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December 6, 1996

Mr. John A. Pullen
Financial Specialist
Office of Comptroller
Department of Banking and Finance
101 East Gaines Street
Tallahassee, FL 32399-0350

Dear Mr. Pullen:

This is in response to your request to Banco Colpatria, S.A. ("Colpatria"), in a letter dated October 16, 1996, to obtain a statement from the Board of Governors of the Federal Reserve System ("Board") that the application to convert Colpatria's federal agency to a state licensed agency does not require Board approval.

This will confirm that the Board's approval is not required for the conversion of a federal agency to a state agency. Under the Board's Regulation K, a foreign bank, except in certain circumstances which do not apply here, must obtain the Board's approval before it establishes a branch, agency, or commercial lending company subsidiary in the United States. 12 CFR 211.24(a)(1)(i)(A). Regulation K defines "establish" to mean, inter alia, to "change the status of an office." 12 CFR 211.21(k)(4). To "change the status of an office" means to "convert a representative office into a branch or agency, or an agency into a branch." 12 CFR 211.21(e). Converting a federal agency into a state licensed agency is not a change in the status of an office and is not, consequently, an establishment of an office for the purposes of Regulation K.

The Board would expect, however, that Colpatria would notify the Board of any such conversion of the office pursuant to 12 CFR 211.24(a)(4).

If you have any further questions regarding this matter, please contact me at (202) 452-6406 or Michael Gaw at (202) 452-3900.

Sincerely,

(signed) Sandra L. Richardson

Sandra L. Richardson

Managing Senior Counsel


cc: Jose E. Sirven, Esq.

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