Federal Branches and Agencies Booklet

Office of the
Comptroller of the Currency
Washington, DC 20219

COMPTROLLER’S LICENSING MANUAL

Federal Branches and
Agencies

September 2020

Contents
Introduction .......................................................................................................................................... 1
Background ........................................................................................................................................ 2
Activities Requiring Approval or Notice—Rules of General Applicability ...................................... 4
Summary of Process .......................................................................................................................... 6
Initial and Additional Establishments ................................................................................................ 9
Processing Requirements ................................................................................................................... 9
Summary of Process ........................................................................................................................ 11
Specific Requirements ..................................................................................................................... 12
Acquisitions ......................................................................................................................................... 15
Processing Requirements ................................................................................................................. 15
Summary of Process ........................................................................................................................ 16
Specific Requirements ..................................................................................................................... 18
Conversion or Contraction of Operations ........................................................................................ 20
Processing Requirements ................................................................................................................. 20
Summary of Process ........................................................................................................................ 21
Specific Requirements ..................................................................................................................... 24
Relocations .......................................................................................................................................... 26
Processing Requirements ................................................................................................................. 26
Summary of Process ........................................................................................................................ 26
Specific Requirements ..................................................................................................................... 27
Fiduciary Powers ................................................................................................................................ 29
Processing Requirements ................................................................................................................. 29
Summary of Process ........................................................................................................................ 30
Specific Requirements ..................................................................................................................... 31
Voluntary Liquidation ....................................................................................................................... 33
Processing Requirements ................................................................................................................. 33
Summary of Process ........................................................................................................................ 33
Specific Requirements ..................................................................................................................... 35
Capital Equivalency Deposit ............................................................................................................. 39
Summary of Process ........................................................................................................................ 39
Closing an Account .......................................................................................................................... 40
Other Changes in Activities or Operations ...................................................................................... 41
Summary of Process ........................................................................................................................ 41
Specific Requirements ..................................................................................................................... 41
Glossary ............................................................................................................................................... 44
References ........................................................................................................................................... 48
Table of Updates Since Publication .................................................................................................. 51

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Federal Branches and Agencies

Introduction

Introduction
This booklet of the Comptroller’s Licensing Manual consolidates the Office of the
Comptroller of the Currency’s (OCC) policies and processes regarding the establishment,
operations, and other corporate activities of federally licensed offices of foreign banks, which
include federal branches, limited federal branches, and federal agencies. This booklet does
not cover subsidiaries for foreign banks, which is covered in the “Related Organizations”
booklet of the Comptroller’s Handbook. Throughout this booklet, references to federal
branches and agencies also include limited federal branches, unless otherwise noted. In
addition, this booklet
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provides a general background on legislative developments that affect the corporate
activities of foreign banks in the United States;
outlines which corporate activities of foreign banks require approval from or notice to the
OCC and provides specific filing guidance; and
specifies which filings may receive expedited review, lists the criteria for a foreign bank
to be considered an eligible filer, and describes the streamlined application process.

Foreign banks seeking or considering federal branch activities not specifically addressed in
this booklet are encouraged to consult the OCC’s Northeastern District Licensing Division
(LIC/NE). The OCC advises foreign banks on whether they should first send written
proposals to the OCC for consideration regarding the proposed activities.
This booklet contains the following sections:
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“Introduction”
“Initial and Additional Establishments”
“Acquisitions”
“Conversion or Contraction of Operations”
“Relocations”
“Fiduciary Powers”
“Voluntary Liquidation”
“Capital Equivalency Deposit”
“Other Changes in Activities or Operations”

“Glossary” and “References” sections appear at the end of the booklet. Refer to other
booklets of the Comptroller’s Licensing Manual, as applicable:
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“General Policies and Procedures” for a discussion of general filing instructions and
procedures.
“Public Notice and Comments” for guidance on publishing a notice of an application,
and, if applicable, procedures for responding to comments and hearings.
“Background Investigations” for guidance on biographical and financial reports.

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Introduction > Background

Background
General
12 CFR 5 and 28 contain the procedural and substantive regulations for foreign banks
seeking to conduct banking activities in the United States through federal branches and
agencies. The OCC’s corporate activities, policies, procedures, and regulations relevant to
national banks generally are applicable to federal branches and agencies, unless the OCC has
provided otherwise.

Statutory Framework
The International Banking Act (IBA) of 1978, as amended, provides a federal licensing
option that allows foreign banks to establish federal branches or federal agencies supervised
by the OCC. The IBA requires foreign banks seeking to establish or expand their federally
licensed U.S. operations to apply for and obtain OCC approval. 1 Except as otherwise
provided by the IBA, other federal laws or regulations, or OCC policy, federal branches and
agencies generally have the same rights and responsibilities as national banks operating at the
same location and are subject to the same laws, regulations, policies, and procedures that
apply to national banks. 2 A federal branch, for example, may conduct a full range of banking
activities, including trading and investment activities, accepting wholesale and foreign
deposits, granting credit, and acting as a fiduciary. There are important differences, however,
between a federal branch or agency and a full-service bank. A federal branch or agency is a
banking office of a foreign bank that does not maintain its own capital base. Also, federal
branches and agencies generally cannot accept retail deposits below the Federal Deposit
Insurance Corporation’s (FDIC) deposit insurance maximum, as discussed further in the
“Restrictions on Deposits and Deposit Insurance” section.

Comprehensive Consolidated Supervision
The Board of Governors of the Federal Reserve System (FRB) conducts a Comprehensive
Consolidated Supervision (CCS) review when a foreign bank first seeks to establish a
presence in the United States or when a CCS determination has not been made for a foreign
bank seeking to establish an additional office in the United States. 3
In deciding whether a foreign bank is subject to CCS, the FRB determines whether the
foreign bank’s home country supervisor receives sufficient information on the worldwide

1

In certain instances, per OCC regulations, foreign banks may provide a notice instead of an application. These
instances are detailed in this booklet in the appropriate sections. This booklet likewise notes in other sections
that foreign banks may need to submit regulatory filings to other banking agencies.

2

Refer to 12 USC 3102(b) and 12 CFR 28.13(a)(1).

3

Refer to 12 USC 3105(d)(2)(A) and 12 CFR 211.24(a)(2), (a)(3), and (c)(1).

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Introduction > Background

operations of the foreign bank. 4 The information must allow the home country supervisor to
assess the foreign bank’s overall financial condition and compliance with laws and
regulations. 5 If the FRB concludes that a foreign bank is not subject to CCS, the FRB and the
OCC may approve an application by the foreign bank if the home country supervisor is
actively working to establish arrangements for CCS and all other factors in the application
are consistent with approval. 6
The IBA requires the OCC to consider whether a foreign bank seeking to establish an
interstate federal branch or agency in the United States is working toward CCS in the foreign
bank’s home country. 7 For other types of requests, the OCC may consider CCS as one of the
factors the agency evaluates as part of the OCC’s review. 8

Restrictions on Deposits and Deposit Insurance
The IBA prohibits a foreign bank from establishing any branch in the United States that
accepts domestic retail deposits of less than the FDIC’s “standard maximum deposit
insurance amount” (SMDIA), unless (1) the branch is an insured branch as defined in section
3(s) of the Federal Deposit Insurance Act or (2) the OCC determines by order or regulation
that the branch is not engaged in domestic retail deposit activities requiring deposit insurance
protection, taking account of the size and nature of depositors and deposit accounts. 9 The
amount of the SMDIA is equivalent to the maximum amount of deposit insurance for
accounts in banks insured by the FDIC. 10 Uninsured branches of foreign banks are permitted,
however, to accept deposits of less than the SMDIA from limited sources, such as from
individuals who are not citizens or residents of the United States at the time of the initial
deposit. 11

4

Refer to 12 CFR 211.24(c)(1)(ii).

5

Ibid.

6

Refer to 12 USC 3105(d)(6)(A); 12 CFR 28.12(b) and (c); and 12 CFR 211.24(c)(1)(iii).

7

Refer to 12 USC 3103(a)(3).

8

Refer to 12 CFR 28.12(b)(5) and (c).

9

Branches with federal deposit insurance that were in operation or had applied for deposit insurance before
December 19, 1991, are grandfathered and are permitted to retain deposit insurance, subject to certain
restrictions.

10

Refer to 12 USC 1821(a)(1)(E).

11

Refer to 12 CFR 28.16(b).

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Introduction > Activities Requiring Approval or Notice

Other Factors
When approving an application to establish a federal branch or agency, the OCC must
include in its approval any conditions imposed by the FRB’s approval order issued in
connection with the establishment. 12
Additionally, FDIC filings or approval may be required for grandfathered, insured federal
branches.

Activities Requiring Approval or Notice—
Rules of General Applicability
Approval
A foreign bank must file an application with LIC/NE for prior approval if it plans to
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establish an initial or additional 13 federal branch or agency;
establish 14 a federal branch or agency through merger, acquisition, consolidation, or
similar transaction with another foreign bank;
convert a state branch or agency operated by a foreign bank, or a commercial lending
company controlled by a foreign bank, into a federal branch or agency;
convert from a federal agency or limited federal branch into a federal branch;
relocate a federal branch or agency;
exercise fiduciary powers at a federal branch; or
acquire or establish an operating subsidiary of a federal branch or agency or conduct a
new activity in an existing operating subsidiary of a federal branch or agency.

Notice
A foreign bank operating a federal branch or agency must provide notice to LIC/NE if
•

12

it voluntarily liquidates U.S. operations; 15

Refer to 12 USC 3102(a)(2).

13

A prior notice is available for the establishment of an additional intrastate federal branch or agency if certain
requirements are met. (Refer to 12 CFR 28.12(e) and the “Additional Branches and Agencies” section of this
booklet.)
14

An after-the-fact notice or approval is available for acquisition of, or merger or consolidation with, a foreign
bank that has an office in the United States, provided certain procedures are followed. Such procedures, if
followed, allow a foreign bank to proceed with the transaction before an application to establish the federal
branch or agency has been filed or acted on, or to provide an after-the-fact notice within 14 days of the
transaction. (Refer to 12 CFR 28.12(g) and (h) and the “Acquisitions” section of this booklet.)
15

Refer to 12 CFR 28.22.

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Introduction > Activities Requiring Approval or Notice

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it closes some, but not all, of its federal branches or agency offices; 16
its ownership/control of the foreign bank changes; 17
it contracts the operations of its federal branch into a limited federal branch or agency; 18
it establishes an operating subsidiary or makes a non-controlling equity investment
subject to the notice requirements under 12 CFR 5.34 and 5.36.

A federal branch or agency must submit notice 19 to LIC/NE if
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it changes its corporate title;
it changes its mailing address;
it converts to a state branch, state agency, or representative office; or
the parent foreign bank changes the designation of its home state.

The aforementioned illustrates the application and notice filing requirements for some of the
more common transactions pertaining to federal branch or agency operations. There may be
circumstances not listed where the OCC may require a filing pursuant to 12 CFR 5. The
foreign bank or federal branch or agency should contact LIC/NE with any questions on
whether a filing may be required for a planned activity.

