Rules Regarding Delegation of Authority: Delegation of Authority to the Secretary of the Board, Director of the Division of Supervision of Regulation, and Federal Reserve Banks, 31701-31707 [2019-13970]
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Rules and Regulations
$3,000 throughout the 30 days of November.
The average daily balance for the quarter is
$2,000, which results in $21 in interest
earned for the quarter. The annual percentage
yield earned would be shown on the periodic
statement for November. The annual
percentage yield earned (using the formula
above) is 4.28%:
APY Earned=100 [(1+21/2,000) (365/91)¥1]
APY Earned=4.28%
The following definition applies for use in
this formula (all other terms are defined
under part II):
‘‘Compounding’’ is the number of days in
each compounding period.
Assume an institution calculates interest
for the statement period using the daily
balance method, pays a 5.00% interest rate,
compounded annually, and provides
periodic statements for each monthly cycle.
The account has a daily balance of $1,000 for
a 30-day statement period. The interest
earned is $4.11 for the period, and the annual
percentage yield earned (using the special
formula above) is 5.00%:
APY Earned=5.00%
FEDERAL RESERVE SYSTEM
for competition after including deposits
of qualifying credit unions weighted at
50 percent and deposits of
‘‘commercially active’’ thrift institutions
weighted in most cases at 100 percent.
In a limited number of cases, deposits
of all thrifts would be weighted at 100
percent. To ensure the Board’s
delegation rules are consistent, the rule
also revises or rescinds, as appropriate,
certain existing delegations to the
Federal Reserve Banks, the Secretary of
the Board, and the Director of the
Division of Supervision and Regulation.
DATES: Effective July 3, 2019.
FOR FURTHER INFORMATION CONTACT:
Alison Thro, Assistant General Counsel,
(202) 452–3236, Scott Tkacz, Senior
Counsel, (202) 452–2744, or Jonah Kind,
Attorney, (202) 452–2045, Legal
Division, Susan Motyka, Deputy
Associate Director, (202) 452–5280,
Division of Supervision and Regulation,
Anthony Iwuji, Manager, (202) 452–
3254, Division of Consumer and
Community Affairs, Board of Governors
of the Federal Reserve System, 20th
Street and C Street NW, Washington, DC
20551.
SUPPLEMENTARY INFORMATION:
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Section 1030.7—Payment of Interest
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(c) Date interest begins to accrue.
1. Relation to Regulation CC. Institutions
may rely on the Expedited Funds Availability
Act (EFAA) and Regulation CC (12 CFR part
229) to determine, for example, when a
deposit is considered made for purposes of
interest accrual, or when interest need not be
paid on funds because a deposited check is
later returned unpaid.
2. Ledger and collected balances.
Institutions may calculate interest by using a
‘‘ledger’’ or ‘‘collected’’ balance method, as
long as the crediting requirements of the
EFAA are met (12 CFR 229.14).
3. Withdrawal of principal. Institutions
must accrue interest on funds until the funds
are withdrawn from the account. For
example, if a check is debited to an account
on a Tuesday, the institution must accrue
interest on those funds through Monday.
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By order of the Board of Governors of the
Federal Reserve System, June 20, 2019.
Ann E. Misback,
Secretary of the Board.
Dated: June 10, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2019–13668 Filed 7–1–19; 4:15 pm]
BILLING CODE 6210–01–P
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12 CFR Part 265
[Docket No. R–1667]
RIN No. 7100–AF 52
Rules Regarding Delegation of
Authority: Delegation of Authority to
the Secretary of the Board, Director of
the Division of Supervision of
Regulation, and Federal Reserve
Banks
Board of Governors of the
Federal Reserve System (Board).
ACTION: Final rule.
AGENCY:
The Board is amending its
rules regarding delegation of authority
to delegate to Federal Reserve Banks
authority to approve certain types of
applications, notices, and requests.
Under the rule, Federal Reserve Banks
are delegated authority to waive a
requirement to file certain applications
under the Bank Holding Company Act
and the Home Owners’ Loan Act; grant
or deny requests for modifying certain
commitments; authorize a state member
bank to make a public welfare
investment in accordance with section 9
of the Federal Reserve Act under certain
circumstances; and approve certain
requests, applications, and notices
relating to international banking
operations filed pursuant to the Board’s
Regulation K. The rule also modifies the
delegation rules by authorizing the
Federal Reserve Banks to approve
applications and notices concerning
mergers and acquisitions that do not
exceed the Board’s delegation criteria
SUMMARY:
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I. Discussion
Section 11(k) of the Federal Reserve
Act provides that the Board, by
published order or rule, may delegate
any of its functions, other than those
related to rulemaking or principally to
monetary and credit policies.1 Pursuant
to this authority, the Board is amending
its Rules Regarding Delegation of
1 12
E:\FR\FM\03JYR1.SGM
U.S.C. 248(k).
03JYR1
ER03JY19.002</GPH>
Supplement I to Part 1030—Official
Interpretations
B. Special Formula for Use Where Periodic
Statement Is Sent More Often Than the
Period for Which Interest Is Compounded
Institutions that use the daily balance
method to accrue interest and that issue
periodic statements more often than the
period for which interest is compounded
shall use the following special formula:
ER03JY19.001</GPH>
14. In Supplement I to part 1030,
under Section 1030.7—Payment of
Interest, paragraph 7(c)—Date interest
begins to accrue is revised to read as
follows:
■
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Rules and Regulations
Authority (Delegation Rules) 2 to
delegate authority to the Federal
Reserve Banks (Reserve Banks) to act on
certain types of applications, notices,
and requests. The Board expects that
these delegations of authority will allow
the Federal Reserve System to process
such applications, notices, and requests
in a more efficient and timely manner.
To ensure the Delegation Rules are
consistent, the rule also revises or
rescinds, as appropriate, certain existing
delegations to the Reserve Banks, the
Secretary of the Board, and the Director
of the Division of Supervision and
Regulation (S&R Director). Each of the
changes to the Delegation Rules made
by this rule are discussed in more detail
below. Additionally, the Board is
revising the Delegation Rules to update
all references to the ‘‘Division of
Banking Supervision and Regulation’’ to
the ‘‘Division of Supervision and
Regulation’’ to reflect the division’s
name change on December 5, 2016.
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A. Waivers of Applications Required by
the Bank Holding Company Act and the
Home Owners’ Loan Act
The Board’s regulations provide for
the waiver of applications required by
the Bank Holding Company Act of 1956
(BHC Act) and the Home Owners’ Loan
Act (HOLA) in certain circumstances to
avoid duplicative review of the same
transaction by federal banking agencies.
Under § 225.12(d)(2) of the Board’s
Regulation Y, applications normally
required by the BHC Act when a bank
holding company seeks to merge with
another bank holding company or to
acquire shares or control of a bank may
be waived; similarly, under
§ 238.12(d)(1) of the Board’s Regulation
LL, applications normally required by
HOLA when a savings and loan holding
company seeks to merge with another
savings and loan holding company or to
acquire shares or control of a thrift may
be waived.3 In both cases, an
application may not be required from
the holding company if the proposed
transaction is also subject to approval by
a federal banking regulator under
section 18(c) of the Federal Deposit
Insurance Act (Bank Merger Act) and
meets certain other criteria.
If a transaction satisfies each of the
criteria for a waiver under the Board’s
rules, an acquiring holding company
seeking a waiver must provide notice of
the transaction to the appropriate
Reserve Bank at least 10 days prior to
2 12
CFR part 265.
CFR 225.12(d)(2) (bank holding company
acquisitions); 12 CFR 238.12(d)(1) (savings and loan
holding company acquisitions).
3 12
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consummation.4 Under the Board’s
waiver rules, the holding company
would not need to submit an
application under the BHC Act or HOLA
unless it is informed by the Reserve
Bank within 10 days after the notice is
submitted that an application is
required.5 The Reserve Banks currently
do not have delegated authority to act
on a notice submitted by an acquiring
holding company in connection with a
waiver. However, the Board has
determined that it would be appropriate
for the Reserve Banks to act on waiver
notices. Accordingly, the Board is
amending the Delegation Rules to
delegate authority to the Reserve Banks
to inform an acquiring holding company
that an application is required under the
BHC Act or HOLA after receiving notice
regarding a waiver, in accordance with
§ 225.12(d)(2) or § 238.12(d)(1).6
B. Requests To Relieve or Modify
Commitments
In connection with applications,
notices, and requests submitted
pursuant to various banking statutes
over which the Federal Reserve has
jurisdiction, persons may provide
commitments to the Board or a Reserve
Bank. Commitments are deemed to be
conditions imposed in writing by the
Board and may be enforced under
applicable law.
The Board has previously delegated
authority to the S&R Director to grant or
deny requests to relieve or modify,
including to extend the time for
performing, any commitment relied
upon by the Board or a Reserve Bank in
acting upon an application or notice
required by the BHC Act, the Bank
Merger Act, the Change in Bank Control
Act of 1978, the Federal Reserve Act,
the International Banking Act, the
Federal Deposit Insurance Act, or HOLA
(Banking Statutes).7 The Board has
determined that it would be appropriate
for Reserve Banks to act on requests to
relieve or modify commitments upon
which the Reserve Bank relied in acting
on a filing submitted pursuant to one or
more of the Banking Statutes.
Accordingly, the Board is revising its
CFR 225.12(d)(2)(v); 12 CFR 238.11(d)(1)(vi).
CFR 225.12(d)(2)(vi); 12 CFR
238.11(d)(1)(vii). Unlike Regulation Y, Regulation
LL states that the acquiring savings and loan
holding company may be informed by either the
Reserve Bank or the Board that an application is
required.
6 In connection with reviewing a notice of a
waiver, a Reserve Bank may, in its discretion,
inform an acquiring holding company before the
end of the 10-day notice period that the Reserve
Bank does not intend to recommend that the Board
take action to require the filing of an application
under the BHC Act or HOLA.
7 12 CFR 265.7(a)(2).
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Delegation Rules to permit the Reserve
Banks to grant or deny requests to
relieve or modify (including extending
the time for performing) such
commitments, so long as the relief or
modification would not be inconsistent
with, or result in an evasion of, the
provisions of the Reserve Bank’s
original action and the requests do not
raise significant legal, supervisory, or
policy issues. In acting on such
requests, the Reserve Bank may take
into account changed circumstances and
good faith efforts to fulfill the
commitments. No changes are being
made to the Board’s existing delegation
of authority to the S&R Director to grant
or deny requests to relieve or modify
commitments made to the Board.
