17056 Federal Register / Vol. 63, No. 67 / Wednesday, April 8, 1998 / Rules and Regulations
for which you wish it to be effective. By
doing so, you agreed to pay the additional
premium designated in the actuarial
documents for this optional coverage; and
(3) You or we did not cancel the option in
writing on or before the cancellation date.
Your election of CAT coverage for any crop
year after this endorsement is effective will
be considered as notice of cancellation by
you.
(b) If you select Fresh Fruit Option A only,
Fresh Fruit Option A will apply to all of your
apples intended for processing and fresh
market.
(c) If you select Fresh Fruit Option B, those
provisions will apply to all of your apples
intended for fresh market and the provisions
of Fresh Fruit Option A will apply to all of
your apples intended for processing.
(d) If you select the Sunburn Option as
designated in the Special Provisions, you
must also select Fresh Fruit Option B.
(e) In addition to the requirements of
section 10 of these provisions, you must
permit us to inspect and grade the fruit prior
to harvest or no quality adjustment will be
made.
(f) Fresh Fruit Option A and Fresh Fruit
Option B are subject to the following
conditions:
(1) Fresh Fruit Option A—In addition to
section 11(c) of these provisions and
notwithstanding the definition of
‘‘marketable’’ in section 1 of these provisions,
your production to count will be adjusted
when your apples are damaged by hail to the
extent that such apples will not grade U.S.
No. 1 (processing). Harvested apple
production that is damaged by hail to the
extent that it does not grade 80 percent U.S.
No. 1 (processing) or better, in accordance
with applicable USDA Standards for Grades
of Apples, will be adjusted as follows:
(i) Production to count with 21 through 40
percent not grading U.S. No. 1 (processing)
or better will be reduced 2 percent for each
full percent in excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. No. 1 (processing)
or better will be reduced 40 percent plus an
additional 3 percent for each full percent in
excess of 40 percent.
(iii) Production to count with 51 percent
through 64 percent not grading U.S. No. 1
(processing) or better will be reduced 70
percent plus an additional 2 percent for each
full percent in excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. No. 1 (processing) or
better will be considered 100 percent cull
production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Thirty (30) percent of all cull
production will be considered production to
count, unless otherwise specified in the
Special Provisions.
(vii) No reduction in production to count
will be applied to any apple grading less than
U.S. No. 1 (processing) due solely to size,
shape, russeting, or color.
(viii) Any appraisal we make on the
insured acreage will be considered
production to count unless such appraised
production is knocked to the ground by wind
or hail or frozen on the tree to the extent that
harvest is not practical.
(2) Fresh Fruit Option B—Notwithstanding
section 11(c) and the definitions of ‘‘harvest’’
and ‘‘marketable’’ in section 1 of these
provisions, the total production to count for
a unit will include all harvested and
appraised production. Harvested apple
production that is damaged by hail to the
extent that it does not grade 80 percent U.S.
Fancy or better, in accordance with
applicable USDA Standards for Grades of
Apples, will be adjusted as follows:
(i) Production to count with 21 through 40
percent not grading U.S. Fancy or better will
be reduced 2 percent for each full percent in
excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. Fancy or better will
be reduced 40 percent plus an additional 3
percent for each full percent in excess of 40
percent.
(iii) Production to count with 51 percent
through 64 percent not grading U.S. Fancy or
better will be reduced 70 percent plus an
additional 2 percent for each full percent in
excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. Fancy or better will be
considered 100 percent cull production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Apples that are knocked to the ground
by wind or frozen to the extent they can be
harvested but not marketed as U.S. Fancy
grade apples will be considered 100 percent
cull production.
(vii) Thirty (30) percent of all cull
production will be considered production to
count, unless otherwise specified in the
Special Provisions.
(viii) No reduction in production to count
will be applied to any apple grading less than
U.S. Fancy due solely to size, shape,
russeting, or color.
(ix) Any appraisal we make on the insured
acreage will be considered production to
count unless such appraised production is
knocked to the ground by wind, hail, or
frozen on the tree to the extent that harvest
is not practical.
(g) Sunburn Option
(1) In addition to the causes of loss
specified in section 9 of these provisions,
excess sun is an insurable cause of loss.
