(March 16 – 11:30 ET) – The U.S. Federal Reserve Board is moving to allow foreign banks operating in the U.S. to become financial holding companies. The change is designed to harmonize the requirements for foreign banks with the rules for domestic banks.
The interim rule became effective March 11, implementing part of the recent financial services reform legislation. The new law enables convergence of banking, insurance and the securities business.
The Fed’s change will allow foreign banks to have their new status within 31 days, providing that they meet management and capitalized standards. U.S. depository subsidiaries of foreign banks must also meet those requirements, as well as satisfactory community reinvestment Act ratings
The Fed is seeking industry comment on, “whether comprehensive consolidated supervision should be required in connection with comparability determinations on capital and management”. Comments on the entire set of changes are due by April 17.
-IE Staff