International banking operations (Regulation K): Correction,

[Federal Register: November 23, 2001 (Volume 66, Number 226)]

[Rules and Regulations]

[Page 58655-58656]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr23no01-1]

Rules and Regulations Federal Register

This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week.

[[Page 58655]]

FEDERAL RESERVE SYSTEM

12 CFR Parts 211 and 265

[Regulation K; Docket No. R-0994]

International Banking Operations; Rules Regarding Delegation of Authority

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule; correcting amendments.

SUMMARY: The Board of Governors of the Federal Reserve System (Board) is adopting correcting amendments to the final rule published in the Federal Register of October 26, 2001, regarding international banking operations and the corresponding delegations of authority. The corrections clarify a number of provisions and correct a citation appearing in Subpart A, and restore a provision that was adopted in January 2001, but was inadvertently deleted from the rule.

DATES: Effective November 26, 2001.

FOR FURTHER INFORMATION CONTACT: Ann Misback, Assistant General Counsel (202/452-3788), or Alison MacDonald, Counsel (202/452-3236), Legal Division, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: On October 17, 2001, the Board adopted final revisions to subparts A, B, and C of Regulation K, governing international banking operations and to corresponding rules regarding delegations of authority. (See 66 FR 54346, October 26, 2001). The final revisions become effective on November 26, 2001. This document makes the following corrections to those final revisions: (1) Clarifies, with respect to the second of five factors considered by the Board in acting on proposals by member banks to invest more than 10 percent of capital and surplus in Edge and agreement corporation subsidiaries, that amounts invested in and retained earnings of any foreign bank subsidiaries are to be included in the relevant capital calculation; (2) restores a provision on the protection of customer information by Edge and agreement corporations that was adopted in January 2001 and was inadvertently omitted from the rule; (3) adds a cross reference in the portfolio investment section of 211.8(c)(3) to the aggregate equity limit previously adopted by the Board set forth in section 211.10(a); (4) corrects a United States Code citation appearing in a footnote to section 211.9 of the rule; and (5) clarifies the scope of authority delegated to the Secretary of the Board of Governors of the Federal Reserve System and the Reserve Banks to approve applications by a member bank to invest more than 10 percent of capital and surplus in Edge and agreement corporation subsidiaries by incorporating Board-imposed conditions on the scope of that authority.

List of Subjects

12 CFR Part 211

Exports, Federal Reserve System, Foreign banking, Holding companies, Investments, Reporting and recordkeeping requirements.

12 CFR Part 265

Authority delegations (Government agencies), Banks, banking, Federal Reserve System.

Accordingly, 12 CFR parts 211 and 265 are corrected by making the following correcting amendments:

PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)

1. Section 211.5 is amended as follows:

   1. Paragraph (h)(2)(ii) is revised; and

   2. A new paragraph (l) is added.

   The revision and addition read as follows:

   Sec. 211.5 Edge and agreement corporations.

   * * * * *

   (h) * * *

   (2) * * *

   (ii) The total capital invested by the bank in its Edge and agreement corporations when combined with retained earnings of the Edge and agreement corporations (including amounts invested in and retained earnings of any foreign bank subsidiaries) as a percentage of the bank's capital; * * * * *

   (l) Protection of customer information. An Edge or agreement corporation shall comply with the Interagency Guidelines Establishing Standards for Safeguarding Customer Information prescribed pursuant to sections 501 and 505 of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 and 6805), set forth in appendix D-2 to part 208 of this chapter. * * * * *

2. Section 211.8 is amended as follows:

   1. Paragraphs (c)(3)(ii) and (iii) are respectively redesignated as paragraphs (c)(3)(iii) and (iv); and

   2. A new paragraph (c)(3)(ii) is added.

   The addition reads as follows:

   Sec. 211.8 Investments and activities abroad.

   * * * * *

   (c) * * *

   (3) * * *

   (ii) Aggregate Investment Limit. Portfolio investments made under authority of this subpart shall be subject to the aggregate equity limit of Sec. 211.10(a)(15)(iii). * * * * *

3. In Sec. 211.9, footnote 5, remove the citation ``12 U.S.C. 616'' and add in its place ``12 U.S.C. 615''.

   PART 265--RULES REGARDING DELEGATION OF AUTHORITY

1. Section 265.5(d)(3) is revised to read as follows:

   Sec. 265.5 Functions delegated to Secretary of the Board.

   * * * * *

   (d) * * *

   (3) Investments in Edge and Agreement Corporations. To approve an application by a member bank to invest more than 10 percent of capital and surplus in Edge and agreement corporation subsidiaries, provided that:

   (i) The member bank's total investment, including the retained earnings of the Edge and agreement corporation subsidiaries, does not exceed 20 percent of the bank's capital and surplus or would not exceed that level as a result of the proposal; and

   [[Page 58656]]

   (ii) The proposal raises no significant policy or supervisory issues. * * * * *

2. Section 265.11(d)(11) is revised to read as follows:

   Sec. 265.11 Functions delegated to Federal Reserve Banks.

   * * * * *

   (d) * * *

   (11) Investments in Edge and agreement Corporation subsidiaries. To approve an application by a member bank to invest more than 10 percent of capital and surplus in Edge and agreement corporation subsidiaries, provided that:

   (i) The member bank's total investment, including the retained earnings of the Edge and agreement corporation subsidiaries, does not exceed 20 percent of the bank's capital and surplus or would not exceed that level as a result of the proposal; and

   (ii) The proposal raises no significant policy or supervisory issues. * * * * *

   By order of the Board of Governors of the Federal Reserve System, acting through the Secretary of the Board under delegated authority, November 16, 2001. Robert deV. Frierson, Deputy Secretary of the Board.

   [FR Doc. 01-29177Filed11-21-01; 8:45 am]

   BILLING CODE 6210-01-P