PART 347—INTERNATIONAL BANKING Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103, 3104, 3105, 3108, 3109; Pub L. No. 111-203, section 939A, 124 Stat. 1376, 1887 (July 21, 2010) (codified 15 U.S.C. 78o-7 note). Source: 70 FR 17560, Apr. 6, 2005, unless otherwise noted. § 347.101 Authority, purpose, and scope. (a) This subpart is issued pursuant to section 18(d) and ( l l (b) The rules in subpart A address the FDIC's requirements for insured state nonmember bank investments in foreign organizations, permissible foreign financial activities, loans or extensions of credit to or for the account of foreign organizations, and the FDIC's recordkeeping, supervision, and approval requirements. The rules also address the permissible activities for foreign branches of insured state nonmember banks, as well as the FDIC's requirements for establishing, operating, relocating and closing of branches in foreign countries. § 347.102 Definitions. For the purposes of this subpart: (a) An affiliate of an insured state nonmember bank means: (1) Any entity of which the insured state nonmember bank is a direct or indirect subsidiary or which otherwise controls the insured state nonmember bank; (2) Any organization which is a direct or indirect subsidiary of such entity or which is otherwise controlled by such entity; or (3) Any other organization that is a direct or indirect subsidiary of the insured state nonmember bank or is otherwise controlled by the insured state nonmember bank. (b) Control means the ability to control in any manner the election of a majority of an organization's directors or trustees; or the ability to exercise a controlling influence over the management and policies of an organization. An insured state nonmember bank is deemed to control an organization of which it is a general partner or its affiliate is a general partner. (c) Domestic means United States. (d) Eligible insured state nonmember bank means an eligible depository institution as defined in § 303.2(r) of this chapter. (e) Equity interest means any ownership interest or rights in an organization, whether through an equity security, contribution to capital, general or limited partnership interest, debt or warrants convertible into ownership interests or rights, loans providing profit participation, binding commitments to acquire any such items, or some other form of business transaction. (f) Equity security means voting or nonvoting shares, stock, investment contracts, or other interests representing ownership or participation in a company or similar enterprise, as well as any instrument convertible to any such interest at the option of the holder without payment of substantial additional consideration. (g) FRB means the Board of Governors of the Federal Reserve System. (h) Foreign bank means an organization that is organized under the laws of a foreign country, a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands that: (1) Is recognized as a bank by the bank supervisory or monetary authority of the country of its organization or the country in which its principal banking operations are located; (2) Receives deposits to a substantial extent in the regular course of its business; and (3) Has the power to accept demand deposits. (i) Foreign banking organization means a foreign organization that is formed for the sole purpose of either holding shares of a foreign bank or performing nominee, fiduciary, or other banking services incidental to the activities of a foreign branch or foreign bank affiliate of the insured state nonmember bank. (j) Foreign branch means an office or place of business located outside the United States, its territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, or the Virgin Islands, at which banking operations are conducted, but does not include a representative office. (k) Foreign country means any country other than the United States and includes any territory, dependency, or possession of any such country or of the United States. (l) Foreign organization means an organization that is organized under the laws of a foreign country. (m) Insured state nonmember bank or bank means a state bank, as defined by § 3(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(a)(2)), whose deposits are insured by the FDIC and that is not a member of the Federal Reserve System. (n) Indirectly means investments held or activities conducted by a subsidiary of an organization. (o) Investment grade (p) Loan or extension of credit means all direct and indirect advances of funds to a person, government, or entity made on the basis of any obligation of that person, government, or entity to repay funds. (q) Organization or entity means a corporation, partnership, association, bank, or other similar entity. (r) NRSRO means a nationally recognized statistical rating organization as designated by the Securities and Exchange Commission. (s) Representative office means an office that engages solely in representative functions such as soliciting new business for its home office or acting as liaison