§3102 Establishment of Federal Branches and Agencies by Foreign Bank

Summary

A foreign bank that does banking outside the United States may open one or more federal branches or agencies in a State if the Comptroller of the Currency gives permission and the State law does not forbid it. The Comptroller must include any conditions the Board of Governors requires. The Comptroller sets the rules for how the branch or agency must operate, including keeping its accounts separate and following most of the same rights, duties, and limits that a national bank would have at the same place. Two differences: limits tied to capital stock and surplus are applied by using the dollar equivalent for the foreign bank (and all its federal branches and agencies in that State are counted together), a federal branch does not have to become a member bank, and a federal agency does not have to be an insured bank. A federal agency may not take deposits or act as a trustee, though it can hold small credit balances that come up in its normal business. A foreign bank cannot have both a federal branch and a federal agency in the same State. A state-law branch, agency, or a commercial lending company controlled by a foreign bank may be converted into a federal branch or agency with Comptroller approval, and liabilities then become payable at the federal office. When a federal branch or agency opens, the foreign bank must keep certain dollar deposits or investment securities with a member bank in that State approved by the Comptroller or the Board. The required amount must be at least the larger of: (a) the capital (not surplus) that a national bank would need at that location, or (b) 5 percent of the branch’s or agency’s total liabilities, excluding accrued expenses and amounts owed to the bank’s own offices, branches, agencies, or subsidiaries. The Comptroller can require higher amounts if needed for safety, but not more than local banking practice would demand. The deposit is held under an agreement that lets the foreign bank earn income on the securities and inspect or exchange them. The Comptroller can also set other asset rules by State and will give credit for assets already required by these rules or other sections. A foreign bank with one federal office in a State may get Comptroller approval to open more offices there, and the Comptroller must give the Board a chance to comment. The bank’s authority ends if it gives it up or is dissolved at home. The Comptroller can revoke the authority for violations, insolvency, or similar foreign proceedings, usually after a hearing but can skip a hearing if needed for the public interest, and can restore authority when compliance is shown. If authority is revoked, a judgment remains unpaid for thirty days, or the Comptroller finds the bank insolvent, the Comptroller may appoint a receiver to take U.S. assets and act like a national-bank receiver. After proved claims of depositors and creditors arising from U.S. branches or agencies (except certain nonenforceable claims and intercompany liabilities) and receivership costs are paid, any leftover assets go to the bank’s head office or its foreign liquidator or receiver.