[Code of Federal Regulations]
[Title 12, Volume 3]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR223.41]

[Page 72-73]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 223--TRANSACTIONS BETWEEN MEMBER BANKS AND THEIR AFFILIATES (REGULATION W)--Table of Contents
 
        Subpart E--Exemptions from the Provisions of Section 23A
 
Sec. 223.41  What covered transactions are exempt from the quantitative limits and collateral requirements?


    The following transactions are not subject to the quantitative 
limits of Secs. 223.11 and 223.12 or the collateral requirements of 
Sec. 223.14. The transactions are, however, subject to the safety and 
soundness requirement of Sec. 223.13 and the prohibition on the purchase 
of a low-quality asset of Sec. 223.15.
    (a) Parent institution/subsidiary institution transactions. 
Transactions with a depository institution if the member bank controls 
80 percent or more of the voting securities of the depository 
institution or the depository institution controls 80 percent or more of 
the voting securities of the member bank.
    (b) Transactions between a member bank and a depository institution 
owned

[[Page 73]]

by the same holding company. Transactions with a depository institution 
if the same company controls 80 percent or more of the voting securities 
of the member bank and the depository institution.
    (c) Certain loan purchases from an affiliated depository 
institution. Purchasing a loan on a nonrecourse basis from an affiliated 
depository institution.
    (d) Internal corporate reorganization transactions. Purchasing 
assets from an affiliate (including in connection with a transfer of 
securities issued by an affiliate to a member bank described in 
paragraph (a) of Sec. 223.31), if:
    (1) The asset purchase is part of an internal corporate 
reorganization of a holding company and involves the transfer of all or 
substantially all of the shares or assets of an affiliate or of a 
division or department of an affiliate;
    (2) The member bank provides its appropriate Federal banking agency 
and the Board with written notice of the transaction before 
consummation, including a description of the primary business activities 
of the affiliate and an indication of the proposed date of the asset 
purchase;
    (3) The member bank's top-tier holding company commits to its 
appropriate Federal banking agency and the Board before consummation 
either:
    (i) To make quarterly cash contributions to the member bank, for a 
two-year period following the member bank's purchase, equal to the book 
value plus any write-downs taken by the member bank, of any transferred 
assets that have become low-quality assets during the quarter; or
    (ii) To repurchase, on a quarterly basis for a two-year period 
following the member bank's purchase, at a price equal to the book value 
plus any write-downs taken by the member bank, any transferred assets 
that have become low-quality assets during the quarter;
    (4) The member bank's top-tier holding company complies with the 
commitment made under paragraph (d)(3) of this section;
    (5) A majority of the member bank's directors reviews and approves 
the transaction before consummation;
    (6) The value of the covered transaction (as computed under this 
part), when aggregated with the value of any other covered transactions 
(as computed under this part) engaged in by the member bank under this 
exemption during the preceding 12 calendar months, represents less than 
10 percent of the member bank's capital stock and surplus (or such 
higher amount, up to 25 percent of the member bank's capital stock and 
surplus, as may be permitted by the member bank's appropriate Federal 
banking agency after conducting a review of the member bank's financial 
condition and the quality of the assets transferred to the member bank); 
and
    (7) The holding company and all its subsidiary member banks and 
other subsidiary depository institutions are well capitalized and well 
managed and would remain well capitalized upon consummation of the 
transaction.