between the home office and local customers, but which has no authority to make business or contracting decisions other than those relating to the personnel and premises of the representative office. (t) Subsidiary means any organization more than 50 percent of the voting equity interests of which are directly or indirectly held by another organization. (u) Tier 1 capital means Tier 1 capital as defined in § 324.2 of this chapter. (v) Well capitalized means well capitalized as defined in § 324.403 of this chapter. [70 FR 17560, Apr. 6, 2005, as amended at 78 FR 55595, Sept. 10, 2013; 83 FR 9143, Mar. 5, 2018; 83 FR 17741, Apr. 24, 2018] § 347.103 Effect of state law on actions taken under this subpart. A bank may acquire and retain equity interests in a foreign organization or establish a foreign branch, subject to the requirements of this subpart, if it is authorized to do so by the law of the state in which the bank is chartered. § 347.104 Insured state nonmember bank investments in foreign organizations. (a) Investment in foreign banks or foreign banking organizations. (b) Investment in other foreign organizations. (1) acquire and retain equity interests in foreign organizations, other than foreign banks or foreign banking organizations in amounts of 50 percent or less of the foreign organization's voting equity interests, if the equity interest is held through a domestic or foreign subsidiary; and (2) The bank meets its minimum capital requirements. § 347.105 Permissible financial activities outside the United States. (a) Limitation on authorized activities. (1) Holding more than 50 percent, in the aggregate, of the voting equity interest in such foreign organization; or (2) Controlling such foreign organization, unless the activities of a foreign organization are limited to those authorized under paragraph (b) of this section. (b) Authorized activities. (1) Commercial and other banking activities. (2) Financing, including commercial financing, consumer financing, mortgage banking, and factoring, subject to compliance with any attendant restrictions contained in 12 CFR 225.28(b). (3) Leasing real or personal property, acting as agent, broker or advisor in leasing real or personal property, subject to compliance with any attendant restrictions in 12 CFR 225.28(b). (4) Acting as a fiduciary, subject to compliance with any attendant restrictions in 12 CFR 225.28(b). (5) Underwriting credit life, credit accident and credit health insurance. (6) Performing services for other direct or indirect operations of a domestic banking organization, including representative functions, sale of long-term debt, name saving, liquidating assets acquired to prevent loss on a debt previously contracted in good faith, and other activities that are permissible for a bank holding company under sections 4(a)(2)(A) and 4(c)(1)(C) of the Bank Holding Company Act. (7) Holding the premises of a branch of an Edge corporation or insured state nonmember bank or the premises of a direct or indirect subsidiary, or holding or leasing the residence of an officer or employee of a branch or a subsidiary. (8) Providing investment, financial, or economic services, subject to compliance with any attendant restrictions in 12 CFR 225.28(b). (9) General insurance agency and brokerage. (10) Data processing. (11) Organizing, sponsoring, and managing a mutual fund if the fund's shares are not sold or distributed in the United States or to U.S. residents and the fund does not exercise management control over the firms in which it invests. (12) Performing management consulting services, provided that such services when rendered with respect to the domestic market must be restricted to the initial entry. (13) Underwriting, distributing, and dealing in debt securities outside the United States. (14) With the prior approval of the FDIC under section 347.119(d), underwriting, distributing, and dealing in equity securities outside the United States. (15) Operating a travel agency in connection with financial services offered outside the United States by the bank or others. (16) Providing futures commission merchant services, subject to compliance with any attendant restrictions in 12 CFR 225.28(b). (17) Engaging in activities that the FRB has determined in Regulation Y (12 CFR 225.28(b)) are closely related to banking under section 4(c)(8) of the Bank Holding Company Act. (18) Engaging in other activities, with the prior approval of the FDIC. (c) Limitation on activities authorized under Regulation Y. (d) Approval of other activities. § 347.106 Going concerns. Going concerns. § 347.107 Joint ventures. (a) Joint ventures. (b) Joint venture defined. § 347.108 Portfolio investments. (a) Portfolio investments. (1) No more than 10 percent of either the consolidated assets or revenues of the foreign organization may be attributable to activities that are not permissible under § 347.105(b); and (2) Any loans or extensions of credit made by the bank and its affiliates to the foreign organization must be