(2) Notwithstanding the definitions of
‘‘harvest’’ and ‘‘marketable’’ in section 1 and
11(c)(1) and (2) of these provisions, the total
production to be counted for a unit will
include all harvested and appraised
production. Harvested apple production that,
due to excessive sun or in conjunction with
hail damage, does not grade 80 percent U.S.
Fancy or better, in accordance with
applicable USDA Standards, will be adjusted
as follows:
(i) Production to count with 21 through 40
percent not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be reduced 2 percent
for each full percent in excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be reduced 40 percent
plus an additional 3 percent for each full
percent in excess of 40 percent.
(iii) Production to count with 51 through
64 percent not grading U.S. Fancy or better
due solely to excessive sun or excessive sun
along with hail damage, will be reduced 70
percent plus an additional 2 percent for each
full percent in excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be considered 100
percent cull production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Thirty (30) percent of all cull
production will be considered as production
to count unless otherwise specified in the
Special Provisions.
Signed in Washington, D.C., on April 2,
1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance
Corporation.
[FR Doc. 98–9208 Filed 4–7–98; 8:45 am]
BILLING CODE 3410–08–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303, 325, 326, 327, 346,
347, 351, and 362
RIN 3064–AC05
International Banking Regulations:
Consolidation and Simplification
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: As part of the FDIC’s
systematic review of its regulations and
written policies under section 303(a) of
the Riegle Community Development and
Regulatory Improvement Act of 1994
(CDRI), the FDIC has revised and
consolidated its three different groups of
rules and regulations governing
international banking. The first group
governs insured branches of foreign
banks and specifies what deposit-taking
activities are permissible for uninsured
state-licensed branches of foreign banks.
The FDIC’s final rule makes conforming
changes throughout this group of
regulations to reflect the statutory
requirement that domestic retail deposit
activities must be conducted through an
insured bank subsidiary, not through an
insured branch. Also with respect to
this group of regulations, the FDIC is
rescinding the provisions concerning
optional insurance for U.S. branches of
foreign banks; the pledge of assets
formula has been revised; and the FDIC
for which you wish it to be effective. By
doing so, you agreed to pay the additional
premium designated in the actuarial
documents for this optional coverage; and
(3) You or we did not cancel the option in
writing on or before the cancellation date.
Your election of CAT coverage for any crop
year after this endorsement is effective will
be considered as notice of cancellation by
you.
(b) If you select Fresh Fruit Option A only,
Fresh Fruit Option A will apply to all of your
apples intended for processing and fresh
market.
(c) If you select Fresh Fruit Option B, those
provisions will apply to all of your apples
intended for fresh market and the provisions
of Fresh Fruit Option A will apply to all of
your apples intended for processing.
(d) If you select the Sunburn Option as
designated in the Special Provisions, you
must also select Fresh Fruit Option B.
(e) In addition to the requirements of
section 10 of these provisions, you must
permit us to inspect and grade the fruit prior
to harvest or no quality adjustment will be
made.
(f) Fresh Fruit Option A and Fresh Fruit
Option B are subject to the following
conditions:
(1) Fresh Fruit Option A—In addition to
section 11(c) of these provisions and
notwithstanding the definition of
‘‘marketable’’ in section 1 of these provisions,
your production to count will be adjusted
when your apples are damaged by hail to the
extent that such apples will not grade U.S.
No. 1 (processing). Harvested apple
production that is damaged by hail to the
extent that it does not grade 80 percent U.S.
No. 1 (processing) or better, in accordance
with applicable USDA Standards for Grades
of Apples, will be adjusted as follows:
(i) Production to count with 21 through 40
percent not grading U.S. No. 1 (processing)
or better will be reduced 2 percent for each
full percent in excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. No. 1 (processing)
or better will be reduced 40 percent plus an
additional 3 percent for each full percent in
excess of 40 percent.
(iii) Production to count with 51 percent
through 64 percent not grading U.S. No. 1
(processing) or better will be reduced 70
percent plus an additional 2 percent for each
full percent in excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. No. 1 (processing) or
better will be considered 100 percent cull
production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Thirty (30) percent of all cull
production will be considered production to
count, unless otherwise specified in the
Special Provisions.
(vii) No reduction in production to count
will be applied to any apple grading less than
U.S. No. 1 (processing) due solely to size,
shape, russeting, or color.
(viii) Any appraisal we make on the
insured acreage will be considered
production to count unless such appraised
production is knocked to the ground by wind
or hail or frozen on the tree to the extent that
harvest is not practical.
