67050 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Rules and Regulations

that currently results from the

reinvestment provision.

Several commenters also predicted

that the change would not have a

negative effect on national banks’ safety

and soundness. One commenter

suggested that the proposed rule might

promote safety and soundness by

allowing bank management increased

flexibility in its use of part 24

investment proceeds.

Several commenters indicated that the

proposed change would decrease the

cost or burden associated with part 24

compliance. These comments generally

were made with regard to low-income

housing tax credits for which

determining compliance with the

reinvestment provision may be

cumbersome. One commenter noted that

the reinvestment requirement furthers

the misperception that public welfare

investments are adverse to bank

profitability.

One commenter opposed the proposal

based on a concern that it might result

in fewer part 24 investments. This

commenter suggested that the OCC

monitor the level of national bank

public welfare investments on an

ongoing basis to assess whether the

change made by this final rule yields the

anticipated results.

Discussion of the Final Rule

In this final rule, the OCC adopts the

proposal and removes the reinvestment

requirement from part 24. The OCC

believes that removal of the

reinvestment provision will further the

basic objective of section 24 (Eleventh)

by encouraging banks to make more

investments. The OCC also believes that

the change made by this final rule is

consistent with bank safety and

soundness. It will enable a bank to use

profits, dividends, and other

distributions from its part 24

investments for any purpose based upon

an overall assessment by the bank’s

management of its financial needs and

public welfare investment objectives.

Removing the reinvestment

requirement will encourage banks to

make investments that promote the

public welfare. It will not, however,

constrain a bank’s use of investment

proceeds nor hamper its ability to

ensure the sound operation of the bank

as a whole.

The OCC will continue to monitor

public welfare investment levels and

trends, as it has since public welfare

investments were specifically

authorized by part 24. Based on this

monitoring, the OCC periodically will

evaluate the effectiveness of part 24, as

amended.

Regulatory Flexibility Act

It is hereby certified that this final

rule will not have a significant

economic impact on a substantial

number of small entities. Accordingly, a

regulatory flexibility analysis is not

required. The final rule will reduce

somewhat the regulatory burden on

national banks, regardless of size, by

removing the requirement that a

national bank must reinvest the

proceeds of its public welfare

investments.

Executive Order 12866

The OCC has determined that this

final rule is not a significant regulatory

action under Executive Order 12866.

Unfunded Mandates

The OCC has determined that this

final rule will not result in expenditures

by state, local, and tribal governments,

or by the private sector, of more than

$100 million in any one year.

Accordingly, a budgetary impact

statement is not required under section

202 of the Unfunded Mandates Reform

Act of 1995.

Effective Date

This final rule will become effective

on January 1, 1996. The final rule will

apply to profits from both existing and

new public welfare investments. Thus,

public welfare investment profits,

dividends, tax credits, interest, and

other distributions that a national bank

earns prior to January 1, 1996, but

which the bank has not reinvested by

January 1, 1996, do not have to be

reinvested. In addition, public welfare

profits, dividends, tax credits, interest,

and other distributions that a national

bank earns after January 1, 1996, which

stem from a public welfare investment

undertaken by the national bank prior to

January 1, 1996, will not have to be

reinvested. Finally, profits, dividends,

tax credits, interest, and other

distributions from a public welfare

investment undertaken after January 1,

1996, will not be subject to the

reinvestment requirement.

The Administrative Procedure Act (5

U.S.C. 553(d)(1)) (APA) states that a

substantive rule shall not be published

less than 30 days before its effective

date unless the rule grants or recognizes

an exemption or relieves a restriction.

Because the current regulation restricts

the manner in which a national bank

can use its pubic welfare investment

returns and the final rule removes this

restriction, this final rule satisfies the

terms of the APA’s exception to the

requirement for a delayed effective date.

In addition, section 302 of the Riegle

Community Development and

Regulatory Improvement Act of 1994

generally restricts the effective date of

Federal banking agency regulations that

impose additional reporting, disclosure,

or other new requirements on insured

depository institutions. The OCC

believes that section 302 is not

applicable to this final rule because the

final rule does not impose any

additional reporting, disclosure, or other

new requirements on national banks.

Instead, this final rule removes the

current reinvestment requirement.