C. Public Welfare Investments
Section 9(23) of the Federal Reserve
Act permits state member banks, subject
to certain limits and other conditions, to
make investments which are designed
primarily to promote the public welfare
(Public Welfare Investments).8 Under
the Board’s Regulation H, a state
member bank must obtain prior
approval before making a Public Welfare
Investment if the bank or the proposed
investment does not satisfy criteria
relating to, among other things, the
condition of the bank and the nature of
the investment.9
The Board previously has delegated to
the Reserve Banks authority to approve
a Public Welfare Investment that meets
the conditions of § 208.22(b)(1)–(3),
(b)(5), and (b)(7) of Regulation H, if the
bank has at least an overall rating of ‘‘3’’
as of its most recent consumer
compliance examination and the bank’s
Public Welfare Investments do not in
the aggregate exceed 10 percent of the
bank’s capital and surplus.10 In
addition, the Board previously has
delegated to the S&R Director authority
8 12
U.S.C. 338a.
CFR 208.22(d). Public Welfare Investments
by state member banks that do not require prior
approval are subject to a 30-day post notice
procedure. 12 CFR 208.22(c).
10 12 CFR 265.11(e)(12). The Board also
previously has delegated to the Reserve Banks
authority to approve, with the concurrence of the
Director of the Division of Consumer and
Community Affairs (DCCA Director), a Public
Welfare Investment by a state member bank having
an overall rating of ‘‘4’’ or ‘‘5’’ as of its most recent
consumer compliance examination, if the
investment meets the conditions of § 208.22(b)(1)–
(3), (b)(5), and (b)(7) of Regulation H and the bank’s
Public Welfare Investments do not in the aggregate
exceed 10 percent of the bank’s capital and surplus.
This delegation was authorized in connection with
the Board’s approval on February 18, 1999, of the
request by California Center Bank, Los Angeles,
California, to make certain public welfare
investments.
9 12
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Rules and Regulations
to approve a Public Welfare Investment
under certain other circumstances.11
The Board has determined that it
would be appropriate for the Reserve
Banks to act on certain proposals by a
state member bank to make a Public
Welfare Investment. Accordingly, the
Board is revising the Delegation Rules to
authorize the Reserve Banks to approve
a Public Welfare Investment that is in
accordance with the requirements of
section 9(23) of the Federal Reserve Act,
if the proposal raises no significant
legal, supervisory, or policy issues.
Under the revised Delegation Rules, the
S&R Director would generally have
delegated authority to approve a Public
Welfare Investment proposal that raises
significant legal, supervisory, or policy
issues; however, any proposal that does
not satisfy § 208.22(b)(1) of Regulation H
would require Board action.12 In
addition, the delegations expressly
authorize the Reserve Banks and the
S&R Director to determine, in
connection with approving a Public
Welfare Investment under their
delegated authority, that the aggregate
amount of a state member bank’s Public
Welfare Investments will not pose a
significant risk to the deposit insurance
fund in accordance with section 9(23) of
the Federal Reserve Act. The
delegations in this final rule supersede
the Board’s prior delegations of
authority to the Reserve Banks and the
S&R Director to approve Public Welfare
Investments.
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D. Proposals Under Subparts A and B of
Regulation K
The Board’s Regulation K sets forth
rules regarding international banking
operations. Subpart A of the regulation
sets out rules governing the
international and foreign activities of
U.S. banking organizations, including
procedures for establishing foreign
branches and Edge and agreement
corporations to engage in international
banking, and for investing in foreign
organizations. Subpart B sets out rules
11 Specifically, the Board delegated to the S&R
Director authority to approve Public Welfare
Investments that are included in the list of
permissible investments listed in 12 CFR
208.22(b)(1) and that involve a state member bank
that (1) has a composite ‘‘3,’’ ‘‘4,’’ or ‘‘5’’ composite
rating under the CAMELS rating system, (2) is less
than adequately capitalized, (3) is subject to a
written agreement, cease and desist order, capital
directive, prompt corrective action directive, or
memorandum of understanding, or (4) proposes an
investment that exposes the bank to liability beyond
the amount of the proposed investment. This
delegation was authorized in connection with the
Board’s approval on February 18, 1999, of the
request by California Center Bank, Los Angeles,
California, to make certain public welfare
investments.
12 12 CFR 208.22(b)(1).
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governing the activities of foreign
banking organizations in the United
States. Subparts A and B include
numerous application and notice
requirements for banking organizations
that propose to engage in certain
activities, open offices, or make or retain
certain investments or acquisitions. The
Board previously has delegated
authority to the Secretary of the Board,
the General Counsel, the S&R Director,
and the Reserve Banks to act on certain
applications, notices, and requests
under both subparts A and B of
Regulation K.
The Board has determined that it
would be appropriate for the Reserve
Banks to act on a number of
applications, notices, and requests
submitted pursuant to subparts A and B
of Regulation K. Accordingly, the Board
is revising the Delegation Rules to
permit the Reserve Banks to act on
certain proposals submitted pursuant to
Regulation K. Generally, the authority
under this new delegation is limited to
proposals that do not raise significant
legal, supervisory, or policy issues. The
Board is also revising certain existing
delegations of authority to the S&R
Director, rescinding certain existing
delegations to the Secretary of the
Board, and reordering certain existing
delegations to the Reserve Banks that
appear in the Delegation Rules.
With respect to subpart A of
Regulation K, concerning the foreign
activities of U.S. banking organizations,
the revisions to the Delegation Rules
provide new authority and expand upon
existing delegations of authority for the
Reserve Banks to act on various
proposals filed under that subpart.
Reserve Banks will have delegated
authority to act on proposals concerning
the establishment of a foreign branch by
a state member bank or an Edge
corporation; the acquisition by a foreign
branch of a member bank of all of the
shares of a company that engages in
activities in which the member bank is
permitted to engage or that are
incidental to the activities of the foreign
branch; the amendment by an Edge
corporation of its articles of association
or charter; a foreign institution’s
acquisition of a majority of the shares of
an Edge corporation; the acquisition of
control of an Edge corporation;
investments by a member bank in the
stock of an agreement corporation; the
extension of time within which an
investor must divest of investments in
entities engaged in impermissible
activities or interests acquired to
prevent a loss upon a debt previously
contracted in good faith; investments
made by a member bank in a foreign
country; a member bank’s engaging in
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31703
underwriting, distribution, or dealing of
equity securities outside the United
States; the use of internal hedging
models for determining compliance
with investment limits; and a member
bank’s engaging in futures commission
merchant activities on an mutual
exchange or clearinghouse that requires
members to guarantee or otherwise
contract to cover losses suffered by the
other members.
With respect to subpart B of
Regulation K, concerning the activities
of foreign banking organizations in the
United States, the revisions to the
Delegation Rules also delegate new
authority and expand upon existing
delegations of authority for Reserve
Banks to act on proposals filed under
that subpart concerning the
establishment of certain permanent or
temporary U.S. offices.
E. Competition
Section 3 of the BHC Act and certain
other statutes administered by the Board
concerning mergers and acquisitions
prohibit the Board from approving
proposals involving the formation of a
holding company, the merger of holding
companies, or the acquisition or merger
of insured depository institutions that
would result in a monopoly or would be
in furtherance of an attempt to
monopolize the business of banking in
any relevant market.13 These statutes
also prohibit the Board from approving
proposals that would substantially
lessen competition or tend to create a
monopoly in any banking market,
unless the Board finds that the
anticompetitive effects of the proposal
are clearly outweighed in the public
interest by the probable effect of the
proposal in meeting the convenience
and needs of the community to be
served.14
The Board previously has delegated
authority to the Reserve Banks to
approve a proposal involving the
formation of a bank holding company,
the merger of bank holding companies
or banks, or the acquisition of a bank
holding company or insured depository
institution, provided the proposal
satisfies the Board’s delegation
criteria.15 In 2011, by order, the Board
13 See 12 U.S.C. 1842(c)(1)(A) (BHC Act); 12
U.S.C. 1828(c)(5)(A) (Bank Merger Act); 12 U.S.C.
1467a(e)(2)(A) (HOLA). Section 4 of the BHC Act
requires the Board to consider whether a proposal
by a bank holding company to acquire a savings and
loan holding company or a savings association
would result in increased competition or decreased
or unfair competition. 12 U.S.C. 1843(j)(2)(A).
14 See 12 U.S.C. 1842(c)(1)(B) (BHC Act); 12
U.S.C. 1828(c)(5)(B) (Bank Merger Act); 12 U.S.C.
1467a(e)(2)(B) (HOLA).
15 12 CFR 265.11(c)(11).
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extended the delegation to include
savings and loan holding companies in
the same manner that the delegation
applies to bank holding companies.16
With respect to competitive factors, the
Board’s delegation criteria require the
Board to act on any such proposal
which, upon consummation, would
result in the control by a banking
organization of over 35 percent of total
deposits in any relevant banking market
or result in a highly concentrated
banking market for deposits, as
measured by the Herfindahl-Hirschman
Index (HHI),17 if the proposed
transaction also would increase the HHI
by at least 200 points.18 Currently, in
determining whether a proposal satisfies
the Board’s delegation criteria for
competition in each relevant banking
market for both relative deposit market
share and market concentration for
deposits, the deposits of any credit
unions in the market are excluded, and,
except for certain applications described
below filed under HOLA, the deposits of
all thrift institutions in the market are
included on a 50 percent weighted
basis.19
In analyzing the competitive effects of
a merger or acquisition proposal, the
Board previously has indicated that
certain thrift institutions have become,
or have the potential to become,
significant competitors to commercial
banks.20 In some cases involving the
formation of a bank holding company,
the acquisition by a bank holding
company of a depository institution, the
merger of a bank holding company with
another holding company, or the merger
of a bank with another depository
institution, the Board has included the
deposits of certain thrift institutions in
a given market on a 100 percent
weighted basis, rather than the standard
50 percent weighting, when competition
from those thrift institutions closely
16 See, Order Delegating Certain Actions Relating
to Savings and Loan Holding Companies (August
12, 2011) available at https://
www.federalreserve.gov/newsevents/pressreleases/
bcreg20110812a.htm.