(2) Fresh Fruit Option B—Notwithstanding
section 11(c) and the definitions of ‘‘harvest’’
and ‘‘marketable’’ in section 1 of these
provisions, the total production to count for
a unit will include all harvested and
appraised production. Harvested apple
production that is damaged by hail to the
extent that it does not grade 80 percent U.S.
Fancy or better, in accordance with
applicable USDA Standards for Grades of
Apples, will be adjusted as follows:
(i) Production to count with 21 through 40
percent not grading U.S. Fancy or better will
be reduced 2 percent for each full percent in
excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. Fancy or better will
be reduced 40 percent plus an additional 3
percent for each full percent in excess of 40
percent.
(iii) Production to count with 51 percent
through 64 percent not grading U.S. Fancy or
better will be reduced 70 percent plus an
additional 2 percent for each full percent in
excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. Fancy or better will be
considered 100 percent cull production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Apples that are knocked to the ground
by wind or frozen to the extent they can be
harvested but not marketed as U.S. Fancy
grade apples will be considered 100 percent
cull production.
(vii) Thirty (30) percent of all cull
production will be considered production to
count, unless otherwise specified in the
Special Provisions.
(viii) No reduction in production to count
will be applied to any apple grading less than
U.S. Fancy due solely to size, shape,
russeting, or color.
(ix) Any appraisal we make on the insured
acreage will be considered production to
count unless such appraised production is
knocked to the ground by wind, hail, or
frozen on the tree to the extent that harvest
is not practical.
(g) Sunburn Option
(1) In addition to the causes of loss
specified in section 9 of these provisions,
excess sun is an insurable cause of loss.
(2) Notwithstanding the definitions of
‘‘harvest’’ and ‘‘marketable’’ in section 1 and
11(c)(1) and (2) of these provisions, the total
production to be counted for a unit will
include all harvested and appraised
production. Harvested apple production that,
due to excessive sun or in conjunction with
hail damage, does not grade 80 percent U.S.
Fancy or better, in accordance with
applicable USDA Standards, will be adjusted
as follows:
(i) Production to count with 21 through 40
percent not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be reduced 2 percent
for each full percent in excess of 20 percent.
(ii) Production to count with 41 through 50
percent not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be reduced 40 percent
plus an additional 3 percent for each full
percent in excess of 40 percent.
(iii) Production to count with 51 through
64 percent not grading U.S. Fancy or better
due solely to excessive sun or excessive sun
along with hail damage, will be reduced 70
percent plus an additional 2 percent for each
full percent in excess of 50 percent.
(iv) Production to count with 65 percent or
more not grading U.S. Fancy or better due
solely to excessive sun or excessive sun along
with hail damage, will be considered 100
percent cull production.
(v) The difference between the total
production and the production to count as
determined above will be considered cull
production.
(vi) Thirty (30) percent of all cull
production will be considered as production
to count unless otherwise specified in the
Special Provisions.
Signed in Washington, D.C., on April 2,
1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance
Corporation.
[FR Doc. 98–9208 Filed 4–7–98; 8:45 am]
BILLING CODE 3410–08–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303, 325, 326, 327, 346,
347, 351, and 362
RIN 3064–AC05
International Banking Regulations:
Consolidation and Simplification
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: As part of the FDIC’s
systematic review of its regulations and
written policies under section 303(a) of
the Riegle Community Development and
Regulatory Improvement Act of 1994
(CDRI), the FDIC has revised and
consolidated its three different groups of
rules and regulations governing
international banking. The first group
governs insured branches of foreign
banks and specifies what deposit-taking
activities are permissible for uninsured
state-licensed branches of foreign banks.
The FDIC’s final rule makes conforming
changes throughout this group of
regulations to reflect the statutory
requirement that domestic retail deposit
activities must be conducted through an
insured bank subsidiary, not through an
insured branch. Also with respect to
this group of regulations, the FDIC is
rescinding the provisions concerning
optional insurance for U.S. branches of
foreign banks; the pledge of assets
formula has been revised; and the FDIC
17057Federal Register / Vol. 63, No. 67 / Wednesday, April 8, 1998 / Rules and Regulations
Division of Supervision’s (DOS) new
supervision program—the Case Manager
approach—has been integrated
throughout the applicable regulations.
