[Federal Register Volume 66, Number 226 (Friday, November 23, 2001)]
[Rules and Regulations]
[Pages 58655-58656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29177]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 226 / Friday, November 23, 2001 / 
Rules and Regulations  

[[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:
    a. Paragraph (h)(2)(ii) is revised; and
    b. 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:
    a. Paragraphs (c)(3)(ii) and (iii) are respectively redesignated as 
paragraphs (c)(3)(iii) and (iv); and
    b. 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. 01-29177 Filed 11-21-01; 8:45 am]
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