[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR211.26]

[Page 378-379]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)--Table of Contents
 
                Subpart B--Foreign Banking Organizations
 
Sec. 211.26  Examination of offices and affiliates of foreign banks.

    (a) Conduct of examinations--(1) Examination of branches, agencies, 
commercial lending companies, and affiliates. The Board may examine:
    (i) Any branch or agency of a foreign bank;
    (ii) Any commercial lending company or bank controlled by one or 
more foreign banks, or one or more foreign companies that control a 
foreign bank; and
    (iii) Any other office or affiliate of a foreign bank conducting 
business in any state.
    (2) Examination of representative offices. The Board may examine any 
representative office in the manner and with the frequency it deems 
appropriate.
    (b) Coordination of examinations. To the extent possible, the Board 
shall coordinate its examinations of the U.S. offices and U.S. 
affiliates of a foreign bank with the licensing authority and, in the 
case of an insured branch, the Federal Deposit Insurance Corporation 
(FDIC), including through simultaneous examinations of the U.S. offices 
and U.S. affiliates of a foreign bank.
    (c) Frequency of on-site examination--(1) General. Each branch or 
agency of a foreign bank shall be examined on-site at least once during 
each 12-month period (beginning on the date the most recent examination 
of the office ended) by--
    (i) The Board;
    (ii) The FDIC, if the branch of the foreign bank accepts or 
maintains insured deposits;
    (iii) The Comptroller, if the branch or agency of the foreign bank 
is licensed by the Comptroller; or

[[Page 379]]

    (iv) The state supervisor, if the office of the foreign bank is 
licensed or chartered by the state.
    (2) 18-month cycle for certain small institutions--(i) Mandatory 
standards. The Board may conduct a full-scope, on-site examination at 
least once during each 18-month period, rather than each 12-month period 
as required in paragraph (c)(1) of this section, if the branch or 
agency--
    (A) Has total assets of $250 million or less;
    (B) Has received a composite ROCA supervisory rating (which rates 
risk management, operational controls, compliance, and asset quality) of 
1 or 2 at its most recent examination;
    (C) Satisfies the requirement of either the following paragraph 
(c)(2)(i)(C)(1) or (2):
    (1) The foreign bank's most recently reported capital adequacy 
position consists of, or is equivalent to, tier 1 and total risk-based 
capital ratios of at least 6 percent and 10 percent, respectively, on a 
consolidated basis; or
    (2) The branch or agency has maintained on a daily basis, over the 
past three quarters, eligible assets in an amount not less than 108 
percent of the preceding quarter's average third-party liabilities 
(determined consistent with applicable federal and state law) and 
sufficient liquidity is currently available to meet its obligations to 
third parties;
    (D) Is not subject to a formal enforcement action or order by the 
Board, FDIC, or OCC; and
    (E) Has not experienced a change in control during the preceding 12-
month period in which a full-scope, on-site examination would have been 
required but for this section.
    (ii) Discretionary standards. In determining whether a branch or 
agency of a foreign bank that meets the standards of paragraph (c)(2)(i) 
of this section should not be eligible for an 18-month examination cycle 
pursuant to this paragraph (c)(2), the Board may consider additional 
factors, including whether--
    (A) Any of the individual components of the ROCA supervisory rating 
of a branch or agency of a foreign bank is rated ``3'' or worse;
    (B) The results of any off-site surveillance indicate a 
deterioration in the condition of the office;
    (C) The size, relative importance, and role of a particular office 
when reviewed in the context of the foreign bank's entire U.S. 
operations otherwise necessitate an annual examination; and
    (D) The condition of the foreign bank gives rise to such a need.
    (3) Authority to conduct more frequent examinations. Nothing in 
paragraphs (c)(1) and (2) of this section limits the authority of the 
Board to examine any U.S. branch or agency of a foreign bank as 
frequently as it deems necessary.