on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions between the bank or its affiliates and nonaffiliated organizations. (b) Portfolio investment defined. § 347.109 Limitations on indirect investments in nonfinancial foreign organizations. (a) A bank may, through a subsidiary authorized by §§ 347.105 or 347.106, or an Edge corporation if also authorized by the FRB, acquire and hold equity interests in foreign organizations that are not foreign banks or foreign banking organizations and that engage generally in activities beyond those listed in § 347.105(b), subject to the following: (1) The amount of the investment does not exceed 15 percent of the bank's Tier 1 capital; (2) The aggregate holding of voting equity interests of one foreign organization by the bank and its affiliates must be less than: (i) 20 percent of the foreign organization's voting equity interests; and (ii) 40 percent of the foreign organization's voting and nonvoting equity interests; (b) The bank or its affiliates must not otherwise control the foreign organization; and (c) Loans or extensions of credit made by the bank and its affiliates to the foreign organization must be on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions between the bank or its affiliates and nonaffiliated organizations. § 347.110 Affiliate holdings. References in §§ 347.107, 347.108, and 347.109 to equity interests of foreign organizations held by an affiliate of a bank include equity interests held in connection with an underwriting or for distribution or dealing by an affiliate permitted to do so by §§ 362.8 or 362.18 of this chapter or section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 1843(c)(8)). § 347.111 Underwriting and dealing limits applicable to foreign organizations held by insured state nonmember banks. A bank that holds an equity interest in one or more foreign organizations which underwrite, deal, or distribute equity securities outside the United States as authorized by § 347.105(b)(14) is subject to the following limitations: (a) Underwriting commitment limits. (2) Underwriting commitments in excess of this limit must be either: (i) Covered by binding commitments from subunderwriters or purchasers; or (ii) Deducted from the capital of the bank, with at least 50 percent of the deduction being taken from Tier 1 capital, with the bank remaining well capitalized after this deduction. (b) Distribution and dealing limits. (1) May not exceed the lesser of $60 million, as adjusted from time to time in accordance with 12 CFR 314.1, or 5 percent of the bank's Tier 1 capital, subject to the following: (i) Any equity securities acquired pursuant to any underwriting commitment extending up to 90 days after the payment date for the underwriting may be excluded from this limit; (ii) Any equity securities of the entity held under the authority of §§ 347.105 through 347.109 or 12 CFR 211.10 for purposes other than distribution or dealing must be included in this limit; and (iii) Up to 75 percent of the position in an equity security may be reduced by netting long and short positions in the same security, or offsetting cash positions against derivative instruments referenced to the same security so long as the derivatives are part of a prudent hedging strategy; and (2) Must be included in calculating the general consent limits under § 347.117(b)(3) if the bank relies on the general consent provisions as authority to acquire equity interests of the same foreign entity for investment or trading. (c) Additional distribution and dealing limits. (d) Combined limits. The aggregate of the following may not exceed 25 percent of the bank's Tier 1 capital: (1) All equity interests of foreign organizations held for investment or trading under § 347.109 or by an affiliate of the bank under the corresponding paragraph of 12 CFR 211.10. (2) All underwriting commitments under paragraph (a) of this section, taken together with all underwriting commitments by any affiliate of the bank under the authority of 12 CFR 211.10, after excluding the amount of any underwriting commitment: (i) Covered by binding commitments from subunderwriters or purchasers under paragraph (a)(1) of this section or the comparable provision of 12 CFR 211.10; or (ii) Already deducted from the bank's capital under paragraph (a)(2) of this section, or the appropriate affiliate's capital under the comparable provisions of 12 CFR 211.10; and (3) All equity securities held for distribution or dealing under paragraph (b) of this section, taken together with all equity securities held for distribution or dealing by any affiliate of the bank under the authority of 12 CFR 211.10, after reducing by up to 75 percent the position in any equity security by netting and offset, as permitted by paragraph (b)(1)(iii) of this section or the comparable provision of 12 CFR 211.10. [70 FR 17560, Apr. 6, 2005, as amended at 90 FR 55811, Dec. 4, 2025] § 347.112 Restrictions applicable to foreign organizations that act as futures commission merchants. (a) If a bank acquires or retains an equity interest