The second group of regulations governs
the foreign branches of insured state
nonmember banks, and also governs
such banks’ investment in foreign banks
or other financial entities. The final rule
modernizes this group of regulations
and clarifies provisions outlining the
activities in which insured state
nonmember banks may engage abroad,
and reduces the instances in which
banks must file an application before
opening a foreign branch or making a
foreign investment. The third group of
regulations governs the international
lending of insured state nonmember
banks and specifies when reserves are
required for particular international
assets. The final rule revises this group
of regulations to simplify the accounting
for fees on international loans to make
it consistent with generally accepted
accounting principles. Consistent with
the goals of CDRI, the final rule
improves efficiency, reduces costs, and
eliminates outmoded requirements.
DATES: This final rule is effective July 1,
1998. Compliance is mandatory for all
affected institutions on July 1, 1998.
Affected institutions may elect to
comply with the final rule voluntarily at
any time after May 8, 1998. If an
affected institution elects to comply
voluntarily with any section of subpart
A, B, or C of 12 CFR part 347, the
institution or bank must comply with
the entire subpart.
FOR FURTHER INFORMATION CONTACT:
Christie A. Sciacca, Associate Director
(202/898–3671), Karen M. Walter, Chief
(202/898–3540), Suzanne L. Williams,
Senior Financial Analyst (202/898–
6788), Division of Supervision; Jamey
Basham, Counsel (202/898–7265),
Wendy Sneff, Counsel (202/898–6865),
Legal Division, FDIC, 550 17th Street,
NW, Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The FDIC
is conducting a systematic review of its
regulations and written policies. Section
303(a) of the CDRI (12 U.S.C. 4803(a))
requires the FDIC to streamline and
modify its regulations and written
policies in order to improve efficiency,
reduce unnecessary costs, and eliminate
unwarranted constraints on credit
availability. Section 303(a) also requires
the FDIC to remove inconsistencies and
outmoded and duplicative requirements
from its regulations and written
policies.
As part of this review, the FDIC has
determined that certain portions of part
346 are out-of-date, and other provisions
of this part require clarification.
Although the FDIC previously made
certain regulatory amendments which
took effect as recently as 1996, other
regulatory language contained in part
346 does not accurately reflect the
underlying statutory authority. The
FDIC has also determined that part 347
is outmoded. Part 347 has not been
revised in any significant regard since
1979, when it was originally
promulgated. The FDIC published a
proposed rule in the Federal Register on
July 15, 1997 (62 FR 37748).
The FDIC has decided to consolidate
its international banking rules into a
single part, part 347, for ease of
reference. This final rule places material
on foreign branching and foreign bank
investment by nonmember banks,
currently located in part 347, into
subpart A of part 347. Material currently
located in part 346, governing insured
branches of foreign banks and deposit-
taking by uninsured state-licensed
branches of foreign banks, is placed in
subpart B of part 347. Part 351 of the
FDIC’s current rules and regulations,
which contains rules governing the
international lending operations of
insured state nonmember banks, is
placed in subpart C of new part 347.
Part 351 was originally adopted in 1984
as an interagency rulemaking in
coordination with the Board of
Governors of the Federal Reserve
System (FRB) and the Office of the
Comptroller of the Currency (OCC). The
most significant revision to part 351 is
to require banks to follow GAAP in
accounting for fees on international
loans. This change was discussed with
accounting staff at the OCC and FRB as
part of an interagency working group
and they are in general agreement with
the change. However, as the other two
federal banking agencies are not ready
to act on a revised regulation at this
time, the FDIC has decided to
unilaterally issue its revision to part 351
in connection with its consolidation of
the international banking regulations.
In addition, the FDIC has recently
published a notice of proposed
rulemaking (62 FR 52810, October 9,
1997) containing complete revision of
part 303 of the FDIC’s rules and
regulations, which contains the FDIC’s
applications procedures and delegations
of authority. For ease of reference, the
FDIC will consolidate its applications
procedures for international banking
matters into a single subpart of part 303,
subpart J. In order to finalize part 347
without waiting for the part 303
proposal to be finalized, this part 347
proposal includes, as a separate subpart
D of part 347, revised application
procedures compatible with the
substantive provisions of this final rule.
These application procedures will be
transferred to subpart J of part 303 once
it is finalized, as is discussed in
connection with subpart D, below.