17 Under the Department of Justice Bank Merger
Competitive Review guidelines, a market is
considered highly concentrated if the post-merger
HHI exceeds 1800. The Department of Justice
generally does not challenge a bank merger or
acquisition (in the absence of other factors
indicating anticompetitive effects) unless the postmerger HHI is at least 1800 and the merger or
acquisition increases the HHI by more than 200
points.
18 12 CFR 265.11(c)(11)(v).
19 The standard inclusion of thrift deposits at 50
percent weight in the initial competitive analysis
reflects thrifts’ generally limited lending to small
businesses relative to commercial banks.
20 See, e.g., Midwest Financial Group, 75 Federal
Reserve Bulletin 386 (1989); National City
Corporation, 70 Federal Reserve Bulletin 743
(1984).
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approximated competition from a
commercial bank.21 Such thrifts are
referred to as ‘‘commercially active
thrifts.’’
The Board also has found that certain
credit unions can serve as competitors
to commercial banks in a relevant
banking market. The Board has included
certain credit unions in its competitive
analysis when the credit unions offer
consumer banking products, operate
street-level branches, and have broad
membership criteria.22 Credit unions
which meet these criteria are referred to
as ‘‘qualifying credit unions.’’ Generally,
the Board has included the deposits of
qualifying credit unions at a 50 percent
weight in its analysis, which reflects
credit unions’ relatively low levels of
commercial and small business lending
relative to commercial banks. However,
the Board has only considered deposits
of qualifying credit unions as a factor
that can mitigate the anti-competitive
effects of a proposal.
The Board has determined that it
would be appropriate for the Reserve
Banks to act on proposals involving the
formation of a bank holding company,
the acquisition by a bank holding
company of a depository institution, the
merger of a bank holding company with
another holding company, or the merger
of a bank with another depository
institution that satisfy the Board’s
delegation criteria for each affected
banking market after the market
deposits of commercially active thrift
institutions at 100 percent weight and
qualifying credit unions at 50 percent
weight are included in the initial
competitive analysis. Accordingly, the
Board is revising the Delegation Rules to
permit the Reserve Banks to act upon
such proposals, provided the proposals
also satisfy the Board’s other criteria for
delegated action. In so doing, the Board
has also determined that it would be
appropriate to clarify that its delegation
criteria for competition apply to
proposals requiring the Board’s prior
21 The Board has found that a commercially active
thrift closely approximates competition from a
commercial bank when the thrift is a significant
commercial lender in the market and offers a broad
range of consumer, mortgage, and other banking
products typically offered by commercial banks.
See, e.g., KeyCorp, FRB Order No. 2016–12 (July 12,
2016); River Valley Bancorp, FRB Order No. 2012–
10 (October 17, 2012); Regions Financial
Corporation, 93 Federal Reserve Bulletin C16
(2007); and Banknorth Group, Inc., supra. See also
Banknorth Group, Inc., 75 Federal Reserve Bulletin
703 (1989).
22 See, e.g., Central Bancompany, Inc., FRB Order
No. 2017–03 (February 8, 2017); Chemical Financial
Corporation, FRB Order No. 2015–13 (April 20,
2015); Mitsubishi UFJ Financial Group, Inc., FRB
Order No. 2012–12 (November 14, 2012); and Old
National Bancorp, FRB Order No. 2012–9 (August
30, 2012).
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approval under the Bank Merger Act
and to proposals involving the
acquisition of a thrift by a bank holding
company pursuant to section 4 of the
BHC Act.
For proposals filed pursuant to HOLA
involving the formation of a savings and
loan holding company, the merger of
savings and loan holding companies, or
the acquisition by a savings and loan
holding company of a thrift, a modified
calculation for relative market share and
market concentration for deposits will
be used to determine whether the
proposal satisfies the Board’s delegation
criteria for competition. In these cases,
the deposits of all thrift institutions in
the relevant banking markets will be
weighted at 100 percent in the
calculation because both before and
after consummation of the proposal, the
depository institutions involved in the
transaction are thrift institutions.
Therefore, all thrift institutions in those
banking markets compete directly with
the involved depository institutions. In
these cases, the deposits of all banks in
the markets are included at 100 percent
weight, because all banks are considered
to compete directly with thrift
institutions.
The Board has determined that it
would be appropriate to codify the
Board’s previous delegation to the
Reserve Banks concerning proposals
involving the formation or acquisition of
a savings and loan holding company,
the merger of savings and loan holding
companies, or the acquisition by a
savings and loan holding company of a
thrift by authorizing the Reserve Banks
to act on proposals that satisfy the
Board’s delegation criteria for each
affected banking market, and to include
the market deposits of all thrift
institutions at 100 percent weight in this
analysis. In so doing, the Board has also
determined that it would be appropriate
to modify this delegation to allow the
Reserve Banks to act on such proposals
if the proposal would satisfy the Board’s
delegation criteria for each affected
banking market after the market
deposits of qualifying credit unions at
50 percent weight are included in the
initial competitive analysis.
In all cases, the concurrence of the
Board’s Division of Research and
Statistics will be necessary in order for
the Reserve Bank to include the market
deposits of commercially active thrifts
and qualifying credit unions the higher
weights, to ensure that such
determinations are consistent with
Board precedent.
The delegations in this final rule
supersede the Board’s prior delegations
of authority to the Reserve Banks to
approve merger or acquisition proposals
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Rules and Regulations
§ 265.5
involving savings and loan holding
companies.
III. Regulatory Analysis
These amendments relate solely to the
agency’s organization, procedure, or
practice. Accordingly, the provisions of
the Administrative Procedure Act (APA)
regarding notice of proposed rulemaking
and opportunity for public participation
are not applicable.23
Because no notice of proposed
rulemaking is required to be issued, or
has been issued, in connection with this
rule, it is not a ‘‘rule’’ for purposes of
the Regulatory Flexibility Act, and that
act, therefore, does not apply.24
In accordance with the Paperwork
Reduction Act of 1995 (PRA),25 the
Board may not conduct or sponsor, and
a respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget control
number. The Board has reviewed the
proposed rule and has determined that
it contains no collections of information
as defined in the PRA.
Section 722 of the Gramm-LeachBliley Act 26 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
Board has sought to present this rule in
a simple and straightforward manner.
This rule is not a ‘‘substantive rule’’
for the purposes of the APA; as such,
the act does not require the Board to
delay the effective date of the rule.27
Accordingly, the amendments are
effective July 3, 2019.
List of Subjects in 12 CFR Part 265
Authority delegations (Government
agencies), Banks, banking.
Authority and Issuance
For the reasons stated in the
Supplementary Information, the Board
of Governors of the Federal Reserve
System amends 12 CFR part 265 as
follows:
■
PART 265—RULES REGARDING
DELEGATION OF AUTHORITY
1. The authority citation for part 265
continues to read as follows:
■
Authority: 12 U.S.C. 248(i) and (k).
2. In part 265, remove all references to
‘‘Director of the Division of Banking
Supervision and Regulation’’ and add in
their place ‘‘Director of the Division of
Supervision and Regulation’’.
jspears on DSK30JT082PROD with RULES
■
23 5
U.S.C. 553(b)(A).
5 U.S.C. 601(2).
25 44 U.S.C. 3501 et seq.
26 12 U.S.C. 4809.
27 See 5 U.S.C. 553(d).
24 See
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[Amended]
3. In § 265.5 remove and reserve
paragraphs (d)(1) and (3).
■ 4. In § 265.7 revise the section heading
and paragraphs (d)(1) and (3); remove
and reserve paragraphs (d)(4) and (5),
(7), and (9) through (13); and add
paragraph (e)(7).
The revisions and addition read as
follows:
■
§ 265.7 Functions delegated to Director of
Division of Supervision and Regulation
*
*
*
*
*
(d) * * *
(1) Foreign bank reports. To require
submission of a report of condition
respecting any foreign bank in which a
member bank holds stock acquired
under § 211.8(b) of Regulation K (12
CFR part 211), pursuant to section 25 of
the Federal Reserve Act (12 U.S.C. 602).
*
*
*
*
*
(3) With the concurrence of the
General Counsel, to approve
applications, notices, exemption
requests, waivers and suspensions, and
other related matters under Regulation
K (12 CFR part 211), where such matters
do not raise any significant legal,
supervisory, or policy issues.
*
*
*
*
*
(e) * * *
(7) Public welfare investments. (i) To
permit a state member bank to make a
public welfare investment in accordance
with paragraph 23 of section 9 of the
Federal Reserve Act (12 U.S.C. 338a) in
any case in which the appropriate
Reserve Bank does not have delegated
authority to act, unless the proposal
does not satisfy 12 CFR 208.22(b)(1). In
acting on such requests, the Director
shall consult with the directors of other
interested divisions where appropriate;
and
(ii) To determine, in connection with
acting on a proposal pursuant to
delegated authority as set forth in
paragraph (e)(7)(i) of this section, that
the aggregate amount of a state member
bank’s public welfare investments will
not pose a significant risk to the deposit
insurance fund in accordance with
paragraph 23 of section 9 of the Federal
Reserve Act (12 U.S.C. 338a).
*
*
*
*
*
■ 5. In § 265.11:
■ a. Revise paragraph (a)(10);
■ b. Add paragraph (a)(17;
■ c. Revise the paragraph (c) subject
heading and paragraph (c)(11)(v);
■ d. Add paragraph (c)(12);
■ e. Revise paragraphs (d)(1) through (8)
and (10) through (12);
■ f. Add paragraphs (d)(13) through
(15); and
■ g. Revise paragraph (e)(12).
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31705
The revisions and addition read as
follows:
§ 265.11 Functions delegated to Federal
Reserve Banks.
*
*
*
*
*
(a) * * *
(10) Regulation K; divestiture of
impermissible interests. To extend the
time within which an investor, under
§ 211.8(e) and (f) of Regulation K (12
CFR part 211), must divest of
investments in entities engaged in
impermissible activities or interests
acquired to prevent a loss upon a debt
previously contracted in good faith.
* * *
(17) Modification of commitments. To
grant or deny requests for relieving or
modifying (including extending the time
for performing) a commitment relied
upon by the Reserve Bank in taking any
action under the Bank Holding
Company Act, the Bank Merger Act, the
Change in Bank Control Act of 1978, the
Federal Reserve Act, the International
Banking Act, the Federal Deposit
Insurance Act, or the Home Owners’
Loan Act, so long as the requests do not
raise any significant legal, supervisory,
or policy issues. In acting on such
requests, the Reserve Bank may take
into account changed circumstances and
good faith efforts to fulfill the
commitments, and shall consult with
Board staff as appropriate. The Reserve
Bank may not take any action that
would be inconsistent with or result in
an evasion of the provisions of the
original action.