in a foreign organization that acts as a futures commission merchant pursuant to § 347.105(b)(16), the foreign organization may not be a member of an exchange or clearing association that requires members to guarantee or otherwise contract to cover losses suffered by other members unless the: (1) Foreign organization's liability does not exceed two percent of the bank's Tier 1 capital, or (2) Bank has obtained the prior approval of the FDIC under § 347.120(d). (b) [Reserved] § 347.113 Restrictions applicable to activities by a foreign organization in the United States. (a) A bank, acting under the authority provided in this subpart, may not directly or indirectly hold: (1) Equity interests of any foreign organization that engages in the general business of buying or selling goods, wares, merchandise, or commodities in the United States; or (2) More than 5 percent of the equity interests of any foreign organization that engages in activities in the United States unless any activities in which the foreign organization engages in the United States are incidental to its international or foreign business. (b) For purposes of this section: (1) A foreign organization is not engaged in any business or activities in the United States unless it maintains an office in the United States other than a representative office. (2) The following activities are incidental to international or foreign business: (i) Activities that are permissible for an Edge corporation in the United States under 12 CFR 211.6; or (ii) Other activities approved by the FDIC. § 347.114 Extensions of credit to foreign organizations held by insured state nonmember banks; shares of foreign organizations held in connection with debts previously contracted. (a) Loans or extensions of credit. (b) Debts previously contracted. § 347.115 Permissible activities for a foreign branch of an insured state nonmember bank. In addition to its general banking powers and if permitted by the law of the state in which the bank is chartered, a foreign branch of a bank may conduct the following activities to the extent that they are consistent with banking practices in a foreign country where the bank maintains a branch: (a) Guarantees. (1) The guarantee or agreement specifies a maximum monetary liability; and (2) To the extent the guarantee or agreement is not subject to a separate amount limit under state or federal law, the amount of the guarantee or agreement is combined with loans and other obligations for purposes of applying any legal lending limits. (b) Government obligations. (1) Underwrite, distribute and deal, invest in, or trade obligations of: (i) The national government of the country in which the branch is located or its political subdivisions; and (ii) An agency or instrumentality of such national government if supported by the taxing authority, guarantee, or full faith and credit of the national government. (2) Underwrite, distribute and deal, invest in or trade obligations 1 1 (i) The national government of any foreign country or its political subdivisions, to the extent permissible under the law of the issuing foreign country; and (ii) An agency or instrumentality of the national government of any foreign country to the extent permissible under the law of the issuing foreign country, if supported by the taxing authority, guarantee, or full faith and credit of the national government. (c) Local investments. (i) Equity securities of the central bank, clearinghouses, governmental entities, and government sponsored development banks of the country in which the branch is located; (ii) Other debt securities eligible to meet local reserve or similar requirements; and (iii) Shares of automated electronic payment networks, professional societies, schools, and similar entities necessary to the business of the branch. (2) Aggregate local investments (other than those required by the law of the foreign country or permissible under section 5136 of the Revised Statutes (12 U.S.C. 24 (Seventh)) by all the bank's branches in a single foreign country must not exceed 1 percent of the total deposits in all the bank's branches in that country as reported in the preceding year-end Report of Income and Condition (Call Report): 2 2 (d) Insurance. (e) Employee benefits program. (f) Repurchase agreements. (g) Other activities. (h) Approval of other activities. § 347.116 Recordkeeping and supervision of foreign activities of insured state nonmember banks. (a) Records, controls and reports. A bank with any foreign branch, any investment in a foreign organization of 20 percent or more of the organization's voting equity interests, or control of a foreign organization must maintain a system of records, controls and reports that, at minimum, provide for the following: (1) Risk assets. To permit assessment of exposure to loss, information furnished or available to the main office should be sufficient to permit periodic and systematic appraisals of the quality of risk assets, including loans and other extensions of credit. Coverage should extend