Filing With the FRB
Nothing in this booklet relieves a foreign bank of any requirement to obtain the approval of
the FRB as may be necessary under the FRB’s Regulation K, 12 CFR 211.
The OCC is aware of the potential for causing a foreign bank applicant unnecessary burden
because of the dual federal regulatory authority contained in the IBA. To reduce the burden,
the OCC may on a case-by-case basis accept filing materials that the applicant made to the
FRB. In these instances, the applicant must still complete the OCC application or notice,
respond to OCC questions, and comply with OCC representation and assurance
requirements. Please contact LIC/NE to discuss the use of this option. The OCC also reserves
the right to require additional information as needed to reach an informed decision.
With the exception of applications eligible for expedited review, the rules of general
applicability contained in the “General Policies and Procedures” booklet of the Comptroller’s
Licensing Manual apply generally to corporate filings involving federal branches and
agencies.

16

Refer to 12 CFR 28.23.

17

Refer to 12 CFR 28.25.

18

Refer to 12 CFR 28.12(i).

19

Refer to 12 CFR 28.17.

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Introduction > Summary of Process

Summary of Process
Application Process
The OCC encourages foreign bank applicants to review its website for additional information
about the application process. The website provides information on the policy matters that
the OCC considers before making a decision on an application. The website also contains
opinions and legal interpretations on a variety of permissible activities and the manner in
which the activities may be established and conducted.
The OCC encourages each foreign bank, before filing an application, to contact the Director
for LIC/NE to discuss its proposal. Each foreign bank should include requests for
confidential treatment under the Freedom of Information Act with each submission of
materials for which it seeks confidentiality. Refer to the “General Policies and Procedures”
booklet of the Comptroller’s Licensing Manual for further discussion about confidential
treatment.

Exploratory Calls or Meetings
A foreign bank’s contact person may call the LIC/NE staff at any time to ask for further
information or assistance. As the foreign bank’s representatives develop key ideas, the
contact person may request an exploratory conference call or meeting to ask questions,
clarify concerns, and become acquainted with the regulatory environment. The LIC/NE staff
will coordinate an initial meeting or conference call for the contact person and other key
people associated with the proposal to discuss issues with appropriate OCC staff.

Prefiling Meeting
The OCC typically requires a prefiling meeting with the foreign bank’s representatives
before the bank files an application. The foreign bank’s management should be familiar with
the OCC’s policy and procedural requirements before the prefiling meeting. The prefiling
meeting will typically be held in the LIC/NE office where the application will be filed, but it
may be held at another location at the request of the applicant.
Before this meeting, the foreign bank’s representatives should submit briefing materials to
the OCC, including
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a brief description of the proposal, including a listing of planned activities.
identification of the general manager (GM).
biographical information on the GM and other management officials of the federal branch
or agency.
a summary of discussions with the home country supervisor and the FRB.
the proposed amount of capital equivalency deposit (CED).

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The OCC rarely waives the prefiling meeting for applications that are accorded standard
review.

Review Process
The OCC’s review process consists of two types of reviews: standard and expedited.

Standard Review
A well-researched and well-prepared application helps the OCC render a timely decision.
Under the standard review process, the OCC seeks to render a decision within 120 days after
the application’s receipt or as soon as possible thereafter. Proposals that receive standard
review are not approved automatically.
The following application types are processed under standard review:
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•

Initial establishments of a federal branch or agency. 20
Applications from foreign banks or countries that are not subject to CCS.
Establishment of a federal branch or agency through a merger, acquisition, consolidation,
or similar transaction in which the target foreign bank has as an office in the United
States, 21 but the acquiring bank/resulting bank does not.
Applications from a foreign bank that is not an eligible foreign bank.

Expedited Review
An eligible foreign bank qualifies for expedited review of the following corporate activities
(see the “Glossary” section of this booklet for the definition of an eligible foreign bank):
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20

Intrastate relocation of a federal branch or agency. 22
Establishment of an additional intrastate federal branch or agency. 23
Establishment of a de novo interstate federal branch or agency. 24
Conversions, as defined in 12 CFR 28.11(f)(4) or 28.11(f)(6). 25

Refer to 12 CFR 5.70(d)(2)(i) and 28.12(a)(1)(i).

21

Refer to 12 CFR 28.11(f)(2) and 28.12. However, a process for after-the-fact approval (12 CFR 28.12(g)) or
after-the-fact notice for an eligible foreign bank (12 CFR 28.12(h)) is available if certain requirements and
conditions are met. Refer to the “Acquisitions” section of this booklet for additional information.
22

Refer to 12 CFR 28.12(e)(1).

23

Refer to 12 CFR 28.12(e)(2).

24

Refer to 12 CFR 28.12(e)(3).

25

Refer to 12 CFR 28.12(e)(4).

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Introduction > Summary of Process

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Establishment of a federal branch or agency through a merger, acquisition, consolidation,
or similar transaction with another foreign bank that has an office in the United States, if,
among other things, the resulting bank is an eligible foreign bank. 26
Fiduciary powers. 27

Upon receipt of a filing, the OCC determines the applicant’s eligibility for expedited review
and promptly informs the applicant whether it is eligible. The OCC may remove a filing from
expedited review if the proposed transaction raises a significant supervisory, compliance,
legal, or policy issue. (See 12 CFR 5.13 and the “Public Notice and Comments” booklet of
the Comptroller’s Licensing Manual for additional information on reasons why an
application may not be eligible for expedited review.)
Eligible foreign banks are generally permitted to use a streamlined application to establish a
federal branch or federal agency. A streamlined application allows an applicant to omit
certain questions. The OCC may request additional information and a complete application if
the proposed transaction raises a significant supervisory, compliance, legal, or policy issue.

26

Refer to 12 CFR 28.12(h).

27

Refer to 12 CFR 28.12(e)(5).

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Initial and Additional Establishments > Processing Requirements

Initial and Additional Establishments
The policies and processing requirements in this section apply to requests from foreign banks
seeking to establish initial or additional federal branches or agencies.
This section should be used in conjunction with the Comptroller’s Licensing Manual
booklets referenced in the “Introduction” section of this booklet. Also refer to the “Fiduciary
Powers” booklet of the Comptroller’s Licensing Manual whenever an initial or additional
federal branch plans to engage in fiduciary activities.
To establish and operate an initial or additional federal branch or agency, a foreign bank must
submit an application or notice, as appropriate, and obtain approval from the OCC. 28 The
foreign bank applicant must publish notice of the application in a newspaper of general
circulation in the community in which the foreign bank proposes to establish the federal
branch or agency. 29 The public comment period is generally 30 days and interested parties
may submit written comments during this time period. 30

Processing Requirements
Initial Branches and Agencies
A foreign bank seeking to establish an initial federal branch or agency must submit an
application for and obtain prior approval from the OCC for a license. 31 This license is similar
to a national bank charter. The OCC licenses the initial federal branch or agency through a
conditional approval. 32
Applications for fiduciary powers at the federal branch or agency are considered separately, 33
but a foreign bank seeking to exercise fiduciary powers may submit the request and
applicable information with its application. 34 A foreign bank receiving preliminary
conditional approval, in writing, from the OCC to exercise fiduciary powers may not do so
until the OCC also issues the branch trust certificate. The “Fiduciary Powers” section of this
booklet contains more specific information on this process.

28

Refer to 12 CFR 28.12(e).

29

Refer to 12 CFR 5.8 and 5.70(d)(1).

30

Refer to 12 CFR 5.8.

31

Refer to 12 CFR 28.12(e).

32

Refer to 12 CFR 5.20(d)(8) and 28.12(e)(3).

33

Refer to 12 CFR 28.12(a)(1)(ii).

34

Ibid. Also refer to 12 CFR 5.26 and 9.3.

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Initial and Additional Establishments > Processing Requirements

Additional Branches and Agencies
Intrastate Branches and Agencies
An eligible foreign bank with a federal branch license may establish additional intrastate
branches or agencies by filing a written notice with the OCC at least 30 days in advance of
the establishment. 35 Public notice requirements apply. 36 An ineligible foreign bank seeking to
establish an additional intrastate branch or agency should follow the application process for
an initial establishment.
The notice should include, but not be limited to, identifying information for the additional
branch, information about the activities to be conducted at the office, staffing, and financial
projections for the proposed activities. Each federal branch exercising fiduciary powers must
receive separate approval from the OCC. 37 If applicable, the notice should contain a request
for fiduciary powers and the required information. The “Fiduciary Powers” section of this
booklet contains specific information on this process.
During the notice period, the OCC reviews the information submitted and requests additional
information, if needed. If approved, the conditional approval letter is issued on the 30th day
after the OCC receives the filing or, if the public comment period has not expired, at the end
of that period. The OCC may, however, require the foreign bank to file an application if the
notification raises significant supervisory, compliance, legal, or policy issues. 38 For example,
a foreign bank applicant submitting a notice detailing activities not currently conducted by a
licensed branch may be asked to file an application. Applicants are advised to contact
LIC/NE before submitting a notice to discuss the activities or character of the proposed
additional branch. In rare cases, the OCC may waive the 30-day period if immediate action is
required.

Interstate Branches and Agencies
An eligible foreign bank seeking to establish an interstate federal branch or agency that does
not raise any significant supervisory, compliance, legal, or other concerns may submit a
streamlined application. 39 The OCC deems the application conditionally approved as of the
45th day after the OCC receives the filing or 15 days after the close of the public comment
period, whichever is later, unless the OCC notifies the foreign bank before that date that the
filing is not eligible for expedited review. If the FRB approves its related application before

35

Refer to 12 CFR 28.12(e)(1).

36

Refer to 12 CFR 5.8 and 5.70(d)(1).

37

Refer to 12 CFR 28.12(a)(1)(ii).

38

Refer to 12 CFR 28.12(e)(2)(ii).

39

Refer to 12 CFR 28.12(e)(3).

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Initial and Additional Establishments > Summary of Process

the end of the OCC review period, the OCC approval is deemed final. 40 Generally, federal
laws provide the authority for interstate branching by foreign banks to the same extent that
the laws permit such branching for national banks; 41 foreign banks, however, may also
establish interstate branches or agencies pursuant to 12 USC 3103(a)(7).
As part of the review process, the OCC considers whether a foreign bank seeking to establish
an additional federal branch or agency outside of its home state is subject to CCS.42
After the OCC approves a de novo interstate branch or agency, the foreign bank is considered
located in that state and may use the intrastate notification procedures thereafter for
additional federal branches or agencies in that state.

Summary of Process
The OCC’s licensing process for a foreign bank that seeks to open an initial or additional
federal branch or agency generally consists of three phases: (1) exploratory and prefiling
discussions; (2) filing, processing, and deciding the application or notice; and (3) if approved,
the opening of the federal branch or agency.

Exploratory and Prefiling Discussions
LIC/NE conducts an exploratory and prefiling meeting with a foreign bank interested in
establishing an initial or additional federal branch or agency to discuss the OCC’s licensing
policies and filing requirements. If asked, the OCC may forgo the prefiling meeting for a
foreign bank with existing federal branches, agencies, or national bank subsidiaries and
previous banking experience in the United States.

Standard Review
Applications to establish an initial or an additional federal branch or agency by a foreign
bank entering the U.S. banking system or a foreign bank that is not an eligible foreign bank
are processed under the standard review process.

Expedited Review
Applications to establish an additional federal branch or agency from an eligible foreign bank
are processed under the expedited review process.

40

Refer to 12 CFR 28.12(e)(3).

41

Refer to 12 USC 3102(b).