I. Subpart A—Foreign Branches and
Investments in Foreign Banks and
Other Entities
A. Background
Section 18(d)(2) of the Federal
Deposit Insurance Act (12 U.S.C.
1828(d)(2)) requires a nonmember bank
to obtain the FDIC’s consent to establish
or operate a foreign branch. Section
18(d)(2) also authorizes the FDIC to
impose conditions and issue regulations
governing the affairs of foreign
branches.
Section 18(l) of the FDI Act (12 U.S.C.
1828(l)) requires a nonmember bank to
obtain the FDIC’s consent to acquire and
hold, directly or indirectly, stock or
other evidences of ownership in any
foreign bank or other entity. Section
18(l) also states that these entities may
not engage in any activities in the
United States except as the Board of
Directors of the FDIC (Board), in its
judgment, has determined are incidental
to the international or foreign business
of these entities. In addition, section
18(l) authorizes the FDIC to impose
conditions and issue regulations
governing these investments. Finally,
although nonmember banks are subject
to the interaffiliate transaction
restrictions of sections 23A and 23B of
the Federal Reserve Act, 12 U.S.C. 371c
and 371c–1, as expressly incorporated
by section 18(j) of the FDI Act, 12 U.S.C.
1821(j), section 18(l) provides that
nonmember banks may engage in
transactions with these foreign banks
and other entities in which the
nonmember bank has invested in the
manner and within the limits prescribed
by the FDIC.
A nonmember bank’s authority to
establish a foreign branch or invest in
foreign banks or other entities, and the
permissible activities for foreign
branches or foreign investment entities,
must be established in the first instance
under the law of its state chartering
authority. Congress created sections
18(d)(2) and 18(l) out of a concern that
there was no federal-level review of
nonmember banks’ foreign branching
and investments. S. Rep. No. 95–323,
95th Cong., 1st Sess. (1977) at 15.
Although the FRB had long held
authority over foreign branching and
investment by state member banks and
national banks (member banks) under
the Federal Reserve Act, as well as
foreign investment by bank holding
companies under the Bank Holding
Company Act, the FDIC did not hold
Division of Supervision’s (DOS) new
supervision program—the Case Manager
approach—has been integrated
throughout the applicable regulations.
The second group of regulations governs
the foreign branches of insured state
nonmember banks, and also governs
such banks’ investment in foreign banks
or other financial entities. The final rule
modernizes this group of regulations
and clarifies provisions outlining the
activities in which insured state
nonmember banks may engage abroad,
and reduces the instances in which
banks must file an application before
opening a foreign branch or making a
foreign investment. The third group of
regulations governs the international
lending of insured state nonmember
banks and specifies when reserves are
required for particular international
assets. The final rule revises this group
of regulations to simplify the accounting
for fees on international loans to make
it consistent with generally accepted
accounting principles. Consistent with
the goals of CDRI, the final rule
improves efficiency, reduces costs, and
eliminates outmoded requirements.
DATES: This final rule is effective July 1,
1998. Compliance is mandatory for all
affected institutions on July 1, 1998.
Affected institutions may elect to
comply with the final rule voluntarily at
any time after May 8, 1998. If an
affected institution elects to comply
voluntarily with any section of subpart
A, B, or C of 12 CFR part 347, the
institution or bank must comply with
the entire subpart.
FOR FURTHER INFORMATION CONTACT:
Christie A. Sciacca, Associate Director
(202/898–3671), Karen M. Walter, Chief
(202/898–3540), Suzanne L. Williams,
Senior Financial Analyst (202/898–
6788), Division of Supervision; Jamey
Basham, Counsel (202/898–7265),
Wendy Sneff, Counsel (202/898–6865),
Legal Division, FDIC, 550 17th Street,
NW, Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The FDIC
is conducting a systematic review of its
regulations and written policies. Section
303(a) of the CDRI (12 U.S.C. 4803(a))
requires the FDIC to streamline and
modify its regulations and written
policies in order to improve efficiency,
reduce unnecessary costs, and eliminate
unwarranted constraints on credit
availability. Section 303(a) also requires
the FDIC to remove inconsistencies and
outmoded and duplicative requirements
from its regulations and written
policies.
As part of this review, the FDIC has
determined that certain portions of part
346 are out-of-date, and other provisions
of this part require clarification.