List of Subjects in 12 CFR Part 24

Community development, Credit,

Investments, National banks, Reporting

and recordkeeping requirements.

Authority and Issuance

For the reasons set forth in the

preamble, part 24 of title 12, chapter I,

of the Code of Federal Regulations is

amended as set forth below:

PART 24—COMMUNITY

DEVELOPMENT CORPORATION AND

PROJECT INVESTMENTS

1. The authority citation for part 24

continues to read as follows:

Authority: 12 U.S.C. 24 (Eleventh), 93a,

161, 481 and 1818.

§ 24.4 [Amended]

2. Paragraph (a)(2) of § 24.4 is

amended by adding at the end of the

paragraph ‘‘and’’.

3. Paragraph (a)(3) of § 24.4 is

amended by removing ‘‘; and’’ at the

end of the paragraph and adding a

period.

4. Paragraph (a)(4) of § 24.4 is

removed.

Dated: December 15, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 95–31020 Filed 12–27–95; 8:45 am]

BILLING CODE 4810–33–P

FEDERAL RESERVE SYSTEM

12 CFR Part 211

[Regulation K; Docket No. R–0896]

International Operations of United

States Banking Organizations

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: This final rule amends

Subpart A of Regulation K (International

Operations of U.S. Banking

Organizations) to provide expanded

general consent authority for

investments in foreign companies by
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Rules and Regulations 67051

1 In the case of an Edge corporation not engaged

in banking, the relevant general consent limit is the

lesser of $25 million or 25 percent of its Tier 1

capital.

2The member bank also may not be subject to any

written agreement, order, capital directive, or

prompt corrective action directive issued by the

Board to meet and maintain a specific capital level

for any capital measure. 12 CFR 208.33(b)(1).

U.S. banking organizations that are

strongly capitalized and well managed.

This expanded authority is designed to

permit U.S. banking organizations

meeting these requirements to make

larger investments without the need for

prior approval or review. Certain

investments or activities, however, are

not eligible for the expanded authority.

The final rule requires an investor

making use of the expanded authority to

provide the Board with certain

information after an investment has

been made. In addition, for those

investments requiring prior notice to the

Board, the rule would streamline the

processing of such notices.

EFFECTIVE DATE: December 21, 1995.

FOR FURTHER INFORMATION CONTACT:

Kathleen M. O’Day, Associate General

Counsel (202/452–3786), Sandra L.

Richardson, Managing Senior Counsel

(202/452–6406), Jonathan D. Stoloff,

Senior Attorney (202/452–3269), or

Andres L. Navarrete, Attorney (202/

452–2300), Legal Division; William A.

Ryback, Associate Director (202/452–

2722), Michael G. Martinson, Assistant

Director (202/452–2798), or Betsy Cross,

Manager (202/452–2574), Division of

Banking Supervision and Regulation,

Board of Governors of the Federal

Reserve System. For the users of

Telecommunication Device for the Deaf

(TDD) only, please contact Dorothea

Thompson (202/452–3544), Board of

Governors of the Federal Reserve

System, 20th and C Streets, N.W.,

Washington, D.C. 20551.

SUPPLEMENTARY INFORMATION: Subpart A

of the Board’s Regulation K sets out the

rules governing the foreign activities of

U.S. banking organizations, including

procedures for making investments in

foreign banking and non-banking

organizations. Under section 211.5(c),

all such investments, whether made

directly or indirectly, are required to be

made in accordance with the general

consent, prior notice, or specific consent

procedures contained in that paragraph.

12 CFR 211.5(c). No prior notice or

application is required for any

investment that falls within the general

consent authority. Such authority at

present is limited to investments where

the total amount invested in any one

organization, in one transaction or a

series of transactions, does not exceed

the lesser of $25 million or 5 percent of

the investor’s Tier 1 capital where the

investor is a member bank, bank holding

company, or Edge corporation engaged

in banking.1

On September 25, 1995, the Board

requested public comment on a

proposed rule that would expand the

general consent authority for strongly

capitalized and well-managed banking

organizations. 60 FR 49350. The

expanded general consent authority

(expanded authority) was intended to

reduce the burden associated with

obtaining approval for such investments

for U.S. banking organizations meeting

these requirements. The comment

period ended on October 30, 1995. The

Board received nine public comments

on the proposal. Comments were

submitted by six banking organizations

and three trade associations. The Board

has considered the comments and, as a

result of its further review, has made

several changes to address these

comments in the final rule.

