Both structures can make and manage loans, conduct foreign exchange activities and trade in securities and commercial paper. These offices may conduct most of the activities a domestic bank performs. State governments and the Office of the Comptroller of the Currency separately license and supervise foreign bank branches and agencies. The Federal Reserve serves as the federal regulator of state-licensed foreign bank branches and agencies, in a system similar to that for domestic banks. Foreign banks may also establish representative offices in the United States.
Representative offices have more limited powers than branches or agencies.
Foreign banks often open representative offices as a first step in establishing a presence in America. They may develop relationships with prospective clients, but they cannot conduct any banking transactions themselves. Representative offices must register with the Federal Reserve, and may be licensed by states as well. Domestic banking organizations may also establish Edge Act or agreement corporations. These offices have a broader range of powers than other banking organizations, but all of their activities must relate to international trade.