*
*
*
*
*
(c) Holding companies; change in
bank control; mergers. * * *
(11) * * *
(v)(A) With respect to holding
company formations, acquisitions or
mergers of holding companies, or
acquisitions or mergers of insured
depository institutions, except as set
forth in paragraph (c)(11)(v)(B) of this
section, upon consummation, the
proposal would result in the control by
a banking organization of over 35
percent of total deposits in banking
offices in the relevant geographic market
or an increase of at least 200 points in
the Herfindahl-Hirschman Index (HHI)
for deposits in a highly concentrated
market (a market with a post-merger
HHI of at least 1800) when including:
(1) All thrift deposits at 50 percent
weight, except for deposits of thrifts
determined by the Reserve Bank, with
the concurrence of the Board’s Division
of Research and Statistics, to be
commercially active, which are
included at 100 percent weight; and
(2) The deposits of credit unions
determined by the Reserve Bank, with
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Rules and Regulations
the concurrence of the Board’s Division
of Research and Statistics, to offer
consumer banking products, operate
street-level branches, and have broad
membership criteria in the relevant
geographic market, which are included
at 50 percent weight; or
(B) With respect to the formation of a
savings and loan holding company, the
merger of savings and loan holding
companies, or the acquisition by a
savings and loan holding company of a
savings association, upon
consummation, the proposal would
result in the control by a banking
organization of over 35 percent of total
deposits in banking offices in the
relevant geographic market or an
increase of at least 200 points in the HHI
for deposits in a highly concentrated
market (a market with a post-merger
HHI of at least 1800) when including:
(1) All thrift deposits at 100 percent
weight; and
(2) The deposits of credit unions
determined by the Reserve Bank, with
the concurrence of the Board’s Division
of Research and Statistics, to offer
consumer banking products, operate
street-level branches, and have broad
membership criteria in the relevant
geographic market, which are included
at 50 percent weight; or
*
*
*
*
*
(12) Waivers. (i) To inform an
acquiring bank holding company, in
connection with a notice submitted by
the bank holding company pursuant to
12 CFR 225.12(d)(2), that an application
under 12 CFR 225.11 is required.
(ii) To inform an acquiring savings
and loan holding company, in
connection with a notice submitted by
the savings and loan holding company
pursuant to 12 CFR 238.12(d)(1), that an
application under 12 CFR 238.11 is
required.
(d) * * *
(1) Member bank, Edge or agreement
corporation establishing foreign branch.
With regard to a prior notice to establish
a branch in a foreign country under
§ 211.3 of Regulation K (12 CFR part
211)—
(i) To waive the notice period if
immediate action is required and there
is no significant legal, supervisory, or
policy issue;
(ii) To suspend the notice period;
(iii) To determine not to object to the
notice, provided that no significant
legal, supervisory, or policy issue is
raised by the proposal; or
(iv) To require the notificant to file an
application for the Board’s specific
consent.
(2) Acquisitions by a foreign branch.
To approve, under § 211.4(a)(8) of
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16:37 Jul 02, 2019
Jkt 247001
Regulation K (12 CFR part 211), a
proposal by a foreign branch of a
member bank to acquire all of the shares
of a company that engages solely in
activities in which the member bank is
permitted to engage or that are
incidental to the activities of the foreign
branch, provided that no significant
legal, supervisory, or policy issue is
raised.
(3) Application to establish Edge
corporation. To approve the application
by a U.S. banking organization to
establish an Edge corporation under
section 25A of the Federal Reserve Act
(12 U.S.C. 611) and § 211.5 of the
Board’s Regulation K (12 CFR part 211)
if all of the following criteria are met:
(i) The U.S. banking organization
meets the capital adequacy guidelines
and is otherwise in satisfactory
condition;
(ii) The proposed Edge corporation
will be a wholly-owned subsidiary of a
single banking organization; and
(iii) No significant legal, supervisory,
or policy issues are raised by the
proposal.
(4) Issuance of permit to Edge
corporation and amendments to articles
of association and charter. To issue to
an Edge corporation under section 25A
of the Federal Reserve Act (12 U.S.C.
614) and § 211.5 of Regulation K (12
CFR part 211) a permit to commence
business and to approve amendments to
the articles of association and charter of
an Edge corporation.
(5) Investments in Edge and
agreement corporations. To approve,
pursuant to 211.5(a)(3) of Regulation K
(12 CFR part 211) an application by a
member bank to invest more than 10
percent of its capital and surplus in the
aggregate amount of stock held in in all
Edge or agreement corporations;
provided that—
(i) The member bank’s total
investment, including retained earnings
of the Edge and agreement corporation,
does not exceed 20 percent of the bank’s
capital and surplus and would not
exceed that level as a result of the
proposal; and
(ii) The proposal raises no significant
legal, supervisory, or policy issues.
(6) Foreign ownership of an Edge
corporation. To approve, under
§ 211.5(d) of Regulation K (12 CFR part
211), a foreign institution’s acquisition,
directly or indirectly, of a majority of
the shares of the capital stock of an Edge
corporation, provided that no significant
legal, supervisory, or policy issue is
raised.
(7) Change in control of an Edge
corporation. With regard to a notice to
acquire, directly or indirectly, 25
percent or more of the voting securities,
PO 00000
Frm 00020
Fmt 4700
Sfmt 4700
or to otherwise acquire control, of an
Edge corporation, under § 211.5(e) of
Regulation K (12 CFR part 211)(i) to waive the notice period if
immediate action is required and no
significant legal, supervisory, or policy
issue is raised;
(ii) To extend the notice period;
(iii) To determine not to object to the
notice if no significant legal,
supervisory, or policy issue is raised; or
(iv) To require the notificant to file an
application for the Board’s specific
consent.
(8) Granting specific consent. To grant
prior specific consent to an investor for
(i) A long range investment plan,
under § 211.9(a)(4) of Regulation K (12
CFR part 211), and
(ii) An investment in its first
subsidiary or its first joint venture,
under § 211.9(a)(5) of Regulation K (12
CFR part 211), where such investment
does not exceed the general consent
limitations under § 211.9(b) of
Regulation K (12 CFR part 211).
*
*
*
*
*
(10) Authority under prior-notice
procedures. (i) With regard to a prior
notice to make an investment under
§ 211.9(f) of Regulation K (12 CFR part
211)—
(A) To waive the notice period if
immediate action is required and there
is no significant legal, supervisory, or
policy issue raised;
(B) To suspend the notice period;
(C) To determine not to object to the
notice if there is no significant legal,
supervisory, or policy issue raised; or
(D) To require the notificant to file an
application for the Board’s specific
consent.
(ii) With regard to a prior notice of a
foreign bank to establish certain U.S.
offices under § 211.24(a)(2)(i) of
Regulation K (12 CFR part 211)—
(A) To waive the notice period if
immediate action is required and there
is no significant legal, supervisory, or
policy issue raised;
(B) To suspend the notice period;
(C) To determine not to object to the
notice if there is no significant legal,
supervisory, or policy issue raised; or
(D) To require the notificant to file an
application for the Board’s specific
consent.
(11) Activities usual in connection
with banking or other financial
operations abroad. (i) To approve a
prior notice, under § 211.10(a)(14) of
Regulation K (12 CFR part 211), to
engage in underwriting and distribution
of equity securities outside the United
States, provided that the proposal raises
no significant legal, supervisory, or
policy issue.
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(ii) To approve a prior notice, under
§ 211.10(a)(15) of Regulation K (12 CFR
part 211), to engage in dealing in equity
securities outside the United States,
provided that the proposal raises no
significant legal, supervisory, or policy
issue.
(iii) To approve a prior notice, under
§ 211.10(a)(15)(iv)(B) of Regulation K
(12 CFR part 211), to use internal
hedging models, provided that the
proposal raises no significant legal,
supervisory, or policy issue.
(iv) To approve a prior notice, under
§ 211.10(a)(18) of Regulation K (12 CFR
part 211), to engage in futures
commission merchant activities on an
mutual exchange or clearinghouse that
requires members to guarantee or
otherwise contract to cover losses
suffered by the other members, provided
that the Board has previously approved
the exchange, the application is on the
same terms and conditions on which the
Board based its approval of the
exchange, and no significant legal,
supervisory, or policy issue is raised.
(12) Change in foreign bank home
state. With respect to a foreign bank’s
change of home state under § 211.22(b)
of Regulation K (12 CFR part 211) and
provided no significant legal,
supervisory, or policy issue is raised—
(i) To waive the notice period; or
(ii) To determine not to object to the
notice.
(13) Waiver of 30-day prior
notification period. To waive the 30-day
prior notification period with respect to
a foreign bank’s change of home state
under § 211.22(c)(1) of Regulation K (12
CFR part 211).
(14) Offices of foreign banks. (i) To
approve the establishment of a branch,
agency, commercial lending company,
or representative office by a foreign
bank in the United States, pursuant to
§ 211.24(a)(1) of Regulation K (12 CFR
part 211), if the Board has already
determined that the foreign bank is
subject to consolidated comprehensive
supervision and provided that the
application raises no significant legal,
supervisory, or policy issue.
(ii) To allow a foreign bank to
establish a temporary office of a branch
or agency, pursuant to § 211.24(a)(5) of
Regulation K (12 CFR part 211),
provided there is no direct public access
to such office and no significant legal,
supervisory, or policy issue is raised.
(15) Agreement with foreign bank
concerning deposits of out-of-homestate branch. To enter into an agreement
or undertaking with a foreign bank that
it shall receive only such deposits at its
out-of-home-state branch as would be
permissible for an Edge corporation
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16:37 Jul 02, 2019
Jkt 247001
under section 5 of the International
Banking Act (12 U.S.C. 3103).
(e) * * *
(12) Public welfare investments. (i) To
permit a state member bank to make a
public welfare investment in accordance
with paragraph 23 of section 9 of the
Federal Reserve Act (12 U.S.C. 338a),
provided that the proposal satisfies 12
CFR 208.22(b)(1) and no significant
legal, supervisory, or policy issue is
raised; and
(ii) To determine, in connection with
acting on a proposal pursuant to
delegated authority as set forth in
paragraph (e)(12)(i) of this section, that
the aggregate amount of a state member
bank’s public welfare investments will
not pose a significant risk to the deposit
insurance fund in accordance with
paragraph 23 of section 9 of the Federal
Reserve Act (12 U.S.C. 338a).