The final rule removes the current $25

million cap on general consent

investments, which is currently the

binding constraint on such investment

in almost all cases, and instead ties the

expanded general consent limits to the

capital of the investor. An aggregate

limit on investments made in any 12-

month period under the expanded

authority is established. The final rule

also specifies the nature of investments

eligible for the expanded authority, as

well as the types of activities that may

be conducted by the organization in

which the investment is to be made.

Comments received regarding each of

these areas are discussed below.

Investor Eligibility for Expanded

General Consent

The final rule limits the expanded

general consent authority to those

investors that are strongly capitalized

and well managed. The expanded

authority is available for investments by

member banks, bank holding

companies, Edge corporations that are

not engaged in banking, and agreement

corporations. The expanded authority is

available only where the investor, its

parent member bank, if any, and the

bank holding company are strongly

capitalized and well managed, as those

terms are defined by the Board. Strongly

capitalized, in relation to member

banks, is defined with reference to the

definition of ‘‘well capitalized’’ set out

in the prompt corrective action

standards, which requires, at a

minimum, a 6 percent tier 1 and 10

percent total risk-based capital ratio and

a leverage ratio of 5 percent.2 12 CFR

208.33(b)(1). Edge or agreement

corporations and bank holding

companies are required to have a total

risk-based capital ratio of 10 percent or

more in order to be considered strongly

capitalized for purposes of the

expanded authority.

One commenter asked for clarification

with respect to the applicability of the

capital tests, maintaining that the

capital requirement should apply only

to the investor and entities that control

the investor. Section 211.5(c)(2)(i)(F) of

the proposed rule indicates that this is

in fact the requirement.

Another commenter pointed out that

risk-based capital ratios have not been

applicable previously to Edge

corporations not engaged in banking.

The Board notes this comment but

considers that calculating such a ratio

would not impose an undue burden on

those investors seeking to utilize the

expanded authority.

The definition of well managed

included in the proposed rule provided

that, in order to be considered well

managed, the Edge or agreement

corporation, its parent member bank, if

any, and the bank holding company

must each have received a composite

rating of at least 1 or 2, with no

component below 3, at its most recent

examination or review. Comments

submitted advocated relying solely

upon the composite rating for purposes

of the ‘‘well managed’’ definition. The

final rule incorporates this change.

However, an additional element also has

been incorporated in the definition to

clarify that any investor that is under a

formal supervisory action would be

ineligible to take advantage of the

expanded authority. The Board believes

the existence of any such supervisory

action would be indicative of

managerial deficiencies such that the

expanded authority should not be

available.

Individual Investment Limit

Limits were proposed on the

expanded authority that were tied to the

level of capital of the investor. For Edge

or agreement corporations, the relevant

limits were proposed to be no more than

the lesser of 20 percent of the Edge or

agreement corporation’s tier 1 capital or

2 percent of the tier 1 capital of its

parent member bank. For member banks

and bank holding companies, the

proposed limit was no more than 2

percent of tier 1 capital.

One commenter proposed that the

limit be raised to at least 2.5 percent of

total capital. Several commenters noted

that the existing general consent

authority in Regulation K sets the limit

at 5 percent of tier 1 capital, and

advocated retention of the higher limit.
67052 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Rules and Regulations

The Board notes, however, that the

current limit is expressed as the lesser

of $25 million or 5 percent of tier 1

capital; the $25 million limit on general

consent investments has proved to be

the constraining factor, particularly for

U.S. banking organizations that would

meet the strongly capitalized standard.

The Board believes that a general

consent limit of 5 percent of tier 1

capital, in the absence of an absolute

dollar cap, would be too high even for

organizations that are strongly

capitalized and well managed because

an initial capital investment in, for

example, a subsidiary, may be leveraged

many times resulting in a potential total

exposure far in excess of the initial 5%

of capital. The Board has therefore

decided to retain the proposed 2 percent

limit in the final rule.

