[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: 12CFR211.4]

[Page 348-349]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)--Table of Contents
 
    Subpart A--International Operations of U.S. Banking Organizations
 
Sec. 211.4  Permissible activities and investments of foreign branches of member banks.

    (a) Permissible activities and investments. In addition to its 
general banking powers, and to the extent consistent with its charter, a 
foreign branch of a member bank may engage in the following activities 
and make the following investments, so far as is usual in connection 
with the business of banking in the country where it transacts business:
    (1) Guarantees. Guarantee debts, or otherwise agree to make payments 
on the occurrence of readily ascertainable events (including, but not 
limited to, nonpayment of taxes, rentals, customs duties, or costs of 
transport, and loss or nonconformance of shipping documents) if the 
guarantee or agreement

[[Page 349]]

specifies a maximum monetary liability; however, except to the extent 
that the member bank is fully secured, it may not have liabilities 
outstanding for any person on account of such guarantees or agreements 
which, when aggregated with other unsecured obligations of the same 
person, exceed the limit contained in section 5200(a)(1) of the Revised 
Statutes (12 U.S.C. 84) for loans and extensions of credit;
    (2) Government obligations. (i) Underwrite, distribute, buy, sell, 
and hold obligations of:
    (A) The national government of the country where the branch is 
located and any political subdivision of that country;
    (B) An agency or instrumentality of the national government of the 
country where the branch is located where such obligations are supported 
by the taxing authority, guarantee, or full faith and credit of that 
government;
    (C) The national government or political subdivision of any country, 
where such obligations are rated investment grade; and
    (D) An agency or instrumentality of any national government where 
such obligations are rated investment grade and are supported by the 
taxing authority, guarantee or full faith and credit of that government.
    (ii) No member bank, under authority of this paragraph (a)(2), may 
hold, or be under commitment with respect to, such obligations for its 
own account in relation to any one country in an amount exceeding the 
greater of:
    (A) 10 percent of its tier 1 capital; or
    (B) 10 percent of the total deposits of the bank's branches in that 
country on the preceding year-end call report date (or the date of 
acquisition of the branch, in the case of a branch that has not been so 
reported);
    (3) Other investments. (i) Invest in:
    (A) The securities of the central bank, clearinghouses, governmental 
entities other than those authorized under paragraph (a)(2) of this 
section, and government-sponsored development banks of the country where 
the foreign branch is located;
    (B) Other debt securities eligible to meet local reserve or similar 
requirements; and
    (C) Shares of automated electronic-payments networks, professional 
societies, schools, and the like necessary to the business of the 
branch;
    (ii) The total investments of a bank's branches in a country under 
this paragraph (a)(3) (exclusive of securities held as required by the 
law of that country or as authorized under section 5136 of the Revised 
Statutes (12 U.S.C. 24, Seventh)) may not exceed 1 percent of the total 
deposits of the bank's branches in that country on the preceding year-
end call report date (or on the date of acquisition of the branch, in 
the case of a branch that has not been so reported);
    (4) Real estate loans. Take liens or other encumbrances on foreign 
real estate in connection with its extensions of credit, whether or not 
of first priority and whether or not the real estate has been improved;
    (5) Insurance. Act as insurance agent or broker;
    (6) Employee benefits program. Pay to an employee of the branch, as 
part of an employee benefits program, a greater rate of interest than 
that paid to other depositors of the branch;
    (7) Repurchase agreements. Engage in repurchase agreements involving 
securities and commodities that are the functional equivalents of 
extensions of credit;
    (8) Investment in subsidiaries. With the Board's prior approval, 
acquire all of the shares of a company (except where local law requires 
other investors to hold directors' qualifying shares or similar types of 
instruments) that engages solely in activities:
    (i) In which the member bank is permitted to engage; or
    (ii) That are incidental to the activities of the foreign branch.
    (b) Other activities. With the Board's prior approval, engage in 
other activities that the Board determines are usual in connection with 
the transaction of the business of banking in the places where the 
member bank's branches transact business.