to a substantial proportion of the risk assets in the branch or foreign organization, and include the status of all large credit lines and of credits to customers also borrowing from other offices or affiliates of the bank. Appropriate information on risk assets may include: (i) A recent financial statement of the borrower or obligee and current information on the borrower's or obligee's financial condition; (ii) Terms, conditions, and collateral; (iii) Data on any guarantors; (iv) Payment history; and (v) Status of corrective measures employed. (2) Liquidity. (3) Contingencies. (4) Controls. (i) Verification and identification of entries on financial statements; (ii) Income and expense accounts, including descriptions of significant chargeoffs and recoveries; (iii) Operations and dual-control procedures and other internal controls; (iv) Conformance to head office guidelines on loans, deposits, foreign exchange activities, accounting procedures in compliance with applicable accounting standards, and discretionary authority of local management; (v) Compliance with local laws and regulations; and (vi) Compliance with applicable U.S. laws and regulations. (b) Availability of information to examiners; reports. (2) The FDIC may from time to time require a bank to make and submit such reports and information as may be necessary to implement and enforce the provisions of this subpart, and the bank shall submit an annual report of condition for each foreign branch pursuant to instructions provided by the FDIC. § 347.117 General consent. (a) General consent to establish or relocate a foreign branch. (1) Eligible bank to establish a foreign branch conducting activities authorized by section 347.115 of this section in any foreign country in which: (i) The bank already operates one or more foreign branches or foreign bank subsidiaries; (ii) The bank's holding company operates a foreign bank subsidiary; or (iii) An affiliated bank or Edge or Agreement corporation operates one or more foreign branches or foreign bank subsidiaries. (2) Insured state nonmember bank to relocate an existing foreign branch within a foreign country. (b) General consent to invest in a foreign organization. (1) The bank operates at least one foreign bank subsidiary or foreign branch, an affiliated bank or Edge or Agreement corporation operates at least one foreign bank subsidiary or foreign branch, or the bank's holding company operates at least one foreign bank subsidiary in the country where the foreign organization will be located; (2) In any instance where the bank and its affiliates will hold 20 percent or more of the foreign organization's voting equity interests or control the foreign organization, at least one state nonmember bank has a foreign bank subsidiary or foreign branch (other than a shell branch) in the country where the foreign organization will be located; 3 3 http://www.fdic.gov. (3) The investment is within one of the following limits: (i) The investment is acquired at net asset value from an affiliate; (ii) The investment is a reinvestment of cash dividends received from the same foreign organization during the preceding 12 months; or (iii) The total investment, directly or indirectly, in a single foreign organization in any transaction or series of transactions during a twelve-month period does not exceed 2 percent of the bank's Tier 1 capital, and such investments in all foreign organizations in the aggregate do not exceed: (A) 5 percent of the bank's Tier 1 capital during a 12-month period; and (B) Up to an additional 5 percent of the bank's Tier 1 capital if the investments are acquired for trading purposes. § 347.118 Expedited processing. (a) Expedited processing of branch applications. (1) Foreign branches or foreign bank subsidiaries of the eligible bank; (2) Foreign branches or foreign bank subsidiaries of banks and Edge or Agreement corporations affiliated with the eligible bank; and (3) Foreign bank subsidiaries of the eligible bank's holding company. (b) Expedited processing of applications for investment in foreign organizations. § 347.119 Specific consent. General consent and expedited processing under this subpart do not apply in the following circumstances: (a) Limitation on access to supervisory information in foreign country. (i) A bank would hold 20 percent or more of the voting equity interests of a foreign organization or control such organization as a result of a foreign investment; or (ii) A bank would be establishing a foreign branch. (b) Modification or suspension of general consent or expedited processing. (c) Specific consent. [70 FR 17560, Apr. 6, 2005, as amended at 85 FR 72555, Nov. 13, 2020] § 347.120 Computation of investment amounts. In computing the amount that may be invested in any foreign organization under §§ 347.117 through 347.119, any investments held by an affiliate of a bank must be included. § 347.121 Requirements for insured state nonmember bank to close a foreign branch. A bank must comply with the written notification requirement contained