12 U.S.C. § 3103 — Interstate banking by foreign banks

Page 1496 TITLE 12—BANKS AND BANKING § 3103 Section 3104 of this title, referred to in subsec. (g)(1), was in the original a reference to section 6 of Pub. L. 95–369, which enacted section 3104 of this title and amended sections 1813, 1815, 1817, 1818, 1820, 1821, 1822, 1823, 1828, 1829b, and 1831b of this title. AMENDMENTS 2000—Subsec. (b). Pub. L. 106–569 redesignated cls. (2) to (4) as (1) to (3), respectively, and struck out former cl. (1) which read as follows: ‘‘the requirements of sec- tion 481 of this title shall be met with respect to a Fed- eral branch or agency if it is examined at least once in each calendar year;’’. 1991—Subsec. (a). Pub. L. 102–242, § 202(b), inserted heading, designated existing provisions as par. (1) and inserted heading, and added par. (2). Subsec. (b). Pub. L. 102–242, § 203(b), inserted at end: ‘‘The Comptroller of the Currency shall coordinate ex- aminations of Federal branches and agencies of foreign banks with examinations conducted by the Board under section 3105(c)(1) of this title and, to the extent pos- sible, shall participate in any simultaneous examina- tions of the United States operations of a foreign bank requested by the Board under such section.’’ Subsec. (h). Pub. L. 102–242, § 202(c), amended heading, designated existing provisions as par. (1), inserted par. (1) heading, redesignated former pars. (1) and (2) as sub- pars. (A) and (B), respectively, and added par. (2). Statutory Notes and Related Subsidiaries STUDY AND REPORT ON SUBSIDIARY REQUIREMENTS FOR FOREIGN BANKS Pub. L. 102–242, title II, § 215, Dec. 19, 1991, 105 Stat. 2304, as amended by Pub. L. 102–550, title XVI, § 1604(a)(14), Oct. 28, 1992, 106 Stat. 4083, directed Sec- retary of the Treasury, jointly with Board of Governors of the Federal Reserve System and in consultation with Comptroller of the Currency, Federal Deposit Insur- ance Corporation, and Attorney General, to conduct a study of whether foreign banks should be required to conduct banking operations in United States through subsidiaries rather than branches and, not later than 1 year after Dec. 19, 1991, to transmit to Congress a re- port on the results of the study. § 3103. Interstate banking by foreign banks (a) Interstate branching and agency operations (1) Federal branch or agency Subject to the provisions of this chapter and with the prior written approval by the Board and the Comptroller of the Currency of an ap- plication, a foreign bank may establish and operate a Federal branch or agency in any State outside the home State of such foreign bank to the extent that the establishment and operation of such branch would be permitted under section 36(g) of this title or section 1831u of this title if the foreign bank were a national bank whose home State is the same State as the home State of the foreign bank. (2) State branch or agency Subject to the provisions of this chapter and with the prior written approval by the Board and the appropriate State bank supervisor of an application, a foreign bank may establish and operate a State branch or agency in any State outside the home State of such foreign bank to the extent that such establishment and operation would be permitted under sec- tion 1828(d)(4) or 1831u of this title if the for- eign bank were a State bank whose home State is the same State as the home State of the foreign bank. (3) Criteria for determination In approving an application under paragraph (1) or (2), the Board and (in the case of an ap- plication under paragraph (1)) the Comptroller of the Currency— (A) shall apply the standards applicable to the establishment of a foreign bank office in the United States under section 3105(d) of this title; (B) may not approve an application unless the Board and (in the case of an application under paragraph (1)) the Comptroller of the Currency— (i) determine that the foreign bank’s fi- nancial resources, including the capital level of the bank, are equivalent to those required for a domestic bank to be ap- proved for branching under section 36 of this title and section 1831u of this title; and (ii) consult with the Secretary of the Treasury regarding capital equivalency; and (C) shall apply the same requirements and conditions to which an application for an interstate merger transaction is subject under paragraphs (1), (3), and (4) of section 1831u(b) of this title. (4) Operation Subsections (c) and (d)(2) of section 1831u of this