42

Refer to 12 CFR 28.12(b)(5).

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Initial and Additional Establishments > Specific Requirements

Filing
After the prefiling meeting, the foreign bank files the application or notice and publishes
notice of the proposal.

Processing
In evaluating an application to establish an initial or additional federal branch or agency, the
OCC relies heavily on the agency’s supervisory experience with the applicant foreign bank
and the experiences of other state, federal, and foreign bank supervisors. A field investigation
is typically conducted as part of the evaluation of the application for initial establishments.
Background checks, if required, are also conducted during this phase.

Decision Criteria
In an initial or additional establishment, the OCC generally considers
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•

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•

the financial and managerial resources and future prospects of the applicant foreign bank
and the proposed federal branch or agency.
whether the foreign bank has provided the OCC with information to adequately assess the
application and assurances that all information on the operations and activities of the
foreign bank and any of its affiliates the OCC deems necessary to enforce compliance
with the IBA and other applicable federal banking statutes will be made available to the
OCC.
whether the foreign bank and its U.S. affiliates are in compliance with applicable U.S.
laws.
the convenience and needs of the community to be served.
the effect of the proposed branch or agency on competition in U.S. domestic and foreign
commerce.
whether the foreign bank is subject to CCS by its home country supervisor or whether the
FRB has determined that the home country supervisor is working actively toward CCS.
whether the foreign bank’s home country supervisor approved or consented to the
establishment of the federal branch or agency. 43

The OCC also considers whether adequate controls for the detection of money laundering are
in place at the foreign bank.

Specific Requirements
General Publication Requirements and Comment Period
Pursuant to 12 CFR 5.8, each foreign bank that proposes to establish an initial or additional
federal branch or agency must publish a notice of the application in a newspaper of general
43

Refer to 12 CFR 28.12(b).

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circulation in the community in which the applicant proposes to engage in business on the
date of filing or as soon as feasible before or after the filing date. The comment period is 30
days for all establishments.

Opening a Federal Branch or Agency
Following preliminary conditional approval, the foreign bank is permitted to organize the
federal branch or agency and establish its CED account. (See the “Capital Equivalency
Deposit” section of this booklet.) The OCC conducts a preopening examination at least two
weeks before the federal branch or agency is scheduled to open for business to verify that the
federal branch or agency has met all requirements for commencing the business of banking in
the United States. If the federal branch or agency has met the requirements for opening, the
OCC issues the final approval letter and provides a license certificate. If the examination
discloses numerous exceptions or significant deviations from the originally approved
proposal, the opening may be delayed, or the preliminary conditional approval may be
revoked.

Revocation of Preliminary Conditional Approval
The OCC generally does not look favorably on proposals that materially alter the plans set
forth in an application that has received preliminary conditional approval. The OCC may
revoke preliminary conditional approval if the foreign bank makes changes that significantly
alter the business plan detailed in the application or notice after the preliminary conditional
approval and before opening the initial or additional federal branch or agency. Proposed
changes that normally require filing another application are considered significant.
Furthermore, the OCC can revoke preliminary conditional approval if it discovers material
violations of law, misrepresentations, or any fraudulent activity by the applicant foreign
bank’s officers or directors.

Identification of Management Team
The OCC considers the selection of a qualified GM to be one of the foreign bank applicant’s
most important decisions affecting the success of an initial federal branch or agency. The
GM must have experience, competence, and the willingness and ability to be active in
directing the activities of the federal branch or agency in a safe, sound, and legal manner.
The names, experience, and qualifications of the proposed GM and other senior officers of
the proposed federal branch or agency are necessary for the OCC’s evaluation of the
application. The OCC performs background investigations as deemed appropriate to
determine if the proposed senior officers possess satisfactory banking experience and
integrity for the positions proposed.
In most cases, an applicant does not need to submit extensive management information with
applications for additional branches or agencies. The OCC looks to the leadership of existing
licensed federal branches or agencies for sound management of the affairs of any additional
federal branches or agencies. An exception to this policy is an application or notice
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Initial and Additional Establishments > Specific Requirements

accompanied by a request for fiduciary powers from an applicant whose licensed federal
branches or agencies currently engage in little or no exercise of fiduciary activities. In this
case, additional information on management of the fiduciary activities is appropriate.

Business Plan
The foreign bank must provide a copy of the federal branch or agency’s proposed business
plan. The Business Plan Guidelines (from the Interagency Charter and Federal Deposit
Insurance Application) are available for your use.
The business plan should be a comprehensive plan covering three years of operations that is
the result of in-depth planning by the federal branch or agency and the foreign bank’s
management. It should establish the foreign bank’s goals and objectives. It should
realistically forecast market demand, customer base, competition, and economic conditions.
The plan must reflect sound banking principles and demonstrate realistic assessment of risk
in light of economic and competitive conditions in the market to be served.

Field Investigations
The OCC decides on a case-by-case basis whether to conduct a field investigation. 44 The
OCC typically conducts a field investigation for an initial federal branch or agency
application from a foreign bank not known to the OCC or operating in the United States
under a state license. The OCC normally does not conduct a field investigation for an
additional federal branch or agency application.
In conducting the field investigation, the OCC reviews relevant materials, interviews bank
management, explores matters related to the foreign bank’s operations in the United States
and abroad, and meets with management to discuss findings. The findings from a field
investigation, if conducted, are important in the OCC’s overall analysis and review of the
application.

CED
A federal branch or agency is required to establish a CED account before opening for
business. (See the “Capital Equivalency Deposit” section of this booklet.) 45

44

Refer to 12 CFR 5.7 and 5.70(d)(1).

45

Refer to 12 USC 3102(g) and 12 CFR 28.15.

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Acquisitions
The policies and processing requirements in this section apply to a foreign bank that is
considering the establishment of a federal branch or agency, directly or indirectly, through
merger, acquisition, consolidation, or similar transaction.
This section should be used together with other sections of this booklet and other booklets of
the Comptroller’s Licensing Manual as referenced in the “Introduction” section of this
booklet.
A foreign bank that is proposing to establish a federal branch or agency through acquiring,
merging with, consolidating with, or making a similar transaction with another foreign bank
should consult with the OCC on the filing requirements. The filing requirements for new
entrants into the U.S. banking system, a foreign bank that is not an eligible foreign bank, or a
foreign bank that is not subject to CCS are processed under standard processing.
Subject to OCC discretion, an eligible foreign bank that plans to establish a federal branch or
agency through the acquisition of, or merger or consolidation with, a foreign bank that has an
existing U.S. bank subsidiary or a federal or state branch or agency may, depending on the
transaction, file an after-the-fact application or an after-the-fact notice with the OCC. 46 This
booklet provides guidance about the use of the after-the-fact approval and notice processes.
Changes in control for foreign banking offices are discussed in the “Change in Control”
subsection of the “Other Changes in Activities or Operations” section of this booklet.

Processing Requirements
New Entrants/Acquiring Foreign Banks With No Presence in the
United States (Standard Processing)
An acquiring bank that is a new entrant to the United States banking system should consult
the OCC and FRB regarding the filing requirements. The OCC will hold exploratory and
prefiling discussions before filing. The foreign bank will be required to file an application for
an initial establishment. In addition, the FRB will need to make a CCS determination. The
acquiring bank may not consummate the acquisition in the foreign country until the OCC and
FRB have made a favorable decision on the bank’s establishment of the federal branch or
agency. Applicants should review the “Initial and Additional Establishments” section of this
booklet for more details.

Foreign Banks That Are Not Eligible Banks (Standard Processing)
A foreign bank that is not an eligible foreign bank must consult with the OCC and FRB
regarding the filing requirements. Based on the condition of the foreign bank and its U.S.
operations, subject to OCC discretion, a foreign bank that is not an eligible foreign bank will
46

Refer to 12 CFR 28.12(g) and (h).

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be required to file either an application or an after-the-fact application to establish the federal
branch or agency.
A foreign bank that is not an eligible foreign bank may proceed with the transaction before
filing an application to establish the federal branch or agency or before OCC action on the
application if the applicant
•
•
•

provides the OCC with reasonable advance notice of the proposed acquisition, merger, or
consolidation and the OCC approves the filing of an after-the fact application;
commits in writing, before consummation of the acquisition, merger, or consolidation, to
comply with the OCC application procedures within a reasonable time or has already
submitted an application; and
commits in writing to abide by the OCC’s decision on the application, including a
decision to terminate activities of the federal branch or agency. 47

After-the-Fact Notice
Unless otherwise provided by the OCC, an eligible foreign bank that plans to establish a
federal branch or agency through the acquisition of, or merger or consolidation with, a
foreign bank that has an existing U.S. bank subsidiary or a federal or state branch or agency
may proceed with the transaction and provide after-the-fact notice to the OCC within 14 days
of the transaction if
•
•

the resulting bank is an eligible foreign bank; and
no federal branch established by the transaction accepts FDIC-insured deposits. 48

Summary of Process
The OCC’s licensing process for a foreign bank that seeks to retain an existing branch or
agency through the acquisition of another foreign bank generally consists of three phases:
(1) exploratory and prefiling discussions; (2) filing, processing, and deciding the application,
after-the-fact application, or after-the-fact notice; and (3) if approved, the transfer of the
federal branch or agency to the resulting foreign bank from the acquisition, merger, or
consolidation.
The OCC’s licensing process is based on the type of proposed establishment. For
acquisitions, mergers, consolidations, or similar transactions, there usually will be an
exploratory and prefiling phase to determine whether an after-the-fact filing is available as
well as a processing and decision phase.

47

Refer to 12 CFR 28.12(g).

48

Refer to 12 CFR 28.12(h).

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If a foreign bank plans to significantly change the operations of the federal branch or agency,
or introduce new products and services, the OCC will require the submission of a revised
business plan.

Exploratory and Prefiling Discussions
The OCC normally requires a foreign bank applicant to initiate exploratory or prefiling
discussions if it plans to seek an after-the-fact approval or file an after-the-fact notice related
to an acquisition of a federal branch or agency, directly or indirectly, or through merger,
consolidation, or similar transaction. Foreign bank applicants seeking to acquire federal
branches holding FDIC-insured deposits should contact the LIC/NE office. The
grandfathered status of an insured branch cannot be transferred unless the FDIC makes
certain determinations. If the resulting bank is a foreign bank with an existing federal branch
or agency, the OCC may waive a prefiling meeting.

Standard Review
Applications to retain a federal branch or agency of another foreign bank by a foreign bank
that does not have any presence in the United States are processed under standard processing.
Applicants should review the section of this booklet that deals with initial establishments of a
federal branch or agency.

Decision Criteria
The decision criteria used in establishing a federal branch or agency resulting from a merger,
acquisition, consolidation, or similar transaction generally consider
•
•

•
•
•

the financial and managerial resources and future prospects of the applicant foreign bank
and the proposed federal branch or agency;
whether the foreign bank has provided the OCC with information to adequately assess the
application and assurances that all information on the operations and activities of the
foreign bank and any of its affiliates the OCC deems necessary to enforce compliance
with the IBA and other applicable federal banking statutes will be made available to the
OCC;
whether the foreign bank and its U.S. affiliates are in compliance with applicable U.S.
laws;
the convenience and needs of the community to be served;
the effect of the proposed branch or agency on competition in U.S. domestic and foreign
commerce;

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•
•

whether the foreign bank is subject to CCS by its home country supervisor or whether the
FRB has determined that the home country supervisor is working actively toward CCS;
and
whether the foreign bank’s home country supervisor approved or consented to the
establishment of the federal branch or agency. 49

The OCC also considers whether adequate controls for the detection of money laundering are
in place and at the foreign bank.