in § 303.182(d) when it closes a foreign branch. § 347.122 Limitations applicable to the authority provided in this subpart. The FDIC may impose such conditions on authority granted in this subpart as it considers appropriate. If a bank is unable or fails to comply with the requirements of this subpart or any conditions imposed by the FDIC regarding transactions under this subpart, the FDIC may require termination of any activities or divestiture of investments permitted under this subpart after giving the bank notice and a reasonable opportunity to be heard on the matter. Subpart B—Foreign Banks § 347.201 Authority, purpose, and scope. (a) This subpart is issued pursuant to sections 5(c) and 10(b)(4) of the Federal Deposit Insurance Act (FDI Act)(12 U.S.C. 1815(c) and 1820(b)(4)) and sections 6, 7, and 15 of the International Banking Act of 1978 (IBA)(12 U.S.C. 3104, 3105, and 3109). (b) This subpart implements the insured branch asset pledge and examination commitment requirement for foreign banks in the FDI Act. It also implements the deposit insurance, permissible activity, and cross-border cooperation provisions of the IBA regarding the FDIC. Sections 347.203-347.211 apply to state and federal branches whose deposits are insured. Sections 347.204 and 347.207 are applicable to depository institution subsidiaries of a foreign bank. Section 347.212 applies to insured state branches and §§ 347.213-347.216 apply to state branches whose deposits are not insured by the FDIC. § 347.202 Definitions. For the purposes of this subpart: (a) Affiliate means any entity that controls, is controlled by, or is under common control with another entity. An entity shall be deemed to “control” another entity if the entity directly or indirectly owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity or controls in any manner the election of a majority of the directors or trustees of the other entity. (b) Agency means any office or any place of business of a foreign bank located in any State of the United States at which credit balances are maintained incidental to or arising out of the exercise of banking powers, checks are paid, or money is lent but at which deposits may not be accepted from citizens or residents of the United States. (c) Branch means any office or place of business of a foreign bank located in any state of the United States at which deposits are received. The term does not include any office or place of business deemed by the state licensing authority or the Comptroller of the Currency to be an agency. (d) Deposit has the same meaning as that term in section 3(l) of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)). (e) Depository means any insured state bank, national bank, or insured branch. (f) Domestic retail deposit activity (g) Federal branch means a branch of a foreign bank established and operating under the provisions of section 4 of the International Banking Act of 1978 (12 U.S.C. 3102). (h) Foreign bank means any company organized under the laws of a foreign country, any territory of the United States, Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, or the Virgin Islands, which engages in the business of banking. The term includes foreign commercial banks, foreign merchant banks and other foreign institutions that engage in banking activities usual in connection with the business of banking in the countries where such foreign institutions are organized and operating. Except as otherwise specifically provided by the Federal Deposit Insurance Corporation, banks organized under the laws of a foreign country, any territory of the United States, Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, or the Virgin Islands which are insured banks other than by reason of having an insured branch are not considered to be foreign banks for purposes of §§ 347.204, 347.205, 347.209, and 347.210. (i) Foreign business means any entity including, but not limited to, a corporation, partnership, sole proprietorship, association, foundation or trust, which is organized under the laws of a foreign country or any United States entity which is owned or controlled by an entity which is organized under the laws of a foreign country or a foreign national. (j) Foreign country means any country other than the United States and includes any colony, dependency or possession of any such country. (k) FRB means the Board of Governors of the Federal Reserve System. (l) Highly liquid means, with respect to a security, that the security has low credit and market risk; is traded in an active secondary two-way market that has committed market makers and independent bona fide offers to buy and sell so that a price reasonably related to the last sales price or current bona fide competitive bid and offer quotations can be determined within one day and settled at that price within a reasonable time period conforming with trade custom; is a type of asset that investors historically have purchased in periods of financial market distress during which market liquidity has been impaired. (m) Home