In response to a comment seeking

clarification that the existing

authorization for general consent

investments will continue to be

available, the Board notes that the

expanded authority is parallel authority

for making investments by banking

organizations that meet the strongly

capitalized and well managed

standards. As is clear from section

211.5(c)(2)(i)(B) and (C) of Regulation K,

however, the limits on investment in

any one organization apply on a

cumulative basis over time and include

investments made under the existing as

well as the expanded authority.

Several commenters argued that

expanded authority should be available

for additional investments in existing

subsidiaries. The Board notes that, as

indicated in section 211.5(c)(2)(iv)(D) of

the final rule, using the expanded

authority for making additional

investments in existing subsidiaries and

joint ventures is permissible under the

terms of the final rule, subject to the

investment limits and the other

investment restrictions.

Aggregate Investment Limit

The proposed rule provided for an

overall aggregate investment limit on all

investments made during the previous

12-month period under the existing and

the expanded authority. Under this

limit, all such investments, when

aggregated with the proposed

investment, may not exceed the lesser of

50 percent of the Edge or agreement

corporation’s total capital or 5 percent

of the parent member bank’s total

capital, in the case of an Edge or

agreement corporation, or 5 percent of

its total capital, in the case of a member

bank or a bank holding company. A

number of commenters supported the

Board’s position that the aggregate

limits apply only to general consent

investments and not to investments

made pursuant to prior notice or

specific consent.

However, one commenter argued that

investments made under existing

general consent authority should not

count toward the aggregate limit

because once the aggregate limit is

reached, prior notice would be required

for small investments representing little

risk to the investor. The Board agrees

that the additional regulatory burden

associated with including investments

made under the existing general consent

authority in calculating the aggregate

limits outweighs any supervisory

benefits. Accordingly, the aggregate

limit shall apply only to investments

made under the expanded general

consent authority.

The proposal also provided that, in

determining compliance with the

aggregate limits and in order to avoid

double counting of investments, an

investment in a subsidiary shall be

counted only once notwithstanding that

such subsidiary may, within the next 12

months, downstream all or part of such

investment to another subsidiary.

Several commenters argued for a longer

time period in which to make

downstream investments or that no time

limit should be imposed. The Board

believes the 12 month time limit should

be retained as it strikes an appropriate

balance between easing regulatory

burden and maintaining adequate

oversight, given that the condition of a

banking organization may change over

time. Supervisory views regarding

downstreaming investments also may

change over time in light of changed

circumstances.

One commenter argued that

downstream investments should not be

subject to the individual investment

limits as well as the aggregate

investment limits. However, the Board

believes that supervisory concerns

regarding the need to monitor

diversification of investments in view of

any changed circumstances relating to

the investor means that the limits on

investments in one organization should

include downstream investments.

Finally, a commenter argued that

restructurings (through the contribution

of an investment from one affiliate to

another) should also be encompassed

within the same exclusion as that

provided for downstream investments.

The Board notes in response to this

comment that Regulation K already

provides general consent authority for

transfers among affiliates at net asset

value.

Eligible Investments

The proposal limited the types of

investments eligible for the expanded

authority, as well as the types of

activities that may be conducted by the

organization in which the investment is

to be made. Ineligible investments

included an investor’s initial entry into

a foreign country, the establishment or

acquisition of an initial subsidiary bank

in a foreign country, investments in

general partnerships or unlimited

liability companies, and an acquisition

of shares or assets of a corporation that

is not an affiliate of the investor.

Exclusion of the latter type of

acquisition was intended to limit the

expanded authority to investments in de

novo subsidiaries (including subsequent

investments in such subsidiaries) by

excluding the acquisition of going

concerns.

Commenters requested clarification as

to whether additional investments made

in existing subsidiaries and joint

ventures would be eligible investments

under the expanded authority. The final

rule authorizes investments in existing

subsidiaries and joint ventures,

provided they meet the remaining

criteria for eligible investments and the

criteria for eligible activities.

Several commenters opposed the

proposal’s exclusion of initial

acquisitions of going concerns from the

expanded investment authority.

