[Code of Federal Regulations]
[Title 12, Volume 2, Parts 200 to 219]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR208.71]

[Page 199]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H)--Table of Contents
 
         Subpart G--Financial Subsidiaries of State Member Banks
 
Sec. 208.71  What are the requirements to invest in or control a financial subsidiary?

    Source: Reg. H, 65 FR 14814, Mar. 20, 2000, unless otherwise noted.


    (a) In general. A state member bank may control, or hold an interest 
in, a financial subsidiary only if:
    (1) The state member bank and each depository institution affiliate 
of the state member bank are well capitalized and well managed;
    (2) The aggregate consolidated total assets of all financial 
subsidiaries of the state member bank do not exceed the lesser of:
    (i) 45 percent of the consolidated total assets of the parent bank; 
or
    (ii) $50,000,000,000, which dollar amount shall be adjusted 
according to an indexing mechanism jointly established by the Board and 
the Secretary of the Treasury;
    (3) The state member bank, if it is one of the largest 100 insured 
banks (based on consolidated total assets of the bank as of the end of 
each calendar year), meets the debt rating or alternative requirement of 
paragraph (b) of this section, if applicable; and
    (4) The Board or the appropriate Reserve Bank has approved the bank 
to acquire the interest in or control the financial subsidiary under 
Sec. 208.76.
    (b) Debt rating or alternative requirement for 100 largest insured 
banks--(1) General. A state member bank meets the debt rating or 
alternative requirement of this paragraph (b) if:
    (i) The bank has at least one issue of outstanding eligible debt 
that is currently rated in one of the three highest investment grade 
rating categories by a nationally recognized statistical rating 
organization; or
    (ii) If the bank is one of the second 50 largest insured banks 
(based on consolidated total assets of the bank as of the end of each 
calendar year), the bank satisfies any alternative criteria jointly 
established by the Board and the Secretary of the Treasury.
    (2) Financial subsidiaries engaged only in financial agency 
activities. This paragraph (b) does not apply to a state member bank if 
the financial subsidiaries of the bank engage in financial activities 
described in Sec. 208.72(a)(1) and (2) only in an agency capacity.
    (c) Alternative requirement. A state member bank satisfies the 
alternative criteria referenced in paragraph (b)(1)(ii) of this section 
if the bank has a current long-term issuer credit rating from at least 
one nationally recognized statistical rating organization that is within 
the three highest investment grade rating categories used by the 
organization.

[Reg. H, 65 FR 14814, 15052, Mar. 20, 2000]