title shall apply with respect to each branch and agency of a foreign bank which is established and operated pursuant to an appli- cation approved under this subsection in the same manner and to the same extent such pro- visions of such section apply to a domestic branch of a national or State bank (as such terms are defined in section 1813 of this title) which resulted from a merger transaction under such section 1831u of this title. (5) Exclusive authority for additional branches Except as provided in this section, a foreign bank may not, directly or indirectly, acquire, establish, or operate a branch or agency in any State other than the home State of such bank. (6) Requirement for a separate subsidiary If the Board or the Comptroller of the Cur- rency, taking into account differing regu- latory or accounting standards, finds that ad- herence by a foreign bank to capital require- ments equivalent to those imposed under sec- tion 36 of this title and section 1831u of this title could be verified only if the banking ac- tivities of such bank in the United States are carried out in a domestic banking subsidiary within the United States, the Board and (in the case of an application under paragraph (1)) the Comptroller of the Currency may approve an application under paragraph (1) or (2) sub- ject to a requirement that the foreign bank or company controlling the foreign bank estab- lish a domestic banking subsidiary in the United States. (7) Additional authority for interstate branches and agencies of foreign banks, upgrades of certain foreign bank agencies and branches Notwithstanding paragraphs (1) and (2), a foreign bank may— Page 1497 TITLE 12—BANKS AND BANKING § 3103 (A) with the approval of the Board and the Comptroller of the Currency, establish and operate a Federal branch or Federal agency or, with the approval of the Board and the appropriate State bank supervisor, a State branch or State agency in any State outside the foreign bank’s home State if— (i) the establishment and operation of such branch or agency is permitted by the State in which the branch or agency is to be established; and (ii) in the case of a Federal or State branch, the branch receives only such de- posits as would be permitted for a corpora- tion organized under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.]; or (B) with the approval of the Board and the relevant licensing authority (the Comp- troller in the case of a Federal branch or the appropriate State supervisor in the case of a State branch), upgrade an agency, or a branch of the type referred to in subpara- graph (A)(ii), located in a State outside the foreign bank’s home State, into a Federal or State branch if— (i) the establishment and operation of such branch is permitted by such State; and (ii) such agency or branch— (I) was in operation in such State on the day before September 29, 1994; or (II) has been in operation in such State for a period of time that meets the State’s minimum age requirement per- mitted under section 1831u(a)(5) of this title. (8) Continuing requirement for meeting com- munity credit needs after initial interstate entry by acquisition (A) In general If a foreign bank acquires a bank or a branch of a bank, in a State in which the foreign bank does not maintain a branch, and such acquired bank is, or is part of, a regulated financial institution (as defined in section 803 of the Community Reinvestment Act of 1977 [12 U.S.C. 2902]), the Community Reinvestment Act of 1977 [12 U.S.C. 2901 et seq.] shall continue to apply to each branch of the foreign bank which results from the acquisition as if such branch were a regu- lated financial institution. (B) Exception for branch that receives only deposits permissible for an Edge Act cor- poration Paragraph (1) shall not apply to any branch that receives only such deposits as are permissible for a corporation organized under section 25A of the Federal Reserve Act [12 U.S.C. 611 et seq.] to receive. (9) Home State of domestic bank defined For purposes of this subsection, the term ‘‘home State’’ means— (A) with respect to a national bank, the State in which the main office of the bank is located; and (B) with respect to a State bank, the State by which the bank is chartered. (b) Continuance of lawful interstate banking op- erations previously commenced Unless its authority to do so is lawfully re- voked otherwise than pursuant to this section, a foreign bank, notwithstanding any restriction or limitation imposed