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, June 26, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019–13970 Filed 7–2–19; 8:45 am]
BILLING CODE 6210–02–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0185; Product
Identifier 2018–NM–178–AD; Amendment
39–19658; AD 2019–12–03]
RIN 2120–AA64
Airworthiness Directives; Bombardier,
Inc., Airplanes
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
AGENCY:
The FAA is adopting a new
airworthiness directive (AD) for all
Bombardier, Inc., Model CL–600–2C10
(Regional Jet Series 700, 701 & 702), CL–
600–2D15 (Regional Jet Series 705), and
CL–600–2D24 (Regional Jet Series 900)
airplanes. This AD was prompted by a
determination that new and more
restrictive airworthiness limitations are
necessary for operational checks of the
landing gear alternate extension system
(AES). This AD requires revising the
existing maintenance or inspection
program, as applicable, to incorporate
new and more restrictive airworthiness
limitations. The FAA is issuing this AD
to address the unsafe condition on these
products.
SUMMARY:
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
31707
This AD is effective August 7,
2019.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of August 7, 2019.
ADDRESSES: For service information
identified in this final rule, contact
Bombardier, Inc., 400 Coˆte-Vertu Road
West, Dorval, Que´bec H4S 1Y9, Canada;
Widebody Customer Response Center
North America toll-free telephone 1–
866–538–1247 or direct-dial telephone
1–514–855–2999; fax 514–855–7401;
email ac.yul@aero.bombardier.com;
internet https://www.bombardier.com.
You may view this service information
at the FAA, Transport Standards
Branch, 2200 South 216th St., Des
Moines, WA. For information on the
availability of this material at the FAA,
call 206–231–3195. It is also available
on the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0185.
DATES:
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0185; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this final rule,
the regulatory evaluation, any
comments received, and other
information. The address for Docket
Operations is U.S. Department of
Transportation, Docket Operations,
M–30, West Building Ground Floor,
Room W12–140, 1200 New Jersey
Avenue SE, Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT:
Darren Gassetto, Aerospace Engineer,
Mechanical Systems and Administrative
Services Section, FAA, New York ACO
Branch, 1600 Stewart Avenue, Suite
410, Westbury, NY 11590; telephone
516–228–7323; fax 516–794–5531; email
9-avs-nyaco-cos@faa.gov.
SUPPLEMENTARY INFORMATION:
Discussion
The FAA issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would
apply to all Bombardier, Inc., Model
CL–600–2C10 (Regional Jet Series 700,
701 & 702), CL–600–2D15 (Regional Jet
Series 705), and CL–600–2D24 (Regional
Jet Series 900) airplanes. The NPRM
published in the Federal Register on
March 28, 2019 (84 FR 11656). The
NPRM was prompted by a
determination that new and more
restrictive airworthiness limitations are
E:\FR\FM\03JYR1.SGM
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]]>Agencies
[Federal Register Volume 84, Number 128 (Wednesday, July 3, 2019)]
[Rules and Regulations]
[Pages 31701-31707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13970]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 265
[Docket No. R-1667]
RIN No. 7100-AF 52
Rules Regarding Delegation of Authority: Delegation of Authority
to the Secretary of the Board, Director of the Division of Supervision
of Regulation, and Federal Reserve Banks
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board is amending its rules regarding delegation of
authority to delegate to Federal Reserve Banks authority to approve
certain types of applications, notices, and requests. Under the rule,
Federal Reserve Banks are delegated authority to waive a requirement to
file certain applications under the Bank Holding Company Act and the
Home Owners' Loan Act; grant or deny requests for modifying certain
commitments; authorize a state member bank to make a public welfare
investment in accordance with section 9 of the Federal Reserve Act
under certain circumstances; and approve certain requests,
applications, and notices relating to international banking operations
filed pursuant to the Board's Regulation K. The rule also modifies the
delegation rules by authorizing the Federal Reserve Banks to approve
applications and notices concerning mergers and acquisitions that do
not exceed the Board's delegation criteria for competition after
including deposits of qualifying credit unions weighted at 50 percent
and deposits of ``commercially active'' thrift institutions weighted in
most cases at 100 percent. In a limited number of cases, deposits of
all thrifts would be weighted at 100 percent. To ensure the Board's
delegation rules are consistent, the rule also revises or rescinds, as
appropriate, certain existing delegations to the Federal Reserve Banks,
the Secretary of the Board, and the Director of the Division of
Supervision and Regulation.
DATES: Effective July 3, 2019.
FOR FURTHER INFORMATION CONTACT: Alison Thro, Assistant General
Counsel, (202) 452-3236, Scott Tkacz, Senior Counsel, (202) 452-2744,
or Jonah Kind, Attorney, (202) 452-2045, Legal Division, Susan Motyka,
Deputy Associate Director, (202) 452-5280, Division of Supervision and
Regulation, Anthony Iwuji, Manager, (202) 452-3254, Division of
Consumer and Community Affairs, Board of Governors of the Federal
Reserve System, 20th Street and C Street NW, Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
I. Discussion
Section 11(k) of the Federal Reserve Act provides that the Board,
by published order or rule, may delegate any of its functions, other
than those related to rulemaking or principally to monetary and credit
policies.\1\ Pursuant to this authority, the Board is amending its
Rules Regarding Delegation of
[[Page 31702]]
Authority (Delegation Rules) \2\ to delegate authority to the Federal
Reserve Banks (Reserve Banks) to act on certain types of applications,
notices, and requests. The Board expects that these delegations of
authority will allow the Federal Reserve System to process such
applications, notices, and requests in a more efficient and timely
manner. To ensure the Delegation Rules are consistent, the rule also
revises or rescinds, as appropriate, certain existing delegations to
the Reserve Banks, the Secretary of the Board, and the Director of the
Division of Supervision and Regulation (S&R Director). Each of the
changes to the Delegation Rules made by this rule are discussed in more
detail below. Additionally, the Board is revising the Delegation Rules
to update all references to the ``Division of Banking Supervision and
Regulation'' to the ``Division of Supervision and Regulation'' to
reflect the division's name change on December 5, 2016.
---------------------------------------------------------------------------
\1\ 12 U.S.C. 248(k).
\2\ 12 CFR part 265.
---------------------------------------------------------------------------
A. Waivers of Applications Required by the Bank Holding Company Act and
the Home Owners' Loan Act
The Board's regulations provide for the waiver of applications
required by the Bank Holding Company Act of 1956 (BHC Act) and the Home
Owners' Loan Act (HOLA) in certain circumstances to avoid duplicative
review of the same transaction by federal banking agencies. Under Sec.
225.12(d)(2) of the Board's Regulation Y, applications normally
required by the BHC Act when a bank holding company seeks to merge with
another bank holding company or to acquire shares or control of a bank
may be waived; similarly, under Sec. 238.12(d)(1) of the Board's
Regulation LL, applications normally required by HOLA when a savings
and loan holding company seeks to merge with another savings and loan
holding company or to acquire shares or control of a thrift may be
waived.\3\ In both cases, an application may not be required from the
holding company if the proposed transaction is also subject to approval
by a federal banking regulator under section 18(c) of the Federal
Deposit Insurance Act (Bank Merger Act) and meets certain other
criteria.
---------------------------------------------------------------------------
\3\ 12 CFR 225.12(d)(2) (bank holding company acquisitions); 12
CFR 238.12(d)(1) (savings and loan holding company acquisitions).
---------------------------------------------------------------------------
If a transaction satisfies each of the criteria for a waiver under
the Board's rules, an acquiring holding company seeking a waiver must
provide notice of the transaction to the appropriate Reserve Bank at
least 10 days prior to consummation.\4\ Under the Board's waiver rules,
the holding company would not need to submit an application under the
BHC Act or HOLA unless it is informed by the Reserve Bank within 10
days after the notice is submitted that an application is required.\5\
The Reserve Banks currently do not have delegated authority to act on a
notice submitted by an acquiring holding company in connection with a
waiver. However, the Board has determined that it would be appropriate
for the Reserve Banks to act on waiver notices. Accordingly, the Board
is amending the Delegation Rules to delegate authority to the Reserve
Banks to inform an acquiring holding company that an application is
required under the BHC Act or HOLA after receiving notice regarding a
waiver, in accordance with Sec. 225.12(d)(2) or Sec. 238.12(d)(1).\6\
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\4\ 12 CFR 225.12(d)(2)(v); 12 CFR 238.11(d)(1)(vi).
\5\ 12 CFR 225.12(d)(2)(vi); 12 CFR 238.11(d)(1)(vii). Unlike
Regulation Y, Regulation LL states that the acquiring savings and
loan holding company may be informed by either the Reserve Bank or
the Board that an application is required.
\6\ In connection with reviewing a notice of a waiver, a Reserve
Bank may, in its discretion, inform an acquiring holding company
before the end of the 10-day notice period that the Reserve Bank
does not intend to recommend that the Board take action to require
the filing of an application under the BHC Act or HOLA.
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B. Requests To Relieve or Modify Commitments
In connection with applications, notices, and requests submitted
pursuant to various banking statutes over which the Federal Reserve has
jurisdiction, persons may provide commitments to the Board or a Reserve
Bank. Commitments are deemed to be conditions imposed in writing by the
Board and may be enforced under applicable law.
The Board has previously delegated authority to the S&R Director to
grant or deny requests to relieve or modify, including to extend the
time for performing, any commitment relied upon by the Board or a
Reserve Bank in acting upon an application or notice required by the
BHC Act, the Bank Merger Act, the Change in Bank Control Act of 1978,
the Federal Reserve Act, the International Banking Act, the Federal
Deposit Insurance Act, or HOLA (Banking Statutes).\7\ The Board has
determined that it would be appropriate for Reserve Banks to act on
requests to relieve or modify commitments upon which the Reserve Bank
relied in acting on a filing submitted pursuant to one or more of the
Banking Statutes. Accordingly, the Board is revising its Delegation
Rules to permit the Reserve Banks to grant or deny requests to relieve
or modify (including extending the time for performing) such
commitments, so long as the relief or modification would not be
inconsistent with, or result in an evasion of, the provisions of the
Reserve Bank's original action and the requests do not raise
significant legal, supervisory, or policy issues. In acting on such
requests, the Reserve Bank may take into account changed circumstances
and good faith efforts to fulfill the commitments. No changes are being
made to the Board's existing delegation of authority to the S&R
Director to grant or deny requests to relieve or modify commitments
made to the Board.
