US Federal Reserve Board Adopts Enhanced Prudential and Intermediate Holding Company Requirements for Foreign Banking Organizations

April 09, 2014

The Federal Reserve Board (Board) recently adopted final rules representing the most significant change in U.S. regulation of foreign banking organizations (FBOs) since the International Banking Act of 1978. Perhaps most significantly, the rules require that many large FBOs establish a U.S. intermediate holding company (IHC) that will become the focal point of the regulation and supervision of their U.S. banking and non-banking subsidiaries. An IHC generally must comply with the same capital, liquidity and other enhanced prudential requirements applicable to large domestic bank holding companies (BHCs), regardless of whether the IHC actually controls a bank.

This OnPoint summarizes the significant aspects of the final rules and highlights some of the practical implications and challenges facing FBOs. Please refer to the Appendix for a chart summarizing the key requirements based on the size of the FBO and the extent of its U.S. operations.

Read "U.S. Federal Reserve Board Adopts Enhanced Prudential and Intermediate Holding Company Requirements for Foreign Banking Organizations."