Supervision of International Operations of U.S. Banking Organizations

 

 

The Federal Reserve also has supervisory and regulatory responsibility for the international operations of member banks (that is, national and state member banks) and bank holding companies. These responsibilities include:

  1. Authorizing the establishment of foreign branches of national banks and state member banks and regulating the scope of their activities
  2. Chartering and regulating the activities of Edge and agreement corporations, which are specialized institutions used for international and foreign business.
  3. Authorizing foreign investments of member banks, Edge and agreement corporations, and bank holding companies and regulating the activities of foreign firms acquired by such investors.
  4. Establishing supervisory policy and practices regarding foreign lending by state member banks.

 

Under federal law, U.S. banking organizations generally may conduct a wider range of activities abroad than they may conduct in this country.

The Board has broad discretionary powers to regulate the foreign activities of member banks and bank holding companies so that, in financing

U.S. trade and investments abroad, U.S. banking organizations can be fully competitive with institutions of the host country. U.S. banks also may conduct deposit and loan business in U.S. markets outside their home states through Edge and agreement corporations if the operations of the corporations are related to international transactions.

The Federal Reserve examines the international operations of state member banks, Edge and agreement corporations, and bank holding companies principally at the U.S. head offices of these organizations. When appropriate, the Federal Reserve will conduct an examination at the foreign operations of a U.S. banking organization in order to review the accuracy of financial and operational information maintained at the head office as well as to test the organization’s adherence to safe and sound banking practices and to evaluate its efforts to implement corrective measures. Examinations abroad are conducted in cooperation with the responsible foreign country supervisor.

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