---------------------------------------------------------------------------
\7\ 12 CFR 265.7(a)(2).
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C. Public Welfare Investments
Section 9(23) of the Federal Reserve Act permits state member
banks, subject to certain limits and other conditions, to make
investments which are designed primarily to promote the public welfare
(Public Welfare Investments).\8\ Under the Board's Regulation H, a
state member bank must obtain prior approval before making a Public
Welfare Investment if the bank or the proposed investment does not
satisfy criteria relating to, among other things, the condition of the
bank and the nature of the investment.\9\
---------------------------------------------------------------------------
\8\ 12 U.S.C. 338a.
\9\ 12 CFR 208.22(d). Public Welfare Investments by state member
banks that do not require prior approval are subject to a 30-day
post notice procedure. 12 CFR 208.22(c).
---------------------------------------------------------------------------
The Board previously has delegated to the Reserve Banks authority
to approve a Public Welfare Investment that meets the conditions of
Sec. 208.22(b)(1)-(3), (b)(5), and (b)(7) of Regulation H, if the bank
has at least an overall rating of ``3'' as of its most recent consumer
compliance examination and the bank's Public Welfare Investments do not
in the aggregate exceed 10 percent of the bank's capital and
surplus.\10\ In addition, the Board previously has delegated to the S&R
Director authority
[[Page 31703]]
to approve a Public Welfare Investment under certain other
circumstances.\11\
---------------------------------------------------------------------------
\10\ 12 CFR 265.11(e)(12). The Board also previously has
delegated to the Reserve Banks authority to approve, with the
concurrence of the Director of the Division of Consumer and
Community Affairs (DCCA Director), a Public Welfare Investment by a
state member bank having an overall rating of ``4'' or ``5'' as of
its most recent consumer compliance examination, if the investment
meets the conditions of Sec. 208.22(b)(1)-(3), (b)(5), and (b)(7)
of Regulation H and the bank's Public Welfare Investments do not in
the aggregate exceed 10 percent of the bank's capital and surplus.
This delegation was authorized in connection with the Board's
approval on February 18, 1999, of the request by California Center
Bank, Los Angeles, California, to make certain public welfare
investments.
\11\ Specifically, the Board delegated to the S&R Director
authority to approve Public Welfare Investments that are included in
the list of permissible investments listed in 12 CFR 208.22(b)(1)
and that involve a state member bank that (1) has a composite ``3,''
``4,'' or ``5'' composite rating under the CAMELS rating system, (2)
is less than adequately capitalized, (3) is subject to a written
agreement, cease and desist order, capital directive, prompt
corrective action directive, or memorandum of understanding, or (4)
proposes an investment that exposes the bank to liability beyond the
amount of the proposed investment. This delegation was authorized in
connection with the Board's approval on February 18, 1999, of the
request by California Center Bank, Los Angeles, California, to make
certain public welfare investments.
---------------------------------------------------------------------------
The Board has determined that it would be appropriate for the
Reserve Banks to act on certain proposals by a state member bank to
make a Public Welfare Investment. Accordingly, the Board is revising
the Delegation Rules to authorize the Reserve Banks to approve a Public
Welfare Investment that is in accordance with the requirements of
section 9(23) of the Federal Reserve Act, if the proposal raises no
significant legal, supervisory, or policy issues. Under the revised
Delegation Rules, the S&R Director would generally have delegated
authority to approve a Public Welfare Investment proposal that raises
significant legal, supervisory, or policy issues; however, any proposal
that does not satisfy Sec. 208.22(b)(1) of Regulation H would require
Board action.\12\ In addition, the delegations expressly authorize the
Reserve Banks and the S&R Director to determine, in connection with
approving a Public Welfare Investment under their delegated authority,
that the aggregate amount of a state member bank's Public Welfare
Investments will not pose a significant risk to the deposit insurance
fund in accordance with section 9(23) of the Federal Reserve Act. The
delegations in this final rule supersede the Board's prior delegations
of authority to the Reserve Banks and the S&R Director to approve
Public Welfare Investments.
---------------------------------------------------------------------------
\12\ 12 CFR 208.22(b)(1).
---------------------------------------------------------------------------
D. Proposals Under Subparts A and B of Regulation K
The Board's Regulation K sets forth rules regarding international
banking operations. Subpart A of the regulation sets out rules
governing the international and foreign activities of U.S. banking
organizations, including procedures for establishing foreign branches
and Edge and agreement corporations to engage in international banking,
and for investing in foreign organizations. Subpart B sets out rules
governing the activities of foreign banking organizations in the United
States. Subparts A and B include numerous application and notice
requirements for banking organizations that propose to engage in
certain activities, open offices, or make or retain certain investments
or acquisitions. The Board previously has delegated authority to the
Secretary of the Board, the General Counsel, the S&R Director, and the
Reserve Banks to act on certain applications, notices, and requests
under both subparts A and B of Regulation K.
The Board has determined that it would be appropriate for the
Reserve Banks to act on a number of applications, notices, and requests
submitted pursuant to subparts A and B of Regulation K. Accordingly,
the Board is revising the Delegation Rules to permit the Reserve Banks
to act on certain proposals submitted pursuant to Regulation K.
Generally, the authority under this new delegation is limited to
proposals that do not raise significant legal, supervisory, or policy
issues. The Board is also revising certain existing delegations of
authority to the S&R Director, rescinding certain existing delegations
to the Secretary of the Board, and reordering certain existing
delegations to the Reserve Banks that appear in the Delegation Rules.
With respect to subpart A of Regulation K, concerning the foreign
activities of U.S. banking organizations, the revisions to the
Delegation Rules provide new authority and expand upon existing
delegations of authority for the Reserve Banks to act on various
proposals filed under that subpart. Reserve Banks will have delegated
authority to act on proposals concerning the establishment of a foreign
branch by a state member bank or an Edge corporation; the acquisition
by a foreign branch of a member bank of all of the shares of a company
that engages in activities in which the member bank is permitted to
engage or that are incidental to the activities of the foreign branch;
the amendment by an Edge corporation of its articles of association or
charter; a foreign institution's acquisition of a majority of the
shares of an Edge corporation; the acquisition of control of an Edge
corporation; investments by a member bank in the stock of an agreement
corporation; the extension of time within which an investor must divest
of investments in entities engaged in impermissible activities or
interests acquired to prevent a loss upon a debt previously contracted
in good faith; investments made by a member bank in a foreign country;
a member bank's engaging in underwriting, distribution, or dealing of
equity securities outside the United States; the use of internal
hedging models for determining compliance with investment limits; and a
member bank's engaging in futures commission merchant activities on an
mutual exchange or clearinghouse that requires members to guarantee or
otherwise contract to cover losses suffered by the other members.
With respect to subpart B of Regulation K, concerning the
activities of foreign banking organizations in the United States, the
revisions to the Delegation Rules also delegate new authority and
expand upon existing delegations of authority for Reserve Banks to act
on proposals filed under that subpart concerning the establishment of
certain permanent or temporary U.S. offices.
E. Competition
Section 3 of the BHC Act and certain other statutes administered by
the Board concerning mergers and acquisitions prohibit the Board from
approving proposals involving the formation of a holding company, the
merger of holding companies, or the acquisition or merger of insured
depository institutions that would result in a monopoly or would be in
furtherance of an attempt to monopolize the business of banking in any
relevant market.\13\ These statutes also prohibit the Board from
approving proposals that would substantially lessen competition or tend
to create a monopoly in any banking market, unless the Board finds that
the anticompetitive effects of the proposal are clearly outweighed in
the public interest by the probable effect of the proposal in meeting
the convenience and needs of the community to be served.\14\
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\13\ See 12 U.S.C. 1842(c)(1)(A) (BHC Act); 12 U.S.C.
1828(c)(5)(A) (Bank Merger Act); 12 U.S.C. 1467a(e)(2)(A) (HOLA).
Section 4 of the BHC Act requires the Board to consider whether a
proposal by a bank holding company to acquire a savings and loan
holding company or a savings association would result in increased
competition or decreased or unfair competition. 12 U.S.C.
1843(j)(2)(A).
\14\ See 12 U.S.C. 1842(c)(1)(B) (BHC Act); 12 U.S.C.
1828(c)(5)(B) (Bank Merger Act); 12 U.S.C. 1467a(e)(2)(B) (HOLA).
---------------------------------------------------------------------------
The Board previously has delegated authority to the Reserve Banks
to approve a proposal involving the formation of a bank holding
company, the merger of bank holding companies or banks, or the
acquisition of a bank holding company or insured depository
institution, provided the proposal satisfies the Board's delegation
criteria.\15\ In 2011, by order, the Board
[[Page 31704]]
extended the delegation to include savings and loan holding companies
in the same manner that the delegation applies to bank holding
companies.\16\ With respect to competitive factors, the Board's
delegation criteria require the Board to act on any such proposal
which, upon consummation, would result in the control by a banking
organization of over 35 percent of total deposits in any relevant
banking market or result in a highly concentrated banking market for
deposits, as measured by the Herfindahl-Hirschman Index (HHI),\17\ if
the proposed transaction also would increase the HHI by at least 200
points.\18\ Currently, in determining whether a proposal satisfies the
Board's delegation criteria for competition in each relevant banking
market for both relative deposit market share and market concentration
for deposits, the deposits of any credit unions in the market are
excluded, and, except for certain applications described below filed
under HOLA, the deposits of all thrift institutions in the market are
included on a 50 percent weighted basis.\19\
---------------------------------------------------------------------------
\15\ 12 CFR 265.11(c)(11).
\16\ See, Order Delegating Certain Actions Relating to Savings
and Loan Holding Companies (August 12, 2011) available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20110812a.htm.
\17\ Under the Department of Justice Bank Merger Competitive
Review guidelines, a market is considered highly concentrated if the
post-merger HHI exceeds 1800. The Department of Justice generally
does not challenge a bank merger or acquisition (in the absence of
other factors indicating anticompetitive effects) unless the post-
merger HHI is at least 1800 and the merger or acquisition increases
the HHI by more than 200 points.
\18\ 12 CFR 265.11(c)(11)(v).
\19\ The standard inclusion of thrift deposits at 50 percent
weight in the initial competitive analysis reflects thrifts'
generally limited lending to small businesses relative to commercial
banks.
