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FDIC: Proposed Revisions to International Banking Regulations

ABA Contact: Paul Smith, (202) 663-5331
Published: 69 Federal Register 43060; July 19, 2004
Comments Due: September 17, 2004
Disposition: Filed

The FDIC issued a final rule on April 6, 2005, adopting the rule largely as proposed, including the amendment recommended by the ABA to enlarge the acceptable collateral to include investment grade securities and CDs of savings associations.

The FDIC made significant revisions to its international banking regulations in 1998, but since then the Federal Reserve Board has revised Regulation K on International Banking and the FDIC has received suggestions under its regulatory reduction review process under EGRPRA that the FDIC believes should be implemented. ABA supported the rewriting of the regulation to make in conform to Regulation K, as it was amended after this regulation had been revised in 1998. ABA in general supported the substantive amendments, but recommended that savings association and holding company notes, CDs and other financial instruments of investment grade be accepted for pledge by the FDIC to the same extent that bank and bank holding company instruments are accepted for pledge.

In summary, besides updating a number of references to other regulations and laws, the proposed revisions:

  • Provide for expedited processing of proposed relocations of insured U.S. branches of foreign banks (section 303.184);
  • Revise existing sections that address authorized activities for foreign investments and foreign branches to more closely track the sections of Regulation K addressing those issues in connection with member banks. The revisions also address approval of activities requiring consideration under parts 347 and 362 (sections 347.105 and 347.115);
  • Provide that, except for certain merger and acquisition transactions, the grandfathered status of an insured branch of a foreign bank may not be transferred (section 347.206);
  • Revise the FDIC's asset pledge requirement for insured branches of foreign banks to a risk-based approach (section 347.209);
  • Revise the FDIC's asset maintenance rule for insured branches of foreign banks to calculate the asset maintenance percentage based on daily third-party liabilities (section 347.210); and
  • Provide deposit insurance for wholesale U.S. branches of foreign banks (section V of the preamble).

2004 Regulations Chart
Federal Register
Comment Letter