12 U.S.C. § 3102 — Establishment of Federal branches and

Page 1493 TITLE 12—BANKS AND BANKING § 3102 trol’’ as defined in section 2 of the Bank Hold- ing Company Act of 1956 [12 U.S.C. 1841]; (14) ‘‘consolidated’’ means consolidated in accordance with generally accepted account- ing principles in the United States consist- ently applied; (15) the term ‘‘representative office’’ means any office of a foreign bank which is located in any State and is not a Federal branch, Federal agency, State branch, or State agency; (16) the term ‘‘office’’ means any branch, agency, or representative office; and (17) the term ‘‘State bank supervisor’’ has the meaning given to such term in section 1813 of this title. (Pub. L. 95–369, § 1(b), Sept. 17, 1978, 92 Stat. 607; Pub. L. 102–242, title II, § 202(e), Dec. 19, 1991, 105 Stat. 2290; Pub. L. 106–102, title I, § 142(a), Nov. 12, 1999, 113 Stat. 1384.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 95–369, Sept. 17, 1978, 92 Stat. 607, known as the International Banking Act of 1978, which enacted this chapter and sections 347d and 611a of this title, amended sections 72, 378, 614, 615, 618, 619, 1813, 1815, 1817, 1818, 1820 to 1823, 1828, 1829b, 1831b, and 1841 of this title, and enacted provisions set out as notes under this section and sections 36, 247, 601, and 611a of this title and formerly set out as notes under sections 36, 247, and 601 of this title. For complete clas- sification of this Act to the Code, see Short Title note set out below and Tables. The Bank Holding Company Act of 1956, referred to in par. (13), is act May 9, 1956, ch. 240, 70 Stat. 133, which is classified principally to chapter 17 (§ 1841 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1841 of this title and Tables. AMENDMENTS 1999—Par. (15). Pub. L. 106–102 substituted ‘‘or State agency;’’ for ‘‘State agency, or subsidiary of a foreign bank;’’. 1991—Par. (13). Pub. L. 102–242, § 202(e)(1), inserted ref- erence to affiliate after first reference to ‘‘the terms’’. Pars. (15) to (17). Pub. L. 102–242, § 202(e)(2), added pars. (15) to (17). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106–102 effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106–102, set out as a note under section 24 of this title. SHORT TITLE OF 1991 AMENDMENT Pub. L. 102–242, title II, § 201, Dec. 19, 1991, 105 Stat. 2286, provided that: ‘‘This subtitle [subtitle A (§§ 201–215) of title II of Pub. L. 102–242, enacting sec- tions 3109 to 3111 of this title, amending this section and sections 1467a, 1817, 1820, 1842, 2803, 2804, 3102, 3104 to 3108, and 4009 of this title and sections 44, 57a, 1607, 1681s, 1691c, 1692l, and 1693o of Title 15, Commerce and Trade, and enacting provisions set out as a note under section 3102 of this title] may be cited as the ‘Foreign Bank Supervision Enhancement Act of 1991’.’’ SHORT TITLE Pub. L. 95–369, § 1(a), Sept. 17, 1978, 92 Stat. 607, pro- vided that: ‘‘This Act [enacting this chapter and sec- tions 347d and 611a of this title, amending sections 72, 378, 614, 615, 618, 619, 1813, 1815, 1817, 1818, 1820 to 1823, 1828, 1829b, 1831b and 1841 of this title, and enacting pro- visions set out as notes under sections 36, 247, 601, and 611a of this title] may be cited as the ‘International Banking Act of 1978’.’’ FOREIGN CONTROL OF UNITED STATES FINANCIAL INSTITUTIONS Pub. L. 96–221, title IX, §§ 901, 902, Mar. 31, 1980, 94 Stat. 192, 193, provided that: ‘‘SEC. 901. For purposes of this title enacting this pro- vision— ‘‘(1) the term ‘domestic financial institution’ means any bank, mutual savings bank, or savings and loan association organized under the laws of any State or of the United States; ‘‘(2) the term ‘foreign person’ means any foreign or- ganization or any individual resident in a foreign country or any organization or individual owned or controlled by such an organization or individual; and ‘‘(3) the term ‘takeover’ means any acquisition of the stock or assets of any domestic financial institu- tion if, after such acquisition, the amount of stock or assets held is 5 per centum or more of the institu- tion’s stock or assets. ‘‘SEC. 902. The Board of Governors of the Federal Re- serve System, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board may not approve any application relating to the take- over of any domestic financial institution by a foreign person until July 1, 1980, unless— ‘‘(1) such takeover is necessary to prevent the bankruptcy or insolvency of the domestic financial institution involved; ‘‘(2) the application was initially submitted for fil- ing on or before March 5, 1980; ‘‘(3) the domestic financial institution has deposits of less than $100,000,000; ‘‘(4) the application relates to a takeover of shares or assets pursuant to a foreign person’s intrafirm re- organization of its interests in a domestic financial institution, including specifically any application to establish a bank holding company pursuant to such reorganization; ‘‘(5) the application relates to a takeover of the as- sets or shares of a domestic financial institution if such assets or shares are owned or controlled by a foreign person; or ‘‘(6) the application relates to the takeover of a do- mestic financial institution which is a subsidiary of a bank holding company under an order to divest by December 31, 1980.’’ § 3102. Establishment of Federal branches and agencies by foreign bank (a) Establishment and operation of Federal branches and agencies (1) Initial Federal branch or agency Except as provided in section 3103 of this title, a foreign bank which engages directly in a banking business outside the United States may, with the approval of the Comptroller, es- tablish one or more Federal branches or agen- cies in any State in which (1) it is not oper- ating a branch or agency pursuant to State law and (2) the establishment of a branch or agency, as the case may be, by a foreign bank is not prohibited by State law. (2) Board conditions required to be included In considering any application for approval under this subsection, the Comptroller of the Currency shall include any condition imposed by the Board under section 3105(d)(5) of this title as a condition for the approval of such application by the agency. Page 1494 TITLE 12—BANKS AND BANKING § 3102 (b) Rules and regulations; rights and privileges; duties and liabilities; exceptions; coordina- tion of examinations In establishing and operating a Federal branch or agency, a foreign bank shall be subject to such rules, regulations, and orders as the Comp- troller considers appropriate to carry out this section, which shall include provisions for serv- ice of process and maintenance of branch and agency accounts separate from those of the par- ent bank. Except as otherwise specifically pro- vided in this chapter or in rules, regulations, or orders adopted by the Comptroller under this section, operations of a foreign bank at a Fed- eral branch or agency shall be conducted with the same rights and privileges as a national bank at the same location and shall be subject to all the same duties, restrictions, penalties, li- abilities, conditions, and limitations that would apply under the National Bank Act to a national bank doing business at the same location, ex- cept that (1) any limitation or restriction based on the capital stock and surplus of a national bank shall be deemed to refer, as applied to a Federal branch or agency, to the dollar equiva- lent of the capital stock and surplus of the for- eign bank, and if the foreign bank has more than one Federal branch or agency the business transacted by all such branches and agencies shall be aggregated in determining compliance with the limitation; (2) a Federal branch or agency shall not be required to become a mem- ber bank, as that term is defined in section 221 of this title; and (3) a Federal agency shall not be required to become an insured bank as that term is defined in section 1813(h) of this title. The Comptroller of the Currency shall coordi- nate examinations 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 possible, shall participate in any simultaneous examinations of the United States operations of a foreign bank requested by the Board under such section. (c) Application to establish Federal branch or agency; matters considered In acting on any application to establish a Federal branch or agency, the Comptroller shall take into account the effects of the proposal on competition in the domestic and foreign com- merce of the United States, the financial and managerial resources and future prospects of the applicant foreign bank and the branch or agen- cy, and the convenience and needs of the com- munity to be served. (d) Receipt of deposits and exercising of fidu- ciary powers at Federal agency prohibited Notwithstanding any other provision of this section, a foreign bank shall not receive deposits or exercise fiduciary powers at any Federal agency. A foreign bank may, however, maintain at a Federal agency for the account of others credit balances incidental to, or arising out of, the exercise of its lawful powers. (e) Maintenance of Federal branch and Federal agency in same State prohibited No foreign bank may maintain both a Federal branch and a Federal agency in the same State. (f) Conversion of foreign bank branch, agency or commercial lending company into Federal branch