However, the Board continues to believe

such exclusion is appropriate in light of

the potential additional risk associated

with such investments. These risks are

greater than simply the amount of

capital invested, extending also, for

example, to the value and quality of the

acquired organization’s assets. The

Board therefore considers that prior

notice of such an investment is

appropriate.

Several commenters argued that the

acquisition or establishment of an initial

bank subsidiary in a foreign country

should be permissible without prior

notice to the Board where the investor

already has a branch in that country.

The Board believes that such a change

may be inconsistent with its

responsibility as home country

supervisor under the Minimum

Standards for Supervision of

Internationally Active Banks established

by the Basle Supervisors Committee, in

those cases where the Board has not

previously approved or reviewed the

establishment of a significant subsidiary

bank in that country. The Minimum

Standards contemplate that the home

country supervisor should specifically

authorize any outward expansion by a

bank, both to inform the home country
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Rules and Regulations 67053

supervisor of the intention of the bank

to operate in another country and to

provide the host supervisor with the

comfort that the home supervisor does

not object to the expansion and takes

responsibility for the supervision of the

branch or subsidiary bank.

Consequently, the Board believes it is

appropriate to retain the prior notice

requirement for establishment of an

initial subsidiary bank in another

country under the expanded authority.

Post-investment Notice

The proposal required an investor

making use of the expanded authority to

provide the Board with a postinvestment notice within 10 business

days of making the investment.

However, the Board requested comment

on whether the requirements relating to

the post-investment notice could be

incorporated into existing reporting

requirements.

Several commenters argued the postinvestment notice would be

unnecessary and inconsistent with the

goal of reducing regulatory burden,

particularly since investors are required

to report acquisitions of shares in

foreign organizations on an existing

Federal Reserve form (F.R. 2064) by the

end of the month following the month

in which the investment was made.

Commenters maintained that the Board

already has sufficient information to

monitor investments in foreign

subsidiaries through existing reporting

and examination authority. Based upon

the comments, the Board has decided to

eliminate the 10 business day notice

requirement. However, the Board has

determined that certain limited

additional information that is not at

present provided in the FR 2064 is

required to be submitted; such

information may be submitted on the

same schedule as the FR 2064, namely,

by the end of the month following the

month in which the investment was

made.

The Board agrees with those

commenters who argued that additional

information should be limited to cover

specific areas of potential risks

regarding investments made under the

expanded general consent authority and

accordingly has narrowed the

information that would be required to

be submitted following exercise of the

expanded authority. More specifically,

the information that would be required

under the final rule is limited to: the

respective responsibilities of the parties

if the investment is a joint venture; one

year projections for the organization in

which the investment is made; and,

where the investment is to redress a

loss, a description of the reasons for the

loss and the steps taken to address the

problem. This would provide to the

Board the minimum information

necessary to monitor any additional

risks posed by such investments.

One commenter requested

clarification as to whether or not the

post-investment notice is intended to

cover investments made pursuant to the

existing general consent authority,

which would make the proposal more

restrictive than the present requirements

for general consent investments. The

Board notes that the post-investment

notice would be required only in

relation to investments made under the

expanded authority.

In response to another comment, the

Board wishes to clarify that investments

in newly established companies are not

precluded by the restriction on the

acquisition of shares or assets of an

organization that is not an affiliate or

joint venture of the investor.

Processing Procedures

The final rule incorporates the change

in processing procedures indicating that

the 45 day period commences upon

receipt of the notice or application to

invest in a foreign company.

Commenters generally supported this

change in processing procedures.

Finally, one commenter noted

generally that Regulation K is a

technically difficult regulation and

expressed concern that the proposed

revisions, by incorporating additional

technical language, would have the side

effect of further diminishing the

readability of the regulation. The Board

notes that the five year review of

Regulation K mandated by the

International Banking Act of 1978 is

now underway. Ways in which

Regulation K may be simplified will be

considered during the course of that

review.

Regulatory Flexibility Analysis

Pursuant to section 605(b) of the

Regulatory Flexibility Act (Pub. L. 96–

354, 5 U.S.C. 601 et seq.), the Board

certifies that this final rule will not have

a significant economic impact on a

substantial number of small entities that

are subject to the regulation.