under subsection (a) of this section, may establish and operate, outside its home State, any State branch, State agency, or bank or commercial lending company subsidiary which commenced lawful operation or for which an application to commence business had been lawfully filed with the appropriate State or Fed- eral authority, as the case may be, on or before July 27, 1978. Notwithstanding subsection (a), a foreign bank may continue to operate, after September 29, 1994, any Federal branch, State branch, Federal agency, State agency, or com- mercial lending company subsidiary which such bank was operating on the day before September 29, 1994, to the extent the branch, agency, or subsidiary continues, after September 29, 1994, to engage in operations which were lawful under the laws in effect on the day before September 29, 1994. (c) Determination of home State of foreign bank For the purposes of this section— (1) in the case of a foreign bank that has any branch, agency, subsidiary commercial lend- ing company, or subsidiary bank in more than 1 State, the home State of the foreign bank is the 1 State of such States which is selected to be the home State by the foreign bank or, in default of any such selection, by the Board; and (2) in the case of a foreign bank that does not have a branch, agency, subsidiary com- mercial lending company, or subsidiary bank in more than 1 State, the home State of the foreign bank is the State in which the foreign bank has a branch, agency, subsidiary com- mercial lending company, or subsidiary bank. (d) Clarification of branching rules in case of foreign bank with domestic bank subsidiary In the case of a foreign bank that has a domes- tic bank subsidiary within the United States— (1) the fact that such bank controls a domes- tic bank shall not affect the authority of the foreign bank to establish Federal and State branches or agencies to the extent permitted under subsection (a); and (2) the fact that the domestic bank is con- trolled by a foreign bank which has Federal or State branches or agencies in States other than the home State of such domestic bank shall not affect the authority of the domestic bank to establish branches outside the home State of the domestic bank to the extent per- mitted under section 36(g) of this title or sec- tion 1828(d)(4) or 1831u of this title, as the case may be. (Pub. L. 95–369, § 5, Sept. 17, 1978, 92 Stat. 613; Pub. L. 103–328, title I, §§ 104, 107(f), Sept. 29, 1994, 108 Stat. 2354, 2361; Pub. L. 106–102, title VII, § 732, Nov. 12, 1999, 113 Stat. 1478.) Editorial Notes REFERENCES IN TEXT For definition of ‘‘this chapter’’, referred to in sub- sec. (a)(1), (2), see References in Text note set out under section 3101 of this title. Page 1498 TITLE 12—BANKS AND BANKING § 3104 The Community Reinvestment Act of 1977, referred to in subsec. (a)(8)(A), is title VIII of Pub. L. 95–128, Oct. 12, 1977, 91 Stat. 1147, which is classified generally to chapter 30 (§ 2901 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 2901 of this title and Tables. Section 25A of the Federal Reserve Act, referred to in subsec. (a)(7)(A)(ii), (8)(B), popularly known as the Edge Act, is classified to subchapter II (§ 611 et seq.) of chap- ter 6 of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 611 of this title and Tables. AMENDMENTS 1999—Subsec. (a)(7). Pub. L. 106–102 amended heading and text of par. (7) generally. Prior to amendment, text read as follows: ‘‘Notwithstanding paragraphs (1) and (2), a foreign bank may, with the approval of the Board and the Comptroller of the Currency, establish and op- erate a Federal branch or Federal agency or, with the approval of the Board and the appropriate State bank supervisor, a State branch or State agency in any State outside the foreign bank’s home State if— ‘‘(A) the establishment and operation of a branch or agency is expressly permitted by the State in which the branch or agency is to be established; and ‘‘(B) in the case of a Federal or State branch, the branch receives only such deposits as would be permis- sible for a corporation organized under section 25A of the Federal Reserve Act.’’ 1994—Subsec. (a). Pub. L. 103–328, §§ 104(a), 107(f), in- serted heading and substituted provisions consisting of pars. (1) to (9) for former provisions relating to limita- tions on interstate banking by foreign banks. Subsec. (b). Pub. L. 103–328, § 104(b), inserted at end ‘‘Notwithstanding subsection (a), a foreign bank may continue to operate, after September 29, 1994, any Fed- eral branch, State branch, Federal agency, State agen- cy, or commercial lending company subsidiary which such bank was operating on the day before September 29, 1994, to the extent the branch, agency, or subsidiary continues, after September 29, 1994, to engage in oper- ations which were lawful under the laws in effect on the day before September 29, 1994.’’ Subsec. (c). Pub. L. 103–328, § 104(d), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: ‘‘For the purposes of this section, the home State of a foreign bank that has branches, agencies, subsidiary commercial lending companies, or sub- sidiary banks, or any combination thereof, in more than one State, is whichever of such States is so deter- mined by election of the foreign bank, or, in default of such election, by the Board.’’ Subsec. (d). Pub. L. 103–328, § 104(c), added subsec. (d). § 3104. Insurance of deposits (a) Objective In implementing this section, the Comptroller and the Federal Deposit Insurance Corporation shall each, by affording equal competitive op- portunities to foreign and United States bank- ing organizations in their United States oper- ations, ensure that foreign banking organiza- tions do not receive an unfair competitive ad- vantage over United States banking organiza- tions. (b) Deposits of less than amount equal to the standard maximum deposit insurance amount No foreign bank may establish or operate a Federal branch which receives deposits of less than an amount equal to the standard maximum deposit insurance amount unless the branch is an insured branch as defined in section 3(s) of the Federal Deposit Insurance Act [12 U.S.C. 1813(s)], or unless the Comptroller determines by order or regulation that the branch is not en- gaged in domestic retail deposit activities re- quiring deposit insurance protection, taking ac- count of the size and nature of depositors and deposit accounts. (c) Deposits required to be insured under State law (1) After September 17, 1978, no foreign bank may establish a branch, and after one year fol- lowing such date no foreign bank may operate a branch, in any State in which the deposits of a bank organized and existing under the laws of that State would be required to be insured, un- less the branch is an insured branch as defined in section 3(s) of the Federal Deposit Insurance Act [12 U.S.C. 1813(s)], or unless the branch will not thereafter accept deposits of less than an amount equal to the standard maximum deposit insurance amount, or unless the Federal Deposit Insurance Corporation determines by order or regulation that the branch is not engaged in do- mestic retail deposit activities requiring deposit insurance protection, taking account of the size and nature of depositors and deposit accounts. (2) Notwithstanding the previous paragraph, a branch of a foreign bank in operation on Sep- tember 17, 1978, which has applied for Federal deposit insurance pursuant to section 5 of the Federal Deposit Insurance Act [12 U.S.C. 1815] by September 17, 1979, and has not had such appli- cation denied, may continue to accept domestic retail deposits until January 31, 1980. (d) Retail deposit-taking by foreign banks (1) In general After December 19, 1991, notwithstanding any other provision of this chapter or any pro- vision of the Federal Deposit Insurance Act [12 U.S.C. 1811 et seq.], in order to accept or main- tain domestic retail deposit accounts having balances of less than an amount equal to the standard maximum deposit insurance amount, and requiring deposit insurance protection, a foreign bank shall— (A) establish 1 or more banking subsidi- aries in the United States for that purpose; and (B) obtain Federal deposit insurance for any such subsidiary in accordance with the Federal Deposit Insurance Act. (2) Exception Domestic retail deposit accounts with bal- ances of less than an amount equal to the standard maximum deposit insurance amount that require deposit insurance protection may be accepted or maintained in a branch of a for- eign bank only if such branch was an insured branch on December 19, 1991. (3) Insured banks in U.S. territories For purposes of this subsection, the term ‘‘foreign bank’’ does not include any bank or- ganized under the laws of any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands the deposits of which are insured by the Federal Deposit In- surance Corporation pursuant to the Federal Deposit Insurance Act [12 U.S.C. 1811 et seq.].