---------------------------------------------------------------------------
In analyzing the competitive effects of a merger or acquisition
proposal, the Board previously has indicated that certain thrift
institutions have become, or have the potential to become, significant
competitors to commercial banks.\20\ In some cases involving the
formation of a bank holding company, the acquisition by a bank holding
company of a depository institution, the merger of a bank holding
company with another holding company, or the merger of a bank with
another depository institution, the Board has included the deposits of
certain thrift institutions in a given market on a 100 percent weighted
basis, rather than the standard 50 percent weighting, when competition
from those thrift institutions closely approximated competition from a
commercial bank.\21\ Such thrifts are referred to as ``commercially
active thrifts.''
---------------------------------------------------------------------------
\20\ See, e.g., Midwest Financial Group, 75 Federal Reserve
Bulletin 386 (1989); National City Corporation, 70 Federal Reserve
Bulletin 743 (1984).
\21\ The Board has found that a commercially active thrift
closely approximates competition from a commercial bank when the
thrift is a significant commercial lender in the market and offers a
broad range of consumer, mortgage, and other banking products
typically offered by commercial banks. See, e.g., KeyCorp, FRB Order
No. 2016-12 (July 12, 2016); River Valley Bancorp, FRB Order No.
2012-10 (October 17, 2012); Regions Financial Corporation, 93
Federal Reserve Bulletin C16 (2007); and Banknorth Group, Inc.,
supra. See also Banknorth Group, Inc., 75 Federal Reserve Bulletin
703 (1989).
---------------------------------------------------------------------------
The Board also has found that certain credit unions can serve as
competitors to commercial banks in a relevant banking market. The Board
has included certain credit unions in its competitive analysis when the
credit unions offer consumer banking products, operate street-level
branches, and have broad membership criteria.\22\ Credit unions which
meet these criteria are referred to as ``qualifying credit unions.''
Generally, the Board has included the deposits of qualifying credit
unions at a 50 percent weight in its analysis, which reflects credit
unions' relatively low levels of commercial and small business lending
relative to commercial banks. However, the Board has only considered
deposits of qualifying credit unions as a factor that can mitigate the
anti-competitive effects of a proposal.
---------------------------------------------------------------------------
\22\ See, e.g., Central Bancompany, Inc., FRB Order No. 2017-03
(February 8, 2017); Chemical Financial Corporation, FRB Order No.
2015-13 (April 20, 2015); Mitsubishi UFJ Financial Group, Inc., FRB
Order No. 2012-12 (November 14, 2012); and Old National Bancorp, FRB
Order No. 2012-9 (August 30, 2012).
---------------------------------------------------------------------------
The Board has determined that it would be appropriate for the
Reserve Banks to act on proposals involving the formation of a bank
holding company, the acquisition by a bank holding company of a
depository institution, the merger of a bank holding company with
another holding company, or the merger of a bank with another
depository institution that satisfy the Board's delegation criteria for
each affected banking market after the market deposits of commercially
active thrift institutions at 100 percent weight and qualifying credit
unions at 50 percent weight are included in the initial competitive
analysis. Accordingly, the Board is revising the Delegation Rules to
permit the Reserve Banks to act upon such proposals, provided the
proposals also satisfy the Board's other criteria for delegated action.
In so doing, the Board has also determined that it would be appropriate
to clarify that its delegation criteria for competition apply to
proposals requiring the Board's prior approval under the Bank Merger
Act and to proposals involving the acquisition of a thrift by a bank
holding company pursuant to section 4 of the BHC Act.
For proposals filed pursuant to HOLA involving the formation of a
savings and loan holding company, the merger of savings and loan
holding companies, or the acquisition by a savings and loan holding
company of a thrift, a modified calculation for relative market share
and market concentration for deposits will be used to determine whether
the proposal satisfies the Board's delegation criteria for competition.
In these cases, the deposits of all thrift institutions in the relevant
banking markets will be weighted at 100 percent in the calculation
because both before and after consummation of the proposal, the
depository institutions involved in the transaction are thrift
institutions. Therefore, all thrift institutions in those banking
markets compete directly with the involved depository institutions. In
these cases, the deposits of all banks in the markets are included at
100 percent weight, because all banks are considered to compete
directly with thrift institutions.
The Board has determined that it would be appropriate to codify the
Board's previous delegation to the Reserve Banks concerning proposals
involving the formation or acquisition of a savings and loan holding
company, the merger of savings and loan holding companies, or the
acquisition by a savings and loan holding company of a thrift by
authorizing the Reserve Banks to act on proposals that satisfy the
Board's delegation criteria for each affected banking market, and to
include the market deposits of all thrift institutions at 100 percent
weight in this analysis. In so doing, the Board has also determined
that it would be appropriate to modify this delegation to allow the
Reserve Banks to act on such proposals if the proposal would satisfy
the Board's delegation criteria for each affected banking market after
the market deposits of qualifying credit unions at 50 percent weight
are included in the initial competitive analysis.
In all cases, the concurrence of the Board's Division of Research
and Statistics will be necessary in order for the Reserve Bank to
include the market deposits of commercially active thrifts and
qualifying credit unions the higher weights, to ensure that such
determinations are consistent with Board precedent.
The delegations in this final rule supersede the Board's prior
delegations of authority to the Reserve Banks to approve merger or
acquisition proposals
[[Page 31705]]
involving savings and loan holding companies.
III. Regulatory Analysis
These amendments relate solely to the agency's organization,
procedure, or practice. Accordingly, the provisions of the
Administrative Procedure Act (APA) regarding notice of proposed
rulemaking and opportunity for public participation are not
applicable.\23\
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\23\ 5 U.S.C. 553(b)(A).
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Because no notice of proposed rulemaking is required to be issued,
or has been issued, in connection with this rule, it is not a ``rule''
for purposes of the Regulatory Flexibility Act, and that act,
therefore, does not apply.\24\
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\24\ See 5 U.S.C. 601(2).
---------------------------------------------------------------------------
In accordance with the Paperwork Reduction Act of 1995 (PRA),\25\
the Board may not conduct or sponsor, and a respondent is not required
to respond to, an information collection unless it displays a currently
valid Office of Management and Budget control number. The Board has
reviewed the proposed rule and has determined that it contains no
collections of information as defined in the PRA.
---------------------------------------------------------------------------
\25\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
Section 722 of the Gramm-Leach-Bliley Act \26\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The Board has sought to present this
rule in a simple and straightforward manner.
---------------------------------------------------------------------------
\26\ 12 U.S.C. 4809.
---------------------------------------------------------------------------
This rule is not a ``substantive rule'' for the purposes of the
APA; as such, the act does not require the Board to delay the effective
date of the rule.\27\ Accordingly, the amendments are effective July 3,
2019.
---------------------------------------------------------------------------
\27\ See 5 U.S.C. 553(d).
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List of Subjects in 12 CFR Part 265
Authority delegations (Government agencies), Banks, banking.
Authority and Issuance
0
For the reasons stated in the Supplementary Information, the Board of
Governors of the Federal Reserve System amends 12 CFR part 265 as
follows:
PART 265--RULES REGARDING DELEGATION OF AUTHORITY
0
1. The authority citation for part 265 continues to read as follows:
Authority: 12 U.S.C. 248(i) and (k).
0
2. In part 265, remove all references to ``Director of the Division of
Banking Supervision and Regulation'' and add in their place ``Director
of the Division of Supervision and Regulation''.
Sec. 265.5 [Amended]
0
3. In Sec. 265.5 remove and reserve paragraphs (d)(1) and (3).
0
4. In Sec. 265.7 revise the section heading and paragraphs (d)(1) and
(3); remove and reserve paragraphs (d)(4) and (5), (7), and (9) through
(13); and add paragraph (e)(7).
The revisions and addition read as follows:
Sec. 265.7 Functions delegated to Director of Division of Supervision
and Regulation
* * * * *
(d) * * *
(1) Foreign bank reports. To require submission of a report of
condition respecting any foreign bank in which a member bank holds
stock acquired under Sec. 211.8(b) of Regulation K (12 CFR part 211),
pursuant to section 25 of the Federal Reserve Act (12 U.S.C. 602).
* * * * *
(3) With the concurrence of the General Counsel, to approve
applications, notices, exemption requests, waivers and suspensions, and
other related matters under Regulation K (12 CFR part 211), where such
matters do not raise any significant legal, supervisory, or policy
issues.
* * * * *
(e) * * *
(7) Public welfare investments. (i) To permit a state member bank
to make a public welfare investment in accordance with paragraph 23 of
section 9 of the Federal Reserve Act (12 U.S.C. 338a) in any case in
which the appropriate Reserve Bank does not have delegated authority to
act, unless the proposal does not satisfy 12 CFR 208.22(b)(1). In
acting on such requests, the Director shall consult with the directors
of other interested divisions where appropriate; and
(ii) To determine, in connection with acting on a proposal pursuant
to delegated authority as set forth in paragraph (e)(7)(i) of this
section, that the aggregate amount of a state member bank's public
welfare investments will not pose a significant risk to the deposit
insurance fund in accordance with paragraph 23 of section 9 of the
Federal Reserve Act (12 U.S.C. 338a).
* * * * *
0
5. In Sec. 265.11:
0
a. Revise paragraph (a)(10);
0
b. Add paragraph (a)(17;
0
c. Revise the paragraph (c) subject heading and paragraph (c)(11)(v);
0
d. Add paragraph (c)(12);
0
e. Revise paragraphs (d)(1) through (8) and (10) through (12);
0
f. Add paragraphs (d)(13) through (15); and
0
g. Revise paragraph (e)(12).
The revisions and addition read as follows:
Sec. 265.11 Functions delegated to Federal Reserve Banks.
* * * * *
(a) * * *
(10) Regulation K; divestiture of impermissible interests. To
extend the time within which an investor, under Sec. 211.8(e) and (f)
of Regulation K (12 CFR part 211), must divest of investments in
entities engaged in impermissible activities or interests acquired to
prevent a loss upon a debt previously contracted in good faith.
* * *
(17) Modification of commitments. To grant or deny requests for
relieving or modifying (including extending the time for performing) a
commitment relied upon by the Reserve Bank in taking any action under
the Bank Holding Company Act, the Bank Merger Act, the Change in Bank
Control Act of 1978, the Federal Reserve Act, the International Banking
Act, the Federal Deposit Insurance Act, or the Home Owners' Loan Act,
so long as the requests do not raise any significant legal,
supervisory, or policy issues. In acting on such requests, the Reserve
Bank may take into account changed circumstances and good faith efforts
to fulfill the commitments, and shall consult with Board staff as
appropriate. The Reserve Bank may not take any action that would be
inconsistent with or result in an evasion of the provisions of the
original action.