Pursuant to 5 U.S.C. 553(d), this

amendment to Regulation K will

become effective immediately. This

final rule grants an exemption for

certain U.S. banking organizations, and

therefore the Board waives the 30 day

general requirement for publication of a

substantive rule.

Paperwork Reduction Act Analysis

In accordance with section 3506 of

the Paperwork Reduction Act of 1995

(44 U.S.C. Ch. 35; 5 CFR 1320 Appendix

A.1), the Board reviewed the rule under

the authority delegated to the Board by

the Office of Management and Budget.

The collection of information

requirements in this regulation are

found in 12 CFR 211.5(c). The

submission of this information is

mandatory under sections 25 and 25A of

the Federal Reserve Act (12 U.S.C. 601–

604(a) and 611–631) and sections

4(c)(13), 4(c)(14), and 5(c) of the Bank

Holding Company Act (12 U.S.C.

1843(c)(13), 1843(c)(14) and 1844(c)) to

evidence compliance with the

requirements of Regulation K. The

Federal Reserve uses the information to

monitor the international operations of

U.S. banking organizations, and to fulfill

its supervisory responsibilities under

Regulation K. The respondents are

banks, bank holding companies, and

Edge and agreement corporations.

The Federal Reserve may not conduct

or sponsor, and an organization is not

required to respond to, this information

collection unless it displays a currently

valid OMB control number. The OMB

control number is 7100–0107.

No comments specifically addressing

the estimate burden were received.

The Federal Reserve estimates that,

based on 1995 data, 10 responses per

year will be filed by U.S. banking

organizations under the expanded

general consent authority. Currently, the

investments that will be permitted

under expanded general consent require

prior notification on the form for

International Applications and Prior

Notifications under Subparts A and C of

Regulation K (FR K–1; OMB No. 7100–

0107). The estimated burden for each

prior notification can range from 1 to 10

hours, depending on its complexity.

Under the revised rule, an investor will

no longer submit information prior to

the investment; instead, it will submit

limited information regarding specific

areas of potential risks of the investment

after the investment is made. The

volume of this information will vary

depending on the type of investment;

the annual burden per respondent is

estimated to be .5 hours, on average.

Based on an hourly cost of $20, the

annual cost to the public is estimated to

be $100. There are no start up costs or

capital costs.

The information collected is not

deemed confidential. The applying

organization has the opportunity to

request confidentiality for information

that it believes will qualify for a

Freedom of Information Act exemption.

Send comments regarding the burden

estimate, or any other aspect of this

collection of information, including

suggestions for reducing the burden, to:
67054 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Rules and Regulations

Secretary, Board of Governors of the

Federal Reserve System, 20th and C

Streets, N.W., Washington, DC 20551;

and to the Office of Management and

Budget, Paperwork Reduction Project

(7100–0107), Washington, DC 20503.

List of Subjects in 12 CFR Part 211

Exports, Federal Reserve System,

Foreign banking, Holding companies,

Investments, Reporting and

recordkeeping requirements.

For the reasons set out in the

preamble, the Board of Governors

amends 12 CFR Part 211 as set forth

below:

PART 211—INTERNATIONAL

BANKING OPERATIONS

(REGULATION K)

1. The authority citation for Part 211

is revised to read as follows:

Authority: 12 U.S.C. 221 et seq., 1818,

1841 et seq., 3101 et seq., 3901 et seq.

2. Section 211.2 is amended by

redesignating paragraphs (u) and (v) as

paragraphs (v) and (w), respectively,

and by adding new paragraphs (u) and

(x) to read as follows:

§ 211.2 Definitions.

* * * * *

(u) Strongly capitalized means:

(1) In relation to a parent member

bank, that the standards set out in 12

CFR 208.33(b)(1) are satisfied; and

(2) In relation to an Edge or

Agreement corporation or a bank

holding company, that it has a total riskbased capital ratio of 10.0 percent or

greater.

* * * * *

(x) Well managed means that the Edge

or Agreement corporation, its parent

member bank, if any, and the bank

holding company have each received a

composite rating of 1 or 2 at its most

recent examination or review and are

not subject to any supervisory

enforcement action.

3. Section 211.5 is amended by:

a. Redesignating paragraphs (c)(2) and

(c)(3) as paragraphs (c)(3) and (c)(4)

respectively and by adding a new

paragraph (c)(2); and

b. In newly designated paragraph

(c)(3), by removing the word ‘‘accepted’’

in the third sentence and adding in its

place the word ‘‘received’’.

The addition reads as follows:

§ 211.5 Investments and activities abroad.

* * * * *

(c) * * *

* * * * *

(2)(i) Expanded general consent for de

novo investments. Notwithstanding the

amount limitations of paragraph (c)(1) of

this section, but subject to the other

limitations of this section, the Board

grants expanded general consent

authority for investments in an

organization by an investor that is

strongly capitalized and well managed

if:

(A) The activities of the organization

are limited to activities in which a

national bank may engage directly or in

which a subsidiary may engage under

paragraph (d) of this section;

(B) In the case of an investor that is

an Edge corporation that is not engaged

in banking or an Agreement corporation,

the total amount invested in such

organization (in one transaction or a

series of transactions) does not exceed

the lesser of 20 percent of the investor’s

Tier 1 capital or 2 percent of the Tier 1

capital of the parent member bank;

(C) In the case of a bank holding

company or member bank investor, the

total amount invested in such

organization (in one transaction or a

series of transactions) directly or

indirectly does not exceed 2 percent of

the investor’s Tier 1 capital;

(D) All investments made, directly or

indirectly, by an Edge corporation not

engaged in banking or an Agreement

corporation during the previous 12-

month period under paragraph (c)(2) of

this section, when aggregated with the

proposed investment, would not exceed

the lesser of 50 percent of the total

capital of the Edge or Agreement

corporation, or 5 percent of the total

capital of the parent member bank;

(E) All investments made, directly or

indirectly, by a member bank or a bank

holding company during the previous

12-month period under paragraph (c)(2)

of this section, when aggregated with

the proposed investment, would not

exceed 5 percent of its total capital; and

(F) Both before and immediately after

the proposed investment the investor,

its parent member bank, if any, and any

parent bank holding company are

strongly capitalized and well managed.

(ii) Determining aggregate investment

limits. For purposes of determining

compliance with the aggregate

investment limits set out in paragraphs

(c)(2)(i)(D) and (E) of this section, an

investment by an investor in a

subsidiary shall be counted only once

notwithstanding that such subsidiary

may, within 12 months of the date of

making the investment, downstream all

or any part of such investment to

another subsidiary.

(iii) Additional investments. An

investor that makes investments under

paragraph (c)(2)(i) of this section may

also make additional investments in an

organization under the standards set

forth in paragraphs (c)(1)(ii), (c)(1)(iii)

and (c)(1)(iv) of this section.

(iv) Ineligible investments. The

following investments are not eligible

for the general consent under paragraph

(c)(2)(i) of this section:

(A) An investment in a foreign

country where the investor does not

have an affiliate or a branch;

(B) The establishment or acquisition

of an initial subsidiary bank in a foreign

country;

(C) Investments in general

partnerships or unlimited liability

companies; and

(D) An acquisition of shares or assets

of an organization that is not an affiliate

or joint venture of the investor.

(v) Post-investment notice. By the end

of the month following the month in

which the investment is made, the

investor shall provide the Board with

the following information relating to the

investment:

(A) If the investment is in a joint

venture, the respective responsibilities

of the parties to the joint venture;

(B) Projections for the organization in

which the investment is made for the

first year following the investment; and

(C) Where the investment is made in

an organization that incurred a loss in

the last year, a description of the

reasons for the loss and the steps taken

to address the problem.

* * * * *

By order of the Board of Governors of the

Federal Reserve System, December 21, 1995.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 95–31362 Filed 12–27–95; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 327

Assessments

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Final rule; correction.

SUMMARY: The FDIC published a final

rule (60 FR 42680, August 16, 1995) that

established a new assessment rate

schedule of 4 to 31 basis points for

institutions whose deposits are subject

to assessment by the Bank Insurance

Fund (BIF); widened the assessment rate

spread from 8 to 27 points; and

established a procedure for adjusting the

rate schedule semiannually as necessary

to maintain the designated reserve ratio

at 1.25 percent. This document corrects

three typographical errors in the final

rule.