or agency; approval of Comptroller Any branch or agency operated by a foreign bank in a State pursuant to State law and any commercial lending company controlled by a foreign bank may be converted into a Federal branch or agency with the approval of the Comptroller. In the event of any conversion pur- suant to this subsection, all of the liabilities of such foreign bank previously payable at the State branch or agency, or all of the liabilities of the commercial lending company, shall there- after be payable by such foreign bank at the branch or agency established under this sub- section. (g) Deposit requirements; asset requirements (1) Upon the opening of a Federal branch or agency in any State and thereafter, a foreign bank, in addition to any deposit requirements imposed under section 3104 of this title, shall keep on deposit, in accordance with such rules and regulations as the Comptroller may pre- scribe, with a member bank designated by such foreign bank, dollar deposits or investment se- curities of the type that may be held by na- tional banks for their own accounts pursuant to paragraph ‘‘Seventh’’ of section 24 of this title, in an amount as hereinafter set forth. Such de- pository bank shall be located in the State where such branch or agency is located and shall be approved by the Comptroller if it is a na- tional bank and by the Board of Governors of the Federal Reserve System if it is a State Bank. (2) The aggregate amount of deposited invest- ment securities (calculated on the basis of prin- cipal amount or market value, whichever is lower) and dollar deposits for each branch or agency established and operating under this sec- tion shall be not less than the greater of (1) that amount of capital (but not surplus) which would be required of a national bank being organized at this location, or (2) 5 per centum of the total liabilities of such branch or agency, including acceptances, but excluding (A) accrued expenses, and (B) amounts due and other liabilities to of- fices, branches, agencies, and subsidiaries of such foreign bank. The Comptroller may require that the assets deposited pursuant to this sub- section shall be maintained in such amounts as he may from time to time deem necessary or de- sirable, for the maintenance of a sound financial condition, the protection of depositors, and the public interest, but such additional amount shall in no event be greater than would be re- quired to conform to generally accepted banking practices as manifested by banks in the area in which the branch or agency is located. (3) The deposit shall be maintained with any such member bank pursuant to a deposit agree- ment in such form and containing such limita- tions and conditions as the Comptroller may prescribe. So long as it continues business in the ordinary course such foreign bank shall, how- ever, be permitted to collect income on the secu- rities and funds so deposited and from time to time examine and exchange such securities. (4) Subject to such conditions and require- ments as may be prescribed by the Comptroller, Page 1495 TITLE 12—BANKS AND BANKING § 3102 each foreign bank shall hold in each State in which it has a Federal branch or agency, assets of such types and in such amount as the Comp- troller may prescribe by general or specific reg- ulation or ruling as necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors and the public interest. In determining compliance with any such prescribed asset requirements, the Comptroller shall give credit to (A) assets re- quired to be maintained pursuant to paragraphs (1) and (2) of this subsection, (B) reserves re- quired to be maintained pursuant to section 3105(a) of this title, and (C) assets pledged, and surety bonds payable, to the Federal Deposit In- surance Corporation to secure the payment of domestic deposits. The Comptroller may pre- scribe different asset requirements for branches or agencies in different States, in order to en- sure competitive equality of Federal branches and agencies with State branches and agencies and domestic banks in those States. (h) Additional branches or agencies (1) Approval of agency required A foreign bank with a Federal branch or agency operating in any State may (A) with the prior approval of the Comptroller establish and operate additional branches or agencies in the State in which such branch or agency is located on the same terms and conditions and subject to the same limitations and restric- tions as are applicable to the establishment of branches by a national bank if the principal office of such national bank were located at the same place as the initial branch or agency in such State of such foreign