Federal Reserve Release, Press Release; image with eagle logo links to home page
Release Date: December 21, 2000

For immediate release

The Federal Reserve Board today approved a final rule setting forth procedures for domestic bank holding companies and foreign banking organizations to qualify as financial holding companies.

The rule, effective 30 days after publication in the Federal Register, also lists financial activities permissible for financial holding companies under the Gramm-Leach-Bliley Act.

The final rule reflects public comment submitted on the interim rule in effect since March 11, 2000.

With respect to foreign banks, the final rule:

  • Removes the Tier 1 leverage ratio from the numerical screening test in the definition of "well capitalized" and adds the leverage ratio to the list of factors the Board may take into account in determining whether a foreign bank's capital is comparable to that required of a U.S. bank owned by a financial holding company.
  • Adopts specific standards with respect to consolidated home country supervision in order for a foreign bank to be treated as a financial holding company.
  • Clarifies the definition of "well managed" used in the assessment required of the overall operations of the foreign bank by its home-country supervisor.
  • Revises the definition of "well-managed" to require a foreign bank to have a satisfactory composite rating for its U.S. branch and agency operations, rather than requiring each office individually to have a satisfactory rating.

The Board believes that the standards and procedures for foreign banks represent a flexible approach that takes into account the statutory requirement for comparability of capital and management standards while ensuring that foreign banks operating in the United States are offered national treatment and equality of competitive opportunity.

The Board's notice is attached.

Attachment (138 KB PDF)

2000 Banking and consumer regulatory policy

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Last update: December 21, 2000