state of a foreign bank means the state so determined by the election of the foreign bank, or in default of such election, by the Board of Governors of the Federal Reserve System. (n) Immediate family member of a natural person means the spouse, father, mother, brother, sister, son or daughter of that natural person. (o) Initial deposit means the first deposit transaction between a depositor and the branch where there is no existing deposit relationship. The initial deposit may be placed into different deposit accounts or into different kinds of deposit accounts, such as demand, savings or time. Deposit accounts that are held by a depositor in the same right and capacity may be added together for the purposes of determining the dollar amount of the initial deposit. (p) Insured bank means any bank, including a foreign bank with an insured branch, the deposits of which are insured in accordance with the provisions of the Federal Deposit Insurance Act. (q) Insured branch means a branch of a foreign bank any deposits of which branch are insured in accordance with the provisions of the Federal Deposit Insurance Act. (r) Investment grade means a security issued by an entity that has adequate capacity to meet financial commitments for the projected life of the exposure. Such an entity has adequate capacity to meet financial commitments if the risk of its default is low and the full and timely repayment of principal and interest is expected. (s) Large United States business means any entity including, but not limited to, a corporation, partnership, sole proprietorship, association, foundation or trust which is organized under the laws of the United States or any state thereof, and: (1) Whose securities are registered on a national securities exchange or quoted on the National Association of Securities Dealers Automated Quotation System; or (2) Has annual gross revenues in excess of $1,000,000 for the fiscal year immediately preceding the initial deposit. (t) A majority owned subsidiary means a company the voting stock of which is more than 50 percent owned or controlled by another company. (u) Noninsured branch means a branch of a foreign bank deposits of which branch are not insured in accordance with the provisions of the Federal Deposit Insurance Act. (v) OCC means the Office of the Comptroller of the Currency. (w) Person means an individual, bank, corporation, partnership, trust, association, foundation, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any other form of entity. (x) Significant risk to the deposit insurance fund shall be understood to be present whenever there is a high probability that the Deposit Insurance Fund administered by the FDIC may suffer a loss. (y) Standard maximum deposit insurance amount, (z) State means any state of the United States or the District of Columbia. (aa) State branch means a branch of a foreign bank established and operating under the laws of any state. (bb) Wholly owned subsidiary means a company the voting stock of which is 100 percent owned or controlled by another company except for a nominal number of directors' shares. [70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 FR 20527, Apr. 21, 2006; 74 FR 47718, Sept. 17, 2009; 75 FR 49365, Aug. 13, 2010; 83 FR 9143, Mar. 5, 2018] § 347.203 Deposit insurance required for all branches of foreign banks engaged in domestic retail deposit activity in the same State. The FDIC will not insure deposits in any branch of a foreign bank unless the foreign bank agrees that every branch established or operated by the foreign bank in the same state that engages in domestic retail deposit activity will be an insured branch. § 347.204 Commitment to be examined and provide information. (a) In connection with an application for deposit insurance for a U.S. branch or depository institution subsidiary of a foreign bank that has been determined to be subject to comprehensive consolidated supervision by the appropriate Federal banking agency, as defined in section 3(q) of the FDI Act (12 U.S.C. 1813(q)), the foreign bank shall provide binding written commitments (including a consent to U.S. jurisdiction and designation of agent for service, acceptable to the FDIC) to the following terms: (1) The FDIC will be provided with any information about the foreign bank and its affiliates located outside of the United States that the FDIC requests to determine: (i) The relationship between the U.S. branch or depository institution subsidiary and its affiliates; and (ii) The effect of such relationship on such U.S. branch or depository institution subsidiary; (2) The FDIC will be allowed to examine the affairs of any office, agency, branch or affiliate of the foreign bank located in the United States and will be provided any information requested to determine: (i) The relationship between the U.S. branch or depository institution subsidiary and such offices, agencies, branches or affiliates; and (ii) The effect of such relationship on such U.S. branch or depository institution subsidiary. (3) The FDