 90 days shall be reported to the senior management
of the investor;
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(16) operating a travel agency, but only in connection with financial
services offered abroad by the investor or others;
(17) underwriting life, annuity, pension
fund-related, and other types of insurance, where the associated risks
have been previously determined by the Board to be actuarially predictable;
provided that—
(i)
investments in, and loans and extensions of credit (other than loans
and ex- tensions of credit fully secured in accordance with the requirements
of section 23A of the FRA (12 U.S.C. 371c), or with such other standards
as the Board may require) to, the company by the investor or its affiliates
are deducted from the capital of the investor (with 50 percent of
such capital deduction to be taken from tier 1 capital); and
(ii) activities conducted directly or
indirectly by a subsidiary of a U.S. insured bank are excluded from
the authority of this paragraph (a)(17), unless authorized by the
Board;
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(18) providing futures
commission merchant services (including clearing without executing
and executing without clearing) for nonaffiliated persons with respect
to futures and options on futures contracts for financial and nonfinancial
commodities; provided that prior notice under section 211.9(f) of
this part shall be provided to the Board before any subsidiaries of
a member bank operating pursuant to this subpart may join a mutual
exchange or clearinghouse, unless the potential liability of the investor
to the exchange, clearinghouse, or other members of the exchange,
as the case may be, is legally limited by the rules of the exchange
or clearinghouse to an amount that does not exceed applicable general-consent
limits under section 211.9 of this part;
(19) acting as principal or agent in commodity-swap
transactions in relation to—
(i) swaps on a cash-settled basis for
any commodity, provided that the investor’s portfolio of swaps contracts
is hedged in a manner consistent with safe and sound banking practices;
and
(ii) contracts that require
physical delivery of a commodity, provided that—
(A) such contracts are entered into solely
for the purpose of hedging the investor’s positions in the underlying
commodity or derivative contracts based on the commodity;
(B) the contract allows for assignment, termination
or offset prior to expiration; and
(C) reasonable efforts are made to avoid delivery.
