[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: 12CFR250.200]

[Page 677-678]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 250--MISCELLANEOUS INTERPRETATIONS--Table of Contents
 
Sec. 250.200  Investment in bank premises by holding company banks.

    (a) The Board of Governors has been asked whether, in determining 
under section 24A of the Federal Reserve Act (12 U.S.C. 371d) how much 
may be invested in bank premises without prior Board approval, a State 
member bank, which is owned by a registered bank holding company, is 
required to include indebtedness of a corporation, wholly owned by the 
holding company, that is engaged in holding premises of banks in the 
holding company system.
    (b) Section 24A provides, in part, as follows:

    Hereafter * * * no State member bank, without the approval of the 
Board of Governors of the Federal Reserve System, shall (1) invest in 
bank premises, or in the stock, bonds, debentures, or other such 
obligations of any corporation holding the premises of such bank or (2) 
make loans to or upon the security of the stock of any such corporation, 
if the aggregate of all such investments and loans, together with the 
amount of any indebtedness incurred by any such corporation which is an 
affiliate of the bank, as defined in section 2 of the Banking Act of 
1933, as amended [12 U.S.C. 221a], will exceed the amount of the capital 
stock of such banks.

    (c) A corporation that is owned by a holding company is an 
``affiliate of each of the holding company's majority-owned banks as 
that term is defined in said section 2. Therefore, under the explicit 
provisions of section 24A, each State member bank, any part of whose 
premises is owned by such an affiliate, must include the affiliate's 
total indebtedness in determining whether a proposed premises investment 
by the bank would cause the aggregate figure to exceed the amount of the 
bank's capital stock, so that the Board's prior approval would be 
required. Where the affiliate holds the premises of a number of the 
holding company's banks, the amount of the affiliate's indebtedness may 
be so large that Board approval is required for every proposed 
investment in bank premises by each majority-owned State member bank, to 
which the entire indebtedness of the affiliate is required to be 
attributed. The Board believes that, in these circumstances, individual 
approvals are not essential to effectuate the purpose of section 24A, 
which is to safeguard the soundness and liquidity of member banks, and 
that the protection sought by Congress can be achieved by a suitably 
circumscribed general approval.
    (d) Accordingly the Board hereby grants general approval for any 
investment or loan (as described in section 24A) by any State member 
bank, the majority of the stock of which is owned by a registered bank 
holding company, if the proposed investment or loan will not cause 
either (1) all such investments and loans by the member bank (together 
with the indebtedness of any bank premises subsidiary thereof) to exceed 
100 percent of the bank's capital

[[Page 678]]

stock, or (2) the aggregate of such investments and loans by all of the 
holding company's subsidiary banks (together with the indebtedness of 
any bank premises affiliates thereof) to exceed 100 percent of the 
aggregate capital stock of said banks.

(12 U.S.C. 221a, 371d)