Foreign Banking Organizations
Foreign banking organizations have had a long-standing presence in the United States. Their operations encompass a wide variety of banking and nonbanking activities, through subsidiaries, branches, agencies, and representative offices. These activities are located primarily in the major U.S. cities where finance and international trade are most actively conducted. The Federal Reserve regularly examines the U.S. operations of foreign banks and plays a key role in assessing the condition of an organization's entire U.S. operations and the foreign banking organization's ability to support its U.S. operations.
The Federal Reserve shares its foreign banking organizations regulatory responsibility with other state and federal supervisory authorities. Branches of foreign banking organizations are licensed by the state banking authorities or the Office of the Comptroller of the Currency (OCC), although certain grandfathered branches may be insured by the Federal Deposit Insurance Corporation (FDIC). Agencies are licensed by the state banking authorities.
The Examination Manual for U.S. Branches and Agencies of Foreign Banking Organizations describes general policies and procedures to be used in conducing examinations of the U.S. branches and agencies of these organizations.
The Federal Reserve produces quarterly reports that show the structure as well as the assets, loans, and deposits of the U.S. offices of foreign banking organizations.
Among other requirements under Federal Reserve Board Regulation YY, a foreign banking organization with $50 billion or more in total U.S. non-branch assets as of June 30, 2015, must establish a U.S. intermediate holding company and transfer its ownership interest in the substantial majority of its U.S. subsidiaries to the U.S. intermediate holding company by July 1, 2016. The Board may permit variances from the requirements under Regulation YY and, in particular, may permit a foreign banking organization to (1) hold its ownership interest in a U.S. subsidiary outside of its U.S. intermediate holding company or (2) use an alternative organizational structure.