* * * * *
(c) Holding companies; change in bank control; mergers. * * *
(11) * * *
(v)(A) With respect to holding company formations, acquisitions or
mergers of holding companies, or acquisitions or mergers of insured
depository institutions, except as set forth in paragraph (c)(11)(v)(B)
of this section, upon consummation, the proposal would result in the
control by a banking organization of over 35 percent of total deposits
in banking offices in the relevant geographic market or an increase of
at least 200 points in the Herfindahl-Hirschman Index (HHI) for
deposits in a highly concentrated market (a market with a post-merger
HHI of at least 1800) when including:
(1) All thrift deposits at 50 percent weight, except for deposits
of thrifts determined by the Reserve Bank, with the concurrence of the
Board's Division of Research and Statistics, to be commercially active,
which are included at 100 percent weight; and
(2) The deposits of credit unions determined by the Reserve Bank,
with
[[Page 31706]]
the concurrence of the Board's Division of Research and Statistics, to
offer consumer banking products, operate street-level branches, and
have broad membership criteria in the relevant geographic market, which
are included at 50 percent weight; or
(B) With respect to the formation of a savings and loan holding
company, the merger of savings and loan holding companies, or the
acquisition by a savings and loan holding company of a savings
association, upon consummation, the proposal would result in the
control by a banking organization of over 35 percent of total deposits
in banking offices in the relevant geographic market or an increase of
at least 200 points in the HHI for deposits in a highly concentrated
market (a market with a post-merger HHI of at least 1800) when
including:
(1) All thrift deposits at 100 percent weight; and
(2) The deposits of credit unions determined by the Reserve Bank,
with the concurrence of the Board's Division of Research and
Statistics, to offer consumer banking products, operate street-level
branches, and have broad membership criteria in the relevant geographic
market, which are included at 50 percent weight; or
* * * * *
(12) Waivers. (i) To inform an acquiring bank holding company, in
connection with a notice submitted by the bank holding company pursuant
to 12 CFR 225.12(d)(2), that an application under 12 CFR 225.11 is
required.
(ii) To inform an acquiring savings and loan holding company, in
connection with a notice submitted by the savings and loan holding
company pursuant to 12 CFR 238.12(d)(1), that an application under 12
CFR 238.11 is required.
(d) * * *
(1) Member bank, Edge or agreement corporation establishing foreign
branch. With regard to a prior notice to establish a branch in a
foreign country under Sec. 211.3 of Regulation K (12 CFR part 211)--
(i) To waive the notice period if immediate action is required and
there is no significant legal, supervisory, or policy issue;
(ii) To suspend the notice period;
(iii) To determine not to object to the notice, provided that no
significant legal, supervisory, or policy issue is raised by the
proposal; or
(iv) To require the notificant to file an application for the
Board's specific consent.
(2) Acquisitions by a foreign branch. To approve, under Sec.
211.4(a)(8) of Regulation K (12 CFR part 211), a proposal by a foreign
branch of a member bank to acquire all of the shares of a company that
engages solely in activities in which the member bank is permitted to
engage or that are incidental to the activities of the foreign branch,
provided that no significant legal, supervisory, or policy issue is
raised.
(3) Application to establish Edge corporation. To approve the
application by a U.S. banking organization to establish an Edge
corporation under section 25A of the Federal Reserve Act (12 U.S.C.
611) and Sec. 211.5 of the Board's Regulation K (12 CFR part 211) if
all of the following criteria are met:
(i) The U.S. banking organization meets the capital adequacy
guidelines and is otherwise in satisfactory condition;
(ii) The proposed Edge corporation will be a wholly-owned
subsidiary of a single banking organization; and
(iii) No significant legal, supervisory, or policy issues are
raised by the proposal.
(4) Issuance of permit to Edge corporation and amendments to
articles of association and charter. To issue to an Edge corporation
under section 25A of the Federal Reserve Act (12 U.S.C. 614) and Sec.
211.5 of Regulation K (12 CFR part 211) a permit to commence business
and to approve amendments to the articles of association and charter of
an Edge corporation.
(5) Investments in Edge and agreement corporations. To approve,
pursuant to 211.5(a)(3) of Regulation K (12 CFR part 211) an
application by a member bank to invest more than 10 percent of its
capital and surplus in the aggregate amount of stock held in in all
Edge or agreement corporations; provided that--
(i) The member bank's total investment, including retained earnings
of the Edge and agreement corporation, does not exceed 20 percent of
the bank's capital and surplus and would not exceed that level as a
result of the proposal; and
(ii) The proposal raises no significant legal, supervisory, or
policy issues.
(6) Foreign ownership of an Edge corporation. To approve, under
Sec. 211.5(d) of Regulation K (12 CFR part 211), a foreign
institution's acquisition, directly or indirectly, of a majority of the
shares of the capital stock of an Edge corporation, provided that no
significant legal, supervisory, or policy issue is raised.
(7) Change in control of an Edge corporation. With regard to a
notice to acquire, directly or indirectly, 25 percent or more of the
voting securities, or to otherwise acquire control, of an Edge
corporation, under Sec. 211.5(e) of Regulation K (12 CFR part 211)-
(i) to waive the notice period if immediate action is required and
no significant legal, supervisory, or policy issue is raised;
(ii) To extend the notice period;
(iii) To determine not to object to the notice if no significant
legal, supervisory, or policy issue is raised; or
(iv) To require the notificant to file an application for the
Board's specific consent.
(8) Granting specific consent. To grant prior specific consent to
an investor for
(i) A long range investment plan, under Sec. 211.9(a)(4) of
Regulation K (12 CFR part 211), and
(ii) An investment in its first subsidiary or its first joint
venture, under Sec. 211.9(a)(5) of Regulation K (12 CFR part 211),
where such investment does not exceed the general consent limitations
under Sec. 211.9(b) of Regulation K (12 CFR part 211).
* * * * *
(10) Authority under prior-notice procedures. (i) With regard to a
prior notice to make an investment under Sec. 211.9(f) of Regulation K
(12 CFR part 211)--
(A) To waive the notice period if immediate action is required and
there is no significant legal, supervisory, or policy issue raised;
(B) To suspend the notice period;
(C) To determine not to object to the notice if there is no
significant legal, supervisory, or policy issue raised; or
(D) To require the notificant to file an application for the
Board's specific consent.
(ii) With regard to a prior notice of a foreign bank to establish
certain U.S. offices under Sec. 211.24(a)(2)(i) of Regulation K (12
CFR part 211)--
(A) To waive the notice period if immediate action is required and
there is no significant legal, supervisory, or policy issue raised;
(B) To suspend the notice period;
(C) To determine not to object to the notice if there is no
significant legal, supervisory, or policy issue raised; or
(D) To require the notificant to file an application for the
Board's specific consent.
(11) Activities usual in connection with banking or other financial
operations abroad. (i) To approve a prior notice, under Sec.
211.10(a)(14) of Regulation K (12 CFR part 211), to engage in
underwriting and distribution of equity securities outside the United
States, provided that the proposal raises no significant legal,
supervisory, or policy issue.
[[Page 31707]]
(ii) To approve a prior notice, under Sec. 211.10(a)(15) of
Regulation K (12 CFR part 211), to engage in dealing in equity
securities outside the United States, provided that the proposal raises
no significant legal, supervisory, or policy issue.
(iii) To approve a prior notice, under Sec. 211.10(a)(15)(iv)(B)
of Regulation K (12 CFR part 211), to use internal hedging models,
provided that the proposal raises no significant legal, supervisory, or
policy issue.
(iv) To approve a prior notice, under Sec. 211.10(a)(18) of
Regulation K (12 CFR part 211), to engage in futures commission
merchant activities on an mutual exchange or clearinghouse that
requires members to guarantee or otherwise contract to cover losses
suffered by the other members, provided that the Board has previously
approved the exchange, the application is on the same terms and
conditions on which the Board based its approval of the exchange, and
no significant legal, supervisory, or policy issue is raised.
(12) Change in foreign bank home state. With respect to a foreign
bank's change of home state under Sec. 211.22(b) of Regulation K (12
CFR part 211) and provided no significant legal, supervisory, or policy
issue is raised--
(i) To waive the notice period; or
(ii) To determine not to object to the notice.
(13) Waiver of 30-day prior notification period. To waive the 30-
day prior notification period with respect to a foreign bank's change
of home state under Sec. 211.22(c)(1) of Regulation K (12 CFR part
211).
(14) Offices of foreign banks. (i) To approve the establishment of
a branch, agency, commercial lending company, or representative office
by a foreign bank in the United States, pursuant to Sec. 211.24(a)(1)
of Regulation K (12 CFR part 211), if the Board has already determined
that the foreign bank is subject to consolidated comprehensive
supervision and provided that the application raises no significant
legal, supervisory, or policy issue.
(ii) To allow a foreign bank to establish a temporary office of a
branch or agency, pursuant to Sec. 211.24(a)(5) of Regulation K (12
CFR part 211), provided there is no direct public access to such office
and no significant legal, supervisory, or policy issue is raised.
(15) Agreement with foreign bank concerning deposits of out-of-
home-state branch. To enter into an agreement or undertaking with a
foreign bank that it shall receive only such deposits at its out-of-
home-state branch as would be permissible for an Edge corporation under
section 5 of the International Banking Act (12 U.S.C. 3103).
(e) * * *
(12) Public welfare investments. (i) To permit a state member bank
to make a public welfare investment in accordance with paragraph 23 of
section 9 of the Federal Reserve Act (12 U.S.C. 338a), provided that
the proposal satisfies 12 CFR 208.22(b)(1) and no significant legal,
supervisory, or policy issue is raised; and
(ii) To determine, in connection with acting on a proposal pursuant
to delegated authority as set forth in paragraph (e)(12)(i) of this
section, that the aggregate amount of a state member bank's public
welfare investments will not pose a significant risk to the deposit
insurance fund in accordance with paragraph 23 of section 9 of the
Federal Reserve Act (12 U.S.C. 338a).
* * * * *
By order of the Board of Governors of the Federal Reserve
System, June 26, 2019.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-13970 Filed 7-2-19; 8:45 am]
BILLING CODE 6210-02-P