Although the FDIC previously made
certain regulatory amendments which
took effect as recently as 1996, other
regulatory language contained in part
346 does not accurately reflect the
underlying statutory authority. The
FDIC has also determined that part 347
is outmoded. Part 347 has not been
revised in any significant regard since
1979, when it was originally
promulgated. The FDIC published a
proposed rule in the Federal Register on
July 15, 1997 (62 FR 37748).
The FDIC has decided to consolidate
its international banking rules into a
single part, part 347, for ease of
reference. This final rule places material
on foreign branching and foreign bank
investment by nonmember banks,
currently located in part 347, into
subpart A of part 347. Material currently
located in part 346, governing insured
branches of foreign banks and deposit-
taking by uninsured state-licensed
branches of foreign banks, is placed in
subpart B of part 347. Part 351 of the
FDIC’s current rules and regulations,
which contains rules governing the
international lending operations of
insured state nonmember banks, is
placed in subpart C of new part 347.
Part 351 was originally adopted in 1984
as an interagency rulemaking in
coordination with the Board of
Governors of the Federal Reserve
System (FRB) and the Office of the
Comptroller of the Currency (OCC). The
most significant revision to part 351 is
to require banks to follow GAAP in
accounting for fees on international
loans. This change was discussed with
accounting staff at the OCC and FRB as
part of an interagency working group
and they are in general agreement with
the change. However, as the other two
federal banking agencies are not ready
to act on a revised regulation at this
time, the FDIC has decided to
unilaterally issue its revision to part 351
in connection with its consolidation of
the international banking regulations.
In addition, the FDIC has recently
published a notice of proposed
rulemaking (62 FR 52810, October 9,
1997) containing complete revision of
part 303 of the FDIC’s rules and
regulations, which contains the FDIC’s
applications procedures and delegations
of authority. For ease of reference, the
FDIC will consolidate its applications
procedures for international banking
matters into a single subpart of part 303,
subpart J. In order to finalize part 347
without waiting for the part 303
proposal to be finalized, this part 347
proposal includes, as a separate subpart
D of part 347, revised application
procedures compatible with the
substantive provisions of this final rule.
These application procedures will be
transferred to subpart J of part 303 once
it is finalized, as is discussed in
connection with subpart D, below.
I. Subpart A—Foreign Branches and
Investments in Foreign Banks and
Other Entities
A. Background
Section 18(d)(2) of the Federal
Deposit Insurance Act (12 U.S.C.
1828(d)(2)) requires a nonmember bank
to obtain the FDIC’s consent to establish
or operate a foreign branch. Section
18(d)(2) also authorizes the FDIC to
impose conditions and issue regulations
governing the affairs of foreign
branches.
Section 18(l) of the FDI Act (12 U.S.C.
1828(l)) requires a nonmember bank to
obtain the FDIC’s consent to acquire and
hold, directly or indirectly, stock or
other evidences of ownership in any
foreign bank or other entity. Section
18(l) also states that these entities may
not engage in any activities in the
United States except as the Board of
Directors of the FDIC (Board), in its
judgment, has determined are incidental
to the international or foreign business
of these entities. In addition, section
18(l) authorizes the FDIC to impose
conditions and issue regulations
governing these investments. Finally,
although nonmember banks are subject
to the interaffiliate transaction
restrictions of sections 23A and 23B of
the Federal Reserve Act, 12 U.S.C. 371c
and 371c–1, as expressly incorporated
by section 18(j) of the FDI Act, 12 U.S.C.
1821(j), section 18(l) provides that
nonmember banks may engage in
transactions with these foreign banks
and other entities in which the
nonmember bank has invested in the
manner and within the limits prescribed
by the FDIC.
A nonmember bank’s authority to
establish a foreign branch or invest in
foreign banks or other entities, and the
permissible activities for foreign
branches or foreign investment entities,
must be established in the first instance
under the law of its state chartering
authority. Congress created sections
18(d)(2) and 18(l) out of a concern that
there was no federal-level review of
nonmember banks’ foreign branching
and investments. S. Rep. No. 95–323,
95th Cong., 1st Sess. (1977) at 15.
Although the FRB had long held
authority over foreign branching and
investment by state member banks and
national banks (member banks) under
the Federal Reserve Act, as well as
foreign investment by bank holding
companies under the Bank Holding
Company Act, the FDIC did not hold