Specific Requirements
General Publication Requirements and Comment Period
Pursuant to 12 CFR 5.8, each foreign bank that proposes to establish an initial or additional
federal branch or agency as a result of an acquisition in the foreign country must publish a
notice of the application in a newspaper of general circulation in the community in which the
federal branch or agency engages in business on the date of filing or as soon as feasible
before or after the filing date. The comment period is 30 days for all establishments.

Streamlined Applications
An applicant that qualifies for after-the-fact application procedures may be able to file a
streamlined application. In such a case, submission of detailed financial data on the resulting
foreign bank may be omitted. In addition, depending on the proposed structure of the
transaction, the OCC’s filing requirements may be reduced further. For example, if each
foreign bank that is party to an acquisition operates a federal branch or agency and will
continue to do so under the same corporate form, in lieu of a streamlined application, the
OCC may accept a copy of other filings required by the FRB. When the OCC has
supervisory concerns or if the resulting bank is unknown to the OCC, however, a streamlined
application may not be acceptable. The applicant is encouraged to consult early with LIC/NE
to determine what portions of the OCC application should be submitted.

Fiduciary Powers
If an existing federal branch has been authorized previously to exercise fiduciary powers and
no change in the fiduciary activities is anticipated by the resulting foreign bank, no
reauthorization is necessary, and the federal branch may continue to exercise its fiduciary
powers. Specific prior OCC approval must be obtained for a federal branch to exercise
fiduciary powers if the OCC has not previously authorized such powers for that branch. (See
the “Fiduciary Powers” section of this booklet.)

49

Refer to 12 CFR 28.12(b).

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CED
The applicant foreign bank may be required to revise the resulting federal branch or agency’s
CED agreement upon consummation of the transaction. The applicant should discuss this
requirement with LIC/NE.

Other
The applicant foreign bank also must comply with requirements of other regulatory agencies,
including the FDIC (in the case of insured branches).

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Conversion or Contraction of Operations
This section describes the OCC’s policies, processes, and filing requirements for a foreign
bank planning to change its U.S. operation(s) by
•
•
•

converting from a state branch or agency operated by a foreign bank, or a commercial
lending company controlled by a foreign bank, into a federal branch, limited federal
branch, or federal agency;
converting its federally licensed operation from either a federal agency into a federal
branch, or from a limited federal branch into a federal branch; or
contracting the activities of its federally licensed operation from a federal branch to either
a limited federal branch or a federal agency. 50

Processing Requirements
A foreign bank proposing either to convert its state-licensed operation 51 or to expand the
activities of its federally licensed operation 52 must file an application with, and receive prior
approval from, the OCC. A foreign bank proposing to contract the activities of its federally
licensed operation must provide only an after-the-fact notice to the OCC. 53
This process does not apply when a foreign bank is seeking to convert its federally licensed
U.S. operations to a state license. 54 In such instance, refer to the “Other Changes in Activities
or Operations” section of this booklet.
The OCC approves conversions of an office of a foreign bank if the approval does not violate
the provisions of applicable federal and state law and the proposal satisfies the OCC’s
decision criteria. Applicants should contact the FDIC about the insured status of any
grandfathered branch as part of a conversion.

50

The OCC requires that an applicant provide notice of contraction from a limited federal branch to a federal
agency. Refer to 12 CFR 28.11(f) and 28.12(i).
51

Refer to 12 CFR 28.11(f)(4) and 28.12(a).

52

Refer to 12 CFR 28.11(f) and 28.12(a) and (e), and 12 USC 3103.

53

Refer to 12 CFR 28.12(i).

54

Under 12 CFR 28.17(c), a federal branch or agency shall provide notice to the OCC if it converts to a state
branch, state agency, or representative office.

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Contraction of Activities
Proposals for converting an office from a federal branch to a limited federal branch or federal
agency only require the foreign bank to send a notice within 10 days after the contraction of
operations. 55

Summary of Process
State-to-Federal License Conversion
The application process for a conversion from a state to a federal license or expansion of a
foreign bank’s federally licensed operations generally consists of exploratory and prefiling
discussions; filing, processing, and deciding the application; and consummating the proposal.
The OCC application includes information on the foreign bank applicant as well as the
operations of its U.S. office(s).

Expedited Review
An application for a conversion from a state to federal license or expansion of activities
qualifies for expedited review if the applicant is an eligible foreign bank. (See the “Glossary”
section of this booklet and 12 CFR 28.12(e) and 28.12(f).) Under expedited review, such
applications are deemed approved by the OCC 30 days after filing with the OCC, unless the
OCC notifies the bank before that date that the filing is not eligible for expedited review.
A foreign bank without federally licensed operations that is seeking to convert a statelicensed branch or agency to a federal license could receive expedited review and qualify for
a streamlined application. 56 To do so, each of its state-licensed operations must meet the
criteria set forth under 12 CFR 28.12(f), and the filing must not present significant
supervisory, compliance, legal, or policy issues.
This streamlined application process is available generally in a conversion proposal when the
banking powers of the desired type of federal license are commensurate with those of the
state license. Proposals for conversion to a type of federal license that involves more banking
powers than those permissible under the state license are considered on a case-by-case basis
to determine if expedited review or a streamlined filing can be permitted.
A foreign bank may satisfy the eligible foreign bank definition even if it does not have an
existing federally licensed office, as long as each state branch and agency satisfies the
applicable eligibility criteria. 57

55

Refer to 12 CFR 28.12(i).

56

Refer to 12 CFR 28.12(e)(4).

57

Refer to 12 CFR 28.12(f).

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Proposals for converting an office from a federal agency to a limited federal branch or to a
federal branch or from a limited federal branch to a federal branch could qualify for
expedited review. 58 Therefore, the foreign bank is encouraged to discuss its plans with
LIC/NE before filing an application.

Standard Review
An application for a conversion from a state to federal license or expansion of activities from
a foreign bank that is not an eligible foreign bank does not qualify for expedited processing.
A state branch or agency considering a license conversion that is subject to an outstanding
enforcement action or has notice of a pending enforcement action by its current federal or
state supervisor, should discuss its conversion proposal with the OCC before submitting an
application. Generally, the OCC will not consider a conversion application submitted while a
material enforcement action is pending. 59
If a conversion from a state to federally licensed operation is not consummated within six
months from the date of an approval, the OCC may withdraw its approval.

Decision Criteria
In a conversion from a state to a federal license or expansion of a foreign bank’s federally
licensed operations, the OCC generally considers
•
•

•
•
•
•

58

the financial and managerial resources and future prospects of the applicant foreign bank
and the proposed federal branch or agency.
whether the foreign bank has provided the OCC with information to adequately assess the
application and assurances that all information on the operations and activities of the
foreign bank and any of its affiliates that the OCC deems necessary to enforce
compliance with the IBA and other federal banking statutes will be made available to the
OCC.
whether the foreign bank and its U.S. affiliates are in compliance with applicable U.S.
laws.
the convenience and needs of the community to be served. 60
the effect of the proposed branch or agency on competition in U.S. domestic and foreign
commerce.
whether the foreign bank is subject to CCS by its home country supervisor, or whether
the FRB has determined that the home country supervisor is working actively toward
CCS.
Refer to 12 CFR 28.11(f)(6) and 28.12(e)(4).

59
An action is considered “pending” if, before the branch or agency files its conversion application with the
OCC, the branch regulator has commenced and notified the branch of—but not finalized—the action.
60

If the state branch is FDIC insured and subject to the Community Reinvestment Act (CRA), the OCC will
consider the state branch’s performance under the CRA in evaluating the application.

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•

whether the foreign bank’s home country supervisor approved or consented to the
conversion of its state license branch or agency to a federal license or the expansion of
the foreign bank’s federally licensed operations. 61

The OCC also considers whether adequate controls for the detection of money laundering are
in place at the foreign bank.
Notwithstanding the general principles outlined in this booklet, depending on the facts and
circumstances of a particular application, the OCC may consider additional factors that it
deems relevant, such as the interests or policies of the home country regulator with respect to
the proposed conversion (including, for example, the potential effects of the conversion on
resolution planning), the presence of exceptional or exigent circumstances, or an unusual
transaction. 62

Denial Criteria
The OCC may deny an application from a foreign bank wanting to convert its state license to
a federal license or expand its federally licensed operations if
•
•
•
•

the applicant’s financial condition poses supervisory concern;
safety or soundness concerns exist;
the proposal is inconsistent with applicable law, regulation, or OCC policy; or
the applicant is trying to escape supervisory action by its current regulator. 63

The OCC may impose special conditions for approvals to convert a state license to a federal
license or to expand the activities of an existing federally licensed operation to protect the
safety and soundness of the federal branch or agency, prevent conflicts of interest, provide
customer protections, ensure that approval is consistent with the statutes and regulations, or
provide for other special supervisory or policy considerations. 64
In evaluating a proposal to convert an existing state-licensed foreign bank office to a federal
branch or agency, the OCC relies heavily on information received from the office’s current
U.S. supervisor and other confidential and supervisory information available to the OCC.
The OCC consults with the converting entity’s current U.S. supervisor to obtain information
on the current condition of the converting entity and any corrective programs instituted by
the supervisor.
61

Refer to 12 CFR 28.12(b).

62

Refer to 12 CFR 5.2(b). In the case of exceptional or exigent circumstances or unusual transactions, it may be
necessary for the OCC to license activities on an emergency basis relying on the record before it. The OCC may
condition an approval issued in the case of such circumstances to require the foreign bank to adhere to the terms
of the condition in the decision letter, which may require the bank to wind down the operations of the converted
branch and surrender its license.
63

Refer to 12 CFR 28.12(f).

64

Refer to 12 CFR 28.12(d).

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In evaluating an application to expand the activities of an existing limited federal branch or
federal agency, the OCC relies heavily on its own supervisory experience with the foreign
bank.

Specific Requirements
Business Plan
For any conversion of an office of a foreign bank, the OCC requires that the applicant
explain the reason for the desired change and any planned changes in its U.S. operations, and
supply a statement on the legal basis for the proposed change in activity. The OCC also may
require that a written legal opinion be included with the application. The legal opinion should
address whether the proposed change conforms with applicable state and federal law.
The foreign bank should provide a copy of the federal branch's business plan. The Business
Plan Guidelines (from the Interagency Charter and Federal Deposit Insurance Application)
are available for your use.
At a minimum, the business plan should address or include
•
•
•

any anticipated changes in operations, strategy, market area, funding, loan composition,
portfolio, products, or services.
future business objectives of the resulting federal branch or agency.
projected financial statements for a period of three years that reflect the effects of
conversion, along with any adjusting entries that result from the conversion.

Background Investigations
If additional management is being proposed to oversee the changed or expanded activities
and LIC/NE deems it appropriate, a background investigation of the new management may
be conducted. (See the “Background Investigations” booklet of the Comptroller’s Licensing
Manual.)