bank and (B) change the designation of its initial branch or agency to any other branch or agency subject to the same limitations and restrictions as are applicable to a change in the designation of the principal office of a national bank if such principal office were located at the same place as such initial branch or agency. (2) Notice to and comment by Board The Comptroller of the Currency shall pro- vide the Board with notice and an opportunity for comment on any application to establish an additional Federal branch or Federal agen- cy under this subsection. (i) Termination of authority to operate Federal branch or agency Authority to operate a Federal branch or agency shall terminate when the parent foreign bank voluntarily relinquishes it or when such parent foreign bank is dissolved or its authority or existence is otherwise terminated or canceled in the country of its organization. If (1) at any time the Comptroller is of the opinion or has reasonable cause to believe that such foreign bank has violated or failed to comply with any of the provisions of this section or any of the rules, regulations, or orders of the Comptroller made pursuant to this section, or (2) a conser- vator is appointed for such foreign bank or a similar proceeding is initiated in the foreign bank’s country of organization, the Comptroller shall have the power, after opportunity for hear- ing, to revoke the foreign bank’s authority to operate a Federal branch or agency. The Comp- troller may, in his discretion, deny such oppor- tunity for hearing if he determines such denial to be in the public interest. The Comptroller may restore any such authority upon due proof of compliance with the provisions of this section and the rules, regulations, or orders of the Comptroller made pursuant to this section. (j) Receivership over assets of foreign bank in United States (1) Whenever the Comptroller revokes a for- eign bank’s authority to operate a Federal branch or agency or whenever any creditor of any such foreign bank shall have obtained a judgment against it arising out of a transaction with a Federal branch or agency in any court of record of the United States or any State of the United States and made application, accom- panied by a certificate from the clerk of the court stating that such judgment has been ren- dered and has remained unpaid for the space of thirty days, or whenever the Comptroller shall become satisfied that such foreign bank is insol- vent, he may, after due consideration of its af- fairs, in any such case, appoint a receiver who shall take possession of all the property and as- sets of such foreign bank in the United States and exercise the same rights, privileges, powers, and authority with respect thereto as are now exercised by receivers of national banks ap- pointed by the Comptroller. (2) In any receivership proceeding ordered pur- suant to this subsection (j), whenever there has been paid to each and every depositor and cred- itor of such foreign bank whose claim or claims shall have been proved or allowed, the full amount of such claims arising out of trans- actions had by them with any branch or agency of such foreign bank located in any State of the United States, except (A) claims that would not represent an enforceable legal obligation against such branch or agency if such branch or agency were a separate legal entity, and (B) amounts due and other liabilities to other of- fices or branches or agencies of, and wholly owned (except for a nominal number of direc- tors’ shares) subsidiaries of, such foreign bank, and all expenses of the receivership, the Comp- troller or the Federal Deposit Insurance Cor- poration, where that Corporation has been ap- pointed receiver of the foreign bank, shall turn over the remainder, if any, of the assets and pro- ceeds of such foreign bank to the head office of such foreign bank, or to the duly appointed domiciliary liquidator or receiver of such for- eign bank. (Pub. L. 95–369, § 4, Sept. 17, 1978, 92 Stat. 610; Pub. L. 102–242, title II, §§ 202(b), (c), 203(b), Dec. 19, 1991, 105 Stat. 2290, 2291; Pub. L. 106–569, title XII, § 1234, Dec. 27, 2000, 114 Stat. 3037.) Editorial Notes REFERENCES IN TEXT For definition of ‘‘this chapter’’, referred to in sub- sec. (b), see References in Text note set out under sec- tion 3101 of this title. The National Bank Act, referred to in subsec. (b), is act June 3, 1864, ch. 106, 13 Stat. 99, which is classified principally to chapter 2 (§ 21 et seq.) of this title. For complete classification of this Act to the Code, see Ref- erences in Text note set out under section 38 of this title. 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—