Fiduciary Powers
If the institution seeking to convert from a state to federal license has existing fiduciary
powers or plans to exercise them following the conversion, it must request and obtain prior
OCC approval to do so. (See the “Fiduciary Powers” section of this booklet.) Similarly, if a
current federal agency or limited federal branch does not have fiduciary powers but plans to
exercise fiduciary powers after converting to a federal branch, it must apply for such powers
and obtain prior OCC approval to do so. The only exception is for a limited federal branch
currently exercising fiduciary powers that plans to convert its operations to a federal branch
with fiduciary powers. In that case, such powers transfer to the converted office, and no
separate request or approval is required.

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Preconversion Examination
State-to-Federal License Conversion
For conversions from a state license to a federal license, the OCC may conduct a
preconversion examination, if deemed necessary. The OCC normally does not conduct a
preconversion examination for a conversion application accorded expedited review. If the
foreign bank applicant’s U.S. operations are in satisfactory condition, the OCC generally
does not perform a preconversion examination. The OCC may discuss the proposal with the
applicant’s current regulator(s) and accept and rely on the current banking regulator’s
examination rating. If there are supervisory concerns, however, the OCC may conduct a
preconversion examination. The decision to conduct a preconversion examination is made on
a case-by-case basis. The information obtained in the investigation may be shared with other
regulators.

Federal Agency or Limited Federal Branch to Federal Branch
Conversion
The OCC normally does not conduct preconversion examinations on applications involving
the conversion from a federal agency or a limited federal branch to a federal branch.

CED
Per the IBA requirements and OCC regulations, a CED is required upon conversion from a
state license to a federal license. 65 (See the “Capital Equivalency Deposit” section of this
booklet.)

Other
Proposals for expansion of activities may require an application with the FRB. A foreign
bank considering a contraction of activities for its insured federal branch may need to
observe additional procedures and requirements promulgated by the FDIC. A foreign bank
considering contracting the operations of its federal branch to a limited federal branch should
seek FRB guidance before notifying the OCC of its proposed plan.

65

Refer to 12 USC 3102(g) and 12 CFR 28.15.

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Relocations
The policies and processing requirements in this section apply to foreign banks seeking to
change the physical location of their federal branch or agency. A foreign bank planning to
relocate its federal branch or agency must file an application with, and receive prior approval
from, the OCC. 66
Federal branch and agency relocations may qualify as a short-distance relocation if the
relocation falls within the distance parameters outlined in the definition of short-distance
relocation in the “Glossary” section of this booklet.

Processing Requirements
A proposal to relocate generally does not require a prefiling meeting unless it involves novel
issues, or, the OCC has supervisory concerns with the federal branch or agency. An
application to relocate is filed, processed, decided, and effected within a relatively short
period of time if the foreign bank qualifies for expedited review as described below. The
OCC decides applications for relocations by federal branches or agencies in accordance with
the provisions of pertinent federal and state law.

Summary of Process
Expedited Review
Expedited review is available for an eligible foreign bank. 67 Under expedited review, an
application for a relocation is deemed approved on the seventh day after the close of the
public comment period unless the OCC
•
•
•

notifies the applicant before that time that the filing is not eligible for expedited review;
approves, conditionally approves, or denies the application; or
advises the applicant that the filing presents significant policy, legal, or supervisory
issues and is being removed from expedited review.

The OCC notifies the applicant promptly and provides a written explanation whenever it
decides to remove an application from expedited review. When an application is removed
from expedited review because of information obtained from a public comment, the OCC
also informs the commenter.

66

Refer to 12 CFR 28.11(f)(5) and 28.12(a)(1)(i).

67

Refer to 12 CFR 28.12(e)(1).

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Standard Review
A standard review means that the federal branch or agency must receive a written decision
from the OCC, and the application will not be approved automatically through the passage of
a specified amount of time. After the close of the public comment period, the OCC considers
all appropriate information and makes a decision to approve, conditionally approve, or deny
the application.

Decision Criteria
The OCC evaluates a relocation under the standards of approval set forth for initial and
additional federal branch establishments under 12 CFR 28.12(b). In applying the standards of
approval, the OCC principally considers
•
•

•
•
•
•
•

the financial and managerial resources and future prospects of the applicant foreign bank
and the proposed federal branch or agency;
whether the foreign bank has provided the OCC with information to adequately assess the
application and assurances that all information on the operations and activities of the
foreign bank and any of its affiliates the OCC deems necessary to enforce compliance
with the IBA and other applicable federal banking statutes will be made available to the
OCC;
whether the foreign bank and its U.S. affiliates are in compliance with applicable U.S.
laws.
the convenience and needs of the community to be served;
the effect of the proposed branch or agency on competition in U.S. domestic and foreign
commerce;
whether the foreign bank is subject to CCS by its home country supervisor or whether the
FRB has determined that the home country supervisor is working actively toward CCS;
and
whether the foreign bank’s home country supervisor approved or consented to the
relocation of the federal branch or agency. 68

The OCC also considers whether adequate controls for the detection of money laundering are
in place at the foreign bank.

Specific Requirements
General Publication Requirements
Pursuant to 12 CFR 5.8, each foreign bank that proposes to relocate a federal branch or
agency must publish notice of the application in a newspaper of general circulation in the
community in which the applicant proposes to engage in business on the date of filing or as

68

Refer to 12 CFR 28.12(b).

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soon as feasible before or after the filing date. The comment period is 15 days for shortdistance relocations and 30 days for all other relocation applications.
The applicant must provide promptly to LIC/NE after publication a statement containing the
date of publication, the name and address of the newspaper that published the public notice, a
copy of the public notice, and any other information the OCC requires as provided by
12 CFR 5.8(c).

Consummation Guidance
If the OCC approves a relocation request, the federal branch or agency must relocate within
18 months from the approval date or the approval automatically terminates, unless the OCC
grants an extension. The foreign bank should advise the OCC promptly of any changes to the
original application between the time of the OCC’s decision and the relocation.

Special Conditions
The OCC may impose special conditions on its approval if conditions are needed to protect
the safety and soundness of the federal branch or agency, prevent the risk of conflicts of
interest, or assure compliance with applicable laws, or for other supervisory, compliance, or
policy considerations.

State Law Considerations
The relocation must comply with applicable state laws, as determined by the OCC. When a
foreign bank proposes to relocate a federal branch or agency outside its current designated
home state, the applicant foreign bank should contact LIC/NE for specific guidance.

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Fiduciary Powers
The policies and processing requirements in this section apply to a foreign bank interested in
exercising fiduciary (trust) powers through its federal branch. Federal agencies are not
permitted by law to exercise fiduciary powers. 69 Also discussed in this section is the
revocation of fiduciary powers by the OCC and the process for a federal branch to surrender
them voluntarily.
This section should be used in conjunction with the Comptroller’s Licensing Manual
booklets referenced in the “Introduction” section of this booklet and the “Fiduciary Powers”
booklet of the Comptroller’s Licensing Manual.

Processing Requirements
Applicability
The OCC requires foreign banks that operate a federal branch to file an application and seek
prior approval before offering fiduciary services to the public. 70 OCC approval under
12 CFR 5.26 and 28.12(a)(ii) to exercise fiduciary powers is required when
•
•
•
•
•

a foreign bank that establishes a new federal branch must receive approval for the new
branch to exercise fiduciary powers. A federal branch may apply for fiduciary powers in
conjunction with an establishment application or at any time after opening for business.
a state branch of a foreign bank seeking to convert to a federal branch must request and
obtain prior OCC approval to exercise fiduciary powers, regardless of whether it
currently exercises them.
a foreign bank that acquires a federal branch that does not currently exercise fiduciary
powers, directly or indirectly, needs prior OCC approval before exercising fiduciary
powers.
a federal branch that currently exercises limited fiduciary powers seeks to expand and
offer additional fiduciary services or products beyond those previously approved.
a foreign bank that operates more than one branch must apply for each branch to exercise
fiduciary powers.

A foreign bank submits an application for fiduciary powers in letter form to LIC/NE,
providing specific information. The OCC sends an acknowledgment letter within five
business days from receipt of the application and notifies the foreign bank in writing of its
decision.

69

Refer to 12 USC 3102(d).

70

Refer to 12 CFR 28.12(a)(ii).

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When a foreign branch wishes to offer fiduciary services, it submits an application in letter
form to LIC/NE, providing specific information for review. 71 The application should contain
the following:
•
•
•

•
•

A statement that the federal branch is requesting full or limited trust powers, and if
limited powers, which specific powers are requested.
A statement that the capital and surplus of the foreign bank is not less than the capital and
surplus required by state law of state banks, trust companies, and other corporations
exercising comparable fiduciary powers.
Sufficient biographical information on proposed trust management personnel, including
educational and professional credentials and a five-year employment history,
emphasizing their trust experience and discussing their ability to perform the proposed
activities.
A description of the locations where the foreign branch will conduct fiduciary activities.
If requested by the OCC, an opinion of counsel that the proposed activities do not violate
applicable federal or state law, including citations to state law.
Any other information necessary to address the factors the OCC must evaluate as noted in
the “Decision Criteria” section on the following page.

If the foreign branch is not in satisfactory condition, has a history of poor earnings, or has
been open for business less than two years, the OCC may require that the foreign branch
submit a fiduciary activities plan for the trust department that demonstrates the projected
financial impact the commencement of trust services may have on the federal branch. The
OCC may request additional information depending upon the federal branch’s condition. The
sample Fiduciary Business Plan outlines the type of information that the OCC may request.

Summary of Process
Expedited Review
If the foreign bank is eligible and its filing qualifies for expedited review per
12 CFR 28.12(e)(5), the application is reviewed to ensure that all information has been
submitted and that there are no new or novel policy issues. The OCC notifies an eligible
foreign bank of the OCC’s decision within 30 days of receipt of the application. If the
applicant does not receive a decision within that time period and is not otherwise notified that
the processing time has been extended, automatic approval is granted 30 days after the date
the OCC receives an application.

71

A sample form, “Application Letter-Fiduciary Powers,” can be found on the OCC website’s “Licensing
Filing Forms” page in the Fiduciary Powers section for the “Federal Branches and Agencies” booklet.

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Standard Review
If the foreign bank is not an eligible bank, the filing does not qualify for expedited review
and the filing will be processed under standard review. The foreign bank ineligible for
expedited review may not exercise fiduciary powers until notified by the OCC in writing.

Decision Criteria
The OCC views the exercise of fiduciary powers or expansion from limited fiduciary powers
to exercise of full powers primarily as a business decision of the foreign bank. The OCC
generally grants permission to exercise fiduciary powers to federal branches after considering
the following factors:
•
•
•
•
•
•

The financial condition of the federal branch and foreign bank;
The adequacy of the foreign bank’s capital and surplus and whether it is sufficient and
not less than the capital and surplus required by state law or state banks, trust companies,
and corporations exercising comparable fiduciary powers;
The character and ability of proposed trust management, including qualifications,
experience and competency;
The adequacy of the proposed business plan;
The needs of the community to be served; and,
Any other factors or circumstances that the OCC considers proper. 72

The proposed activities must comply with applicable statues and regulation, including federal
law (12 USC 92a) and state and local statutes and regulations.
The OCC may deny a request for fiduciary powers if federal branch activities do not comply
with applicable state and federal laws (12 USC 92a and 12 CFR 9) or if the federal branch
does not provide for and retain qualified fiduciary management.

Specific Requirements
Generally, a fiduciary powers request that is filed with an application to open an initial or
additional federal branch is decided at the same time as the federal branch application. The
federal branch may exercise fiduciary powers once it receives OCC approval.

Commencement of Activity
The federal branch must begin exercising fiduciary powers within 18 months of approval. 73 It
must request and receive OCC approval for any changes it wishes to make in the proposed
trust management before commencing its fiduciary business.
72

Refer to 12 CFR 5.26(e)(2)(iii).

73

Refer to 12 CFR 5.26(e)(8).

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Surrender or Revocation of Fiduciary Powers
Surrender
A foreign bank may discontinue and surrender voluntarily the fiduciary powers of its federal
branch. 74 To do so, it must notify LIC/NE and file a certified copy of a resolution adopted by
its senior bank management to surrender trust powers.
The federal branch may be classified as inactive, or it may surrender its fiduciary powers
altogether. In either case, the board of directors must arrange for a final audit of the fiduciary
accounts. In addition, the OCC may conduct a closing investigation to determine if the
federal branch has been discharged completely from its fiduciary obligations; that is, all
accounts have been properly closed and distributed or transferred to substitute fiduciaries.
After the OCC is assured that the federal branch is relieved of all fiduciary duties pursuant to
state law, the OCC issues to the foreign bank a notice certifying that the federal branch is no
longer authorized to exercise fiduciary powers. (See the “Voluntary Liquidation” section of
this booklet.)

Revocation
If the OCC determines that a federal branch has exercised its fiduciary powers unlawfully or
unsoundly, or has failed to exercise fiduciary powers for five consecutive years, the agency
may revoke those powers. 75 As part of this process, the OCC may serve a foreign bank with a
notice of its intent to revoke the authority of the federal branch to exercise fiduciary powers,
outlining the reasons why the OCC is considering such action.

74

Refer to 12 CFR 9.17.

75

Refer to 12 USC 92a(k) and 12 CFR 9.17(b).

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Voluntary Liquidation
The policies and processes in this section apply to foreign banks seeking to close their
federally licensed operations and liquidate voluntarily. A voluntary liquidation occurs when
the senior management of the foreign bank decides to discontinue the operations of all of its
federal branches or agencies and proceeds with a plan of liquidation to terminate the
activities of the foreign bank’s U.S. offices. A foreign bank that proposes to liquidate
voluntarily must comply with the requirements in 12 CFR 28.22, 12 CFR 5.48, and this
booklet. The foreign bank must file a notice with the OCC and publish a notice of its intent to
cease operations in accordance with 12 USC 182.

Processing Requirements
This section should be used together with other sections of this booklet and other booklets of
the Comptroller’s Licensing Manual as referenced in the “Introduction” section of this
booklet. Users should also refer to the “Acquisitions” section of this booklet if the liquidation
occurs in connection with a merger, acquisition, consolidation, or similar transaction. A
foreign bank closing some, but not all, of its federal branches or agencies should follow the
branch closing requirements outlined in 12 CFR 28.23. See the “Branch Closings” booklet of
the Comptroller’s Licensing Manual for guidance and procedures on closing a federal branch
or agency.
The OCC generally requires that the provisions of 12 USC 181 and 182 be followed in a
liquidation of a foreign bank’s federal branches or agencies. A federal branch or agency in
voluntary liquidation must make regular reports to the OCC until the liquidation process is
completed and its operations are terminated. The OCC monitors voluntary liquidations to
ensure compliance with applicable statutes. The OCC requires maintenance of a CED by the
federal branch or agency until the voluntary liquidation and final dissolution of the federal
branch or agency is completed.

Summary of Process
Once a foreign bank decides to liquidate all of its federal branches or agencies, it should
submit a notice of intent to voluntary liquidate to LIC/NE and publish notice in a newspaper
of general circulation. For standard voluntary liquidations, the foreign bank must receive
prior OCC non-objection to its liquidation plan before it can begin to dispose of its assets and
liabilities. During a voluntary liquidation, the federal branch or agency must comply with
normal OCC reporting requirements. The federal branch or agency should maintain its books
and records in accordance with generally accepted accounting principles. Additionally, the
federal branch or agency must make annual filings on the progress of the liquidation and
submit a “Liquidation—Final Report” upon its completion. Foreign banks seeking an
expedited liquidation process, resulting from a merger, acquisition, consolidation, or similar
transaction, should contact LIC/NE for specific requirements and further guidance.

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Upon completion of the liquidation, the foreign bank should return the federal branch or
agency license(s) to the OCC with its “Liquidation—Final Report.” It also must return all
OCC reports of examination or certify that they have been destroyed. 76 The OCC notifies the
foreign bank when it deems that all of the requirements of a voluntary liquidation have been
met and the operations of all of its federal branches or agencies are finally dissolved. The
OCC does not release the CED to the foreign bank until all necessary requirements are met.

Standard Voluntary Liquidation
A foreign bank that wishes to close all of its federal branches or agencies through a standard
voluntary liquidation may do so according to the processes described in this section. The
foreign bank must file a written notice with LIC/NE that includes
•
•
•
•

a resolution, adopted by senior management of the foreign bank, to liquidate the federal
branches or agencies;
certification from senior management that states that total assets exceed total liabilities,
including contingent liabilities of the federal branches or agencies;
a plan of liquidation; and
the anticipated date of closure to the public.

Expedited Voluntary Liquidation
A foreign bank seeking an expedited liquidation process should contact LIC/NE for
guidance. The OCC permits expedited liquidation of a foreign bank’s federal branches or
agencies for
•
•

acquisition transactions whereby an acquiring U.S. bank purchases all the assets and
assumes all the liabilities of the foreign bank’s federal branches or agencies, including all
contingent liabilities; or
consolidation of the foreign bank’s offices in the United States. 77

These transactions allow the liquidating federal branch or agency to surrender its license and
dissolve immediately after the acquisition or consolidation has been consummated.
Generally, an expedited liquidation process is available for acquisitions or consolidations if
•
•
•

the foreign bank’s senior management has resolved to liquidate the operations of the
federal branches or agencies;
the foreign bank has notified LIC/NE of its plans;
the acquiring bank or consolidating foreign bank certifies to the OCC that the ownership
of all the assets and liabilities, including all contingent liabilities, of the liquidating
foreign bank’s federal branches or agencies have been transferred; and

76

Refer to 12 CFR 28.22.

77

Refer to 12 CFR 5.48(f) and 28.22(a).

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•

the foreign bank has published notice of the intent to dissolve the federal branches or
agencies after the acquisition or consolidation. (See the “Public Notice” section of this
booklet for more information.)

Specific Requirements
Public Notice
Expedited Voluntary Liquidation
The public comment period for an expedited voluntary liquidation is 30 days, unless the
OCC determines a shorter period is warranted. The notice must announce that the federal
branch or agency is closing its operations and that creditors should present their claims for
payment.
Notice of the application must be published in a newspaper of general circulation in the
community in which the federal branch or agency is located. 78 The public notice must be
published three times, at intervals spaced throughout the 30-day comment period. The first
publication should be on or about the date the application is filed with the OCC, but in no
event more than three days before or after the date the application is filed. The applicant
should submit to the OCC confirmation of the public notice as part of the voluntary
liquidation notice.

Standard Voluntary Liquidation
The foreign bank must publish notice of the impending closure of the federal branch or
agency daily for two months in a local newspaper. If only weekly publication is available, the
notice must be published for nine consecutive weeks. The notice must announce that the
federal branch or agency is closing its operations and that creditors should present their
claims for payment. The first publication of the liquidation notice should appear on or before
the date the liquidation begins, and final publication should be before the date the federal
branch or agency closes to the public.

Liquidation Plan
After filing the preliminary notice of liquidation with the OCC, if the foreign bank decides to
proceed with the liquidation, it shall file a proposed liquidation plan with LIC/NE. The OCC
generally expects the plan to address the following:
•
•
•
78

The reason for proposing the liquidation.
Alternatives to the voluntary liquidation considered by the senior management of the
foreign bank, including a discussion of any contact with potential acquirers.
The feasibility of completing the liquidation on a solvent basis.
Refer to 12 CFR 28.22(b).

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•
•
•
•
•

•
•
•
•
•
•

An assessment of realizable value of the federal branch or agency’s assets, generally on a
liquidation basis and not on a “going concern” basis.
The identity of all known and probable creditors, including contingent liabilities; whether
they are secured or unsecured creditors; and the potential amounts due, including any
potential early termination payments.
Any outstanding or possible litigation and a plan for resolution of that litigation,
including allocation of sufficient funds to cover attorney fees, costs, and potential
judgments.
Ongoing expenses during the liquidation phase, including those from operations, gains, or
losses from sales of assets and liabilities, payments to terminate employees, and costs to
terminate contracts and business arrangements.
The liquidation strategy and timeline, including what transactions (such as asset sales or
transfers of deposits) will occur before the formal liquidation officially commences, what
transactions will occur during formal liquidation, how long the liquidation is likely to
take, and plans for the final winding up of the federal branch or agency’s affairs.
Plans to obtain required foreign bank’s shareholder or senior management approvals of
the liquidation.
The status of employees during the liquidation and any retention bonuses to be paid to
employees.
If applicable, transfer of trust accounts to a successor fiduciary.
For insured federal branches, termination of FDIC insurance.
Application for and receipt of any other required regulatory approvals.
Provisions for maintenance of federal branch or agency records after the liquidation,
including OCC access to those records.

The liquidation plan should also include pro forma balance sheets for each material step of
the liquidation process and the assumptions used to prepare the financial projections. In
evaluating the liquidation plan, the OCC considers the purpose of the liquidation, the impact
on the federal branch or agency’s safety and soundness, and whether the transaction is in
conformance with applicable laws and regulations. The OCC evaluates the effect of the
transaction on the foreign branch or agency’s depositors, other creditors, and customers. A
final liquidation plan that addresses any OCC concerns should be submitted before
commencement of liquidation. The foreign bank must receive the OCC’s non-objection to
the final liquidation plan before commencing the liquidation of its federal branches or
agencies.

Liquidating Agent
Senior management of the foreign bank must appoint a liquidating agent 79 and publish notice
of the intent to voluntarily liquidate and close the operations of all of its federal branches or
agencies, in accordance with 12 CFR 28.22(b) and 12 USC 182. The liquidating agent should
reside in the United States during the liquidation process. Senior management of the foreign
bank must continue to monitor each federal branch or agency and its liquidation through the
liquidating agent.
79

Refer to 12 USC 181.

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The liquidating agent may be the GM of a federal branch or agency, a management
committee member of a federal branch or agency, or another responsible person designated
by senior management. When applicable, the liquidating agent must post a bond in favor of
all of the federal branches or agencies. 80 After considering the nature and value of the assets
to be liquidated, the bond must carry an amount deemed adequate by senior management of
the foreign bank. The resolution adopted by senior management of the foreign bank must
specify the dollar amount to be posted as a bond for the liquidating agent.

Disposition of Assets
The liquidating agent liquidates the assets of all of the federal branches or agencies for the
benefit, first, of its depositors and other creditors or claimants, and then of the foreign bank.
The agent may not dispose of the assets of the federal branches or agencies to favor some
creditors over others (unless entitled by law to do so). A liquidating agent may not dispose of
the assets of the federal branch or agency, or transfer them to the foreign bank, until all
depositors’ and creditors’ claims have been identified and evaluated.

Reports
At the commencement of its liquidation, a federal branch or agency must submit to LIC/NE a
report on its condition. This filing requirement is met by submitting to LIC/NE a “Report of
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks” (Federal Financial
Institutions Examination Council [FFIEC] Form 002) and a report of all contingent liabilities
as of the close of the last business day before the start of the liquidation. The “Report of
Assets and Liabilities” must include a certified maturity schedule of all remaining liabilities,
if any. The federal branch or agency in liquidation must continue to file FFIEC Form 002 and
its supplement, FFIEC Form 002S, if applicable, quarterly until the liquidation is complete.
Additionally, the liquidating agent for the federal branch or agency must submit quarterly to
LIC/NE a “Liquidation—Interim Progress Report,” unless requested to file it more often,
until the liquidation is complete, and the federal branch or agency is fully dissolved.

Examinations or Field Investigations
The OCC may perform regular and special examinations or field investigations of a federal
branch or agency in liquidation until the claims of all creditors have been satisfied and the
liquidation process is completed pursuant to 12 CFR 28.22 and 5.48. The foreign bank is
responsible for the cost of any regular or special examinations conducted by the OCC during
the voluntary liquidation phase of the branch or agency.

80

Refer to 12 USC 181.

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Fiduciary Responsibilities
Whenever a federal branch exercising fiduciary powers is in voluntary liquidation, the
liquidating agent shall liquidate fiduciary accounts in accordance with 12 USC 92a(j) and
12 CFR 9.

Offshore Shell Branches
Before completion of a voluntary liquidation, the management and control of any offshore
shell branch activity otherwise conducted through the federal branch or agency in liquidation
must be transferred to other units of the foreign bank or terminated. The management and
control by the federal branch or agency of any offshore shell branch activity ceases upon the
completion of the liquidation and final dissolution of the federal branch or agency.

Loan Production Offices
A federal branch that operates a loan production office (LPO) must include it in the
liquidation process of the federal branch.

CED
Generally, the OCC authorizes the release of the CED to a foreign bank following the
completion of a voluntary liquidation and final dissolution of the foreign bank’s federal
branches or agencies.
The OCC monitors each federal branch or agency’s termination process to ensure compliance
with applicable statutes pertaining to voluntary liquidation and the CED. Generally, the CED
is held on deposit until all of the federal branches’ or agencies’ liabilities have been resolved.
Persons wishing to file claims after liquidation of all of the federal branches or agencies and
return of the CED must make them against the foreign bank in the appropriate jurisdiction.

Other
Additional requirements apply if the voluntary liquidation involves an FDIC-insured federal
branch. In such cases, the foreign bank should refer to 12 USC 1818(a)(6) and (q) and
12 CFR 307. The foreign bank should contact LIC/NE for guidance and instructions. If the
liquidation occurs in connection with a merger, acquisition, consolidation, or other similar
transaction of federal branch or agency operations in the United States, expedited procedures
may be available.

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Capital Equivalency Deposit > Summary of Process

Capital Equivalency Deposit
The policies and processes in this section apply to the establishment of CED accounts for a
federal branch or agency.
A CED serves the public interest, protects depositors, and helps maintain the federal branch
or agency’s sound financial condition. If a federal branch or agency is liquidated, CED assets
may be used to pay appropriate claims, if necessary. The IBA requires all federal branches
and agencies to establish a CED account before opening for business. 81 The CED must be
maintained in accordance with the requirements set forth in this section and 12 CFR 28.15.

Summary of Process
Per 12 USC 3102(g) and 12 CFR 28.15, a federal branch or agency is required to establish
and maintain a CED account with a Federal Reserve System member bank (depository bank)
in an amount equal to at least 5 percent of the total liabilities of the federal branch or agency,
including acceptances but excluding accrued expenses, intercompany liabilities, liabilities of
an international banking facility (IBF) to third parties and of a federal branch to an IBF,
liabilities from repurchase agreements (on a case-by-case basis), and any amounts due to the
head office. The OCC may require, in individual cases or otherwise, that a foreign bank
establish and maintain a CED above the 5 percent minimum amount.
The foreign bank must deposit its CED into an account in a bank that is located in the state in
which the federal branch or agency is located. A member bank headquartered in another state
but operating a branch in the state in which the federal branch or agency is located qualifies
as a CED depository bank. A foreign bank with federal branches or agencies in more than
one state may consolidate some or all of its CEDs into one such account, but the total amount
of the consolidated CED continues to be calculated on an office-by-office basis. The OCC
must approve the depository bank if it is a national bank, and the FRB must approve if the
depository bank is a state member bank.
The CED must consist of any of the following eligible assets:
•
•
•
•
•

81

Investment securities eligible for investment by national banks.
U.S. dollar deposits payable in the United States or any other Group of 10 country.
Certificates of deposit, payable in the United States, and bankers’ acceptances. The issuer
of the certificate of deposit or banker’s acceptance must have an adequate capacity to
meet financial commitments for the projected life of the asset or exposure.
Repurchase agreements.
Similar assets the OCC deems eligible.

Refer to 12 USC 3102(g).

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A foreign bank applicant establishing its CED is advised to contact LIC/NE for information
on any relevant changes in the types of assets considered eligible for inclusion in the CED.
A CED agreement must be in place before an initial or additional federal branch or agency
opens for business or before a state-licensed branch or agency converts to a federal license. 82
This agreement is generally entered into by the foreign bank, the depository bank, and the
OCC.
The CED agreement governs the operation of the account, sets forth certain conditions, and
stipulates that the instruments be held for the benefit of the OCC. Assets held in a depository
bank for CED purposes must be segregated in a safekeeping account and free of any liens.
The foreign bank can collect the income on the eligible instruments and is permitted by the
agreement to exchange funds or securities on a dollar-for-dollar basis without prior OCC
approval.
The authorized officers of the foreign and depository banks should complete and sign three
original CED agreements and forward them to LIC/NE. The OCC retains one original and
sends the two remaining documents to the foreign bank. The foreign bank is then responsible
for providing one copy of the agreement to the depository bank.
Once established, the CED must be maintained in accordance with the requirements set forth
in this section and 12 CFR 28.15. Requests for CED account withdrawals, changes in
depository banks, or other matters affecting the CED account may require prior notice and
should be discussed with the OCC supervisory office responsible for supervision of the
federal branch or agency.

Closing an Account
With the OCC’s prior approval, a foreign bank may close the CED account of its federal
branch or agency after it voluntarily liquidates or converts from a federal to a state license.
The closing of the account should follow established OCC processes. (See the “Voluntary
Liquidation” and “Other Changes in Activities or Operations” sections of this booklet.)

82

Refer to 12 USC 3102(g).

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Other Changes in Activities or Operations
This section describes the OCC’s policies and processes not addressed elsewhere in this
booklet for the following changes in activities or operations of a foreign bank operating a
federal branch or agency:
•

•

•

Changes in operations:
– Corporate title.
– Mailing address of the federal branch or agency.
– Home state designation of the foreign bank.
– Change in control of the foreign bank.
Changes in activities:
– Establishment of an LPO.
– Noncontrolling equity investment.
– Acquisition or establishment of an operating subsidiary of a federal branch or agency,
or conducting a new activity in an existing operating subsidiary of a federal branch or
agency.
Conversion to a state branch, state agency, or representative office.

Summary of Process
A foreign bank must provide written notice within 10 days of the effective date of changes in
title, mailing address, or home state designation to LIC/NE. 83 Notices for changes in control
should be sent to LIC/NE within 14 calendar days after the foreign bank becomes aware of
the change. Conversion to a state-licensed branch or agency requires prior notice to the OCC,
generally at the time the application to convert is filed with the state. 84
The GM of a federal branch or agency should sign notices submitted to the OCC.

Specific Requirements
Change in Corporate Title
The notice of the change in the corporate title of the foreign bank must include the current
and former corporate titles.

Change in Mailing Address
A foreign bank must notify the OCC whenever it changes the mailing address of its federal
branch or agency. The OCC also requires that the foreign bank notify them when it changes

83

Refer to 12 CFR 28.17.

84

Ibid.

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the mailing address of its corporate headquarters. 85 A separate notice is not required if a
change in address of a federal branch or agency results from a corporate application with the
OCC, such as a relocation.

Change in Home State Designation
A foreign bank changing its home state designation must give the OCC notice of the
change. 86 A foreign bank may meet this requirement by providing the OCC with a copy of a
notice or application to the FRB or an FRB determination for a change in home state
designation.

Change in Control
A foreign bank is required to provide a written notice to the OCC within 14 calendar days
after the foreign bank becomes aware of the change in control, provided that after the change
in control the foreign bank and its federal branches or agencies continue to operate in the
same corporate form. 87 A change in control notice is required when the acquiring entity,
person, or group of entities or persons acting in concert would (1) directly or indirectly
control or have the power to vote at least 25 percent of any class of voting securities of the
foreign bank or (2) controls in any manner the election of a majority of the directors or
trustees of the foreign bank. In such case, the foreign bank needs only to provide the OCC
with a copy of any filing submitted to the FRB, as provided in 12 CRF 28.12(k). The OCC
may request supplemental information as deemed appropriate.
An entity, person, or group of persons proposing to acquire control of a foreign bank
operating a federal branch or agency is encouraged to contact LIC/NE.

Loan Production Office
A federal branch may establish lending offices, make credit decisions, and engage in other
representational activities at a site other than a federal branch office in accordance with
12 CFR 7.1003–1005 and 28.26.

Noncontrolling Equity Investments
A well-capitalized and well-managed federal branch may make noncontrolling equity
investments subject to the requirements of 12 CFR 5.36. (See the “Subsidiaries and Equity
Investments” booklet of the Comptroller’s Licensing Manual.)

85

Refer to 12 CFR 5.52.

86

Refer to 12 CFR 28.17(d).

87

Refer to 12 CFR 28.25.

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Operating Subsidiaries
A federal branch or agency may acquire, establish, or maintain an operating subsidiary
(pursuant to the requirements in 12 CFR 5.34) as if it were a national bank. (See the
“Subsidiaries and Equity Investments” booklet of the Comptroller’s Licensing Manual.)

Conversion to State-Licensed Operation
When a foreign bank decides to convert its federal branch or agency to a state-licensed
operation, it must file written notice with the OCC before conversion. 88 The notice must
include a resolution from senior management of the foreign bank to surrender the federal
branch or agency license and any trust powers previously granted by the OCC. The
anticipated date of the conversion must also be provided. Before conversion, a federal branch
or agency must return the federal branch or agency license. The federal branch or agency
must also either return all reports of examination or certify that they have been destroyed.
The conversion is not deemed final until the foreign bank obtains any appropriate regulatory
approvals and returns official OCC documents. Upon conversion to a state-licensed operation
and compliance with the OCC’s requirements for the return of documents, the OCC will
authorize the release of the CED to the foreign bank.

88

Refer to12 CFR 28.17(c).

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Glossary

Glossary
Capital equivalency deposit (CED): A deposit required for a federal branch or agency
pursuant to section 4 of the IBA (12 USC 3102(g)) and 12 CFR 28.15. A CED serves the
public interest, protects depositors, and helps maintain the federal branch or agency’s sound
financial condition. If a federal branch or agency is liquidated, CED assets may be used to
pay appropriate claims, if necessary. All federal branches and agencies must establish a CED
account before opening for business. The CED must be maintained in accordance with the
requirements set forth in this section and 12 CFR 28.15. Upon the opening of a federal
branch or agency, a foreign bank must have U.S. dollar deposits or investment-grade
securities on deposit with a Federal Reserve System member bank in the state in which the
federal branch or agency is located. A member bank headquartered in another state, but
operating a branch located in the state in which the federal branch or agency is located,
qualifies as a CED depository institution. A foreign bank operating federal branches or
agencies in more than one state may consolidate some or all of its CEDs into one account.
Commercial lending company: Any organization, other than a bank or an organization
operating under section 25 of the Federal Reserve Act (12 USC 601-604a), that is organized
under the laws of any state, maintains credit balances permissible for an agency, and engages
in the business of making commercial loans. (This includes any company chartered under
Article XII of the banking law of the state of New York.)
Comprehensive consolidated supervision (CCS): Supervision of a foreign bank in such a
manner that its home country supervisor receives sufficient information on the worldwide
operations of the foreign bank. In deciding whether a foreign bank is subject to CCS, the
FRB determines whether the information received allows the home country supervisor to
assess the foreign bank’s overall financial condition and compliance with laws and
regulations.
Control: Indirect or direct control or power to vote 25 percent or more of any class of voting
securities of another entity, or control in any manner of the election of a majority of the
directors or trustees of another entity.
Conversion: One of the following actions:
•
•

Conversion of a state branch or state agency operated by a foreign bank, or a commercial
lending company controlled by a foreign bank, into a federal branch, limited federal
branch, or federal agency.
Conversion of a federal agency or a limited federal branch to a federal branch.

Edge Corporation: A corporation organized under section 25A of the Federal Reserve Act,
12 USC 611-631, to engage in activities incidental to international business. Edge
Corporations may accept deposits from foreign states, foreign persons, and certain other
sources.

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Glossary

Eligible foreign bank: As described in 12 CFR 28.12(f), a federal branch and agency of the
foreign bank, that
•
•

•

has a composite rating of “1” or “2” under the interagency rating system for U.S.
branches and agencies of foreign banks (see the “ROCA” definition in this “Glossary”
section).
is not subject to a cease-and-desist order, consent order, formal written agreement, or
prompt corrective action directive or, if subject to such an order, agreement, or directive,
is informed in writing by the OCC that the federal branch or agency may be treated as an
eligible foreign bank.
has, if applicable, a CRA rating of “outstanding” or “satisfactory.”

Enhanced Prudential Standards: As described in 12 CFR 252, bank holding companies
and foreign banking organizations (FBO) with total consolidated assets of $50 billion or
more will establish certain standards for liquidity, risk management, and capital. 12 CFR 252
also requires an FBO with a significant U.S. presence to establish an intermediate holding
company over its U.S. subsidiaries (excludes a federal branch or agency).
Establish a federal branch or agency: One of the following actions, per 12 CFR 28.11(f):
•
•
•
•
•
•

Open and conduct business through an initial or additional federal branch or agency.
Acquire, directly or indirectly through merger, consolidation, or similar transaction with
another foreign bank, the operations of a federal branch or agency that is open and
conducting business.
Acquire a federal branch or agency through the acquisition of a foreign bank subsidiary
that would cease to operate in the same corporate form following the acquisition.
Convert a state branch or agency operated by a foreign bank, or a commercial lending
company controlled by a foreign bank, into a federal branch or agency.
Relocate a federal branch or agency within a state or from one state to another.
Convert a federal agency or a limited federal branch into a federal branch.

Federal agency: An office or place of business, licensed by the OCC and operated by a
foreign bank in any state, that may engage in the business of banking—including maintaining
credit balances, cashing checks, and lending money—but may not accept deposits or exercise
fiduciary powers. A federal agency primarily makes commercial loans and finances
international transactions.
Federal branch: An office or place of business, licensed by the OCC and operated by a
foreign bank in any state, that may engage in the business of banking, including accepting
domestic nonretail deposits.
Foreign bank: An organization organized under the laws of a foreign country, or a territory
of the United States (Puerto Rico, Guam, American Samoa, or the Virgin Islands), that
engages directly in the business of banking in a foreign country.

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Glossary

Foreign banking organization (FBO): A foreign bank that: (1) operates a branch, agency,
or commercial lending company subsidiary in the United States; (2) controls a bank in the
United States; (3) controls an Edge corporation acquired after March 5, 1987; or (4) is a
company of which the foreign bank is a subsidiary.
Group of 10 (G-10): Group of countries that have agreed to participate in the General
Arrangements to Borrow. Member banks coordinate banking industry supervision through
the Bank for International Settlements and monetary policy through the International
Monetary Fund. Founding members are Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, the United Kingdom, and the United States. Switzerland has joined as
a member.
Home state: The state in which a foreign bank has a branch, agency, subsidiary commercial
lending company, or subsidiary bank. If a foreign bank has an office in more than one state,
the home state is selected by the foreign bank, or, in default of such selection, the state is
selected by the FRB.
Limited federal branch: A limited federal branch can accept only those deposits
permissible for which an Edge Corporation can receive. It cannot accept deposits from U.S.
citizens or corporations. A limited federal branch can exercise fiduciary powers and also
engage in activities that are authorized for federal agencies.
Loan production office (LPO): A staffed facility, other than a branch, that is open to the
public and provides lending-related services, such as loan information and applications
(representational activities). Federal branches may operate these offices. These LPOs are
supervised by the OCC as part of its supervision of the federal branch or agency. The FRB
considers an LPO a representative office under its regulation. 89
Offshore branch: A non-U.S. branch established in an offshore center and managed by the
U.S. branch of an FBO. An offshore branch is also referred to as a “shell branch” because it
often does not have a physical presence and is only nominally domiciled in the offshore
center.
ROCA: Rating system used by U.S. bank regulators to rate U.S. branches and agencies of
FBOs. The acronym stands for risk management, operational controls, compliance, and asset
quality. The individual components and the overall or composite ROCA rating are based on a
scale from 1 to 5 in ascending order of supervisory concern. Thus, 1 represents the lowest
level of concern and 5 the highest.
Short-distance relocation: Moving of a federal branch or agency within
•

89

a 1,000-foot radius of the site if the federal branch or agency is located within a principal
city of a Metropolitan Statistical Area (MSA) designated by the Office of Management
and Budget;

Refer to 12 CFR 211.21(x) and 211.24(d)(1)(i).

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Glossary

•
•

a one-mile radius of the site if the federal branch or agency is not located within a
principal city but is located within an MSA; or
a two-mile radius of the site if the federal branch or agency is not located within an MSA.

Well capitalized: A federal branch or agency is considered well capitalized if the foreign
bank’s most recently reported capital adequacy position consists of, or is equivalent to,
common equity tier 1, tier 1, and total risk-based capital ratios that satisfy the definition of
“well capitalized” set forth at 12 CFR 6.4, respectively, on a consolidated basis; or the
federal branch or agency has maintained on a daily basis, over the past three quarters, eligible
assets in an amount not less than 108 percent of the preceding quarter’s average third-party
liabilities (determined consistent with applicable federal and state law), and sufficient
liquidity is currently available to meet its obligations to third parties. 90
Well managed: A federal branch or agency is considered well managed if the federal branch
or agency has received a composite ROCA supervisory rating of 1 or 2 at its most recent
examination. 91

90

Refer to 12 CFR 4.7(b)(1)(iii) and 5.34(d)(2).

91

Refer to 12 CFR 5.34(d)(3)(ii).

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References

References
Bank Secrecy Act
Law
Regulation

31 USC Chapter X
12 CFR 21, subparts B and C

Capital Equivalency Deposit
Law
Regulation

12 USC 3102(g)
12 CFR 28.15

Capital Requirements
Law
Regulation

12 USC 3101 et seq.
12 CFR 3, 28.14, and 28.20

Change in Corporate Title
Law
Regulation
Change in Home State Designation
Law
Regulation

12 USC 3101 et seq.
12 CFR 28.17(a)

12 USC 3103(c)
12 CFR 28.11(n) and 28.17(d)

Change in Location—Policy and Procedures
Law
12 USC 30(b) and 3102
Regulation
12 CFR 5.30, 5.40, and 28.12(e)(1)
Change in Mailing Address
Law
Regulation

12 USC 3101 et seq.
12 CFR 28.17(b)

Change in Ownership or Control
Law
Regulation

12 USC 3101 et seq.
12 CFR 28.11(d) and 28.25

Conversion to State-Licensed Branch, Agency,
or Representative Office
Law
12 USC 3101 et seq. and state law
Regulation
12 CFR 5.70 and 28.17(c)
Corporate Powers and Investment Securities
Law
Regulation

12 USC 24 and 3102
12 CFR 1 and 28.13(a)

Establish a Federal Agency or Branch
Law
12 USC 3102
Regulation
12 CFR 5.70, 28.11(f), and 28.12
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References

Examinations
Law
Regulation

12 USC 161, 3102(b), and 3108(a)
12 CFR 7.4000 and 28.18(c)

Expedited Review
Law
Regulation
Failing to File Progress Reports
Law
Regulation
Fiduciary Powers
Law
Regulation

12 USC 3101 et seq.
12 CFR 5.13 and 28.12(e)

12 USC 164 and 3101 et seq.
12 CFR 28.18 and 28.19

12 USC 92a and 3102
12 CFR 5.26, 9, and 28.12(e)(5)

Fiduciary Powers of Liquidating Agent
Law
12 USC 92a(i) and 3101 et seq.
Regulation
12 CFR 9
Fraudulent Statements
Law

18 USC 1001

Interstate Branching
Law
Regulation

12 USC 3103
12 CFR 28.12

Liquidation Reports
Law
Regulation

12 USC 181 and 3102
12 CFR 5.48 and 28.22(c)

Notice of Filing
Law
Regulation

12 USC 93a and 3101 et seq.
12 CFR 5.8 and 5.70

Public Comments and Hearings
Regulation

12 CFR 5.10 and 5.11

Requirements and Procedures for Liquidation and Dissolution
Law
12 USC 181, 182, and 3101 et seq.
Regulation
12 CFR 5.48, 9.16, and 28.22
Termination of Insurance
Law
Regulation

Comptroller’s Licensing Manual

12 USC 1818(a)(2), (p), and (q)
12 CFR 307

49

Federal Branches and Agencies

References

Theft, Embezzlement, or Misapplication
Law
Regulation

Comptroller’s Licensing Manual

18 USC 656
12 CFR 19

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Federal Branches and Agencies

Table of Updates Since Publication

Table of Updates Since Publication
Date of Last Publication: October 2019
Reason

Affected pages

Regulatory and policy clarifications and corrections

4–8, 12, 15–19, 27, 29, 31, 35, 36, 40, 41

Added footnotes to reflect current statutes and regulations

2–4, 5, 7–12, 14–16, 18, 20–23, 25–27, 29–
32, 34, 36, 37, 41, 42, 46

Changes and additions to “Glossary” section

44–47

Changes and update to “References” section

48, 49

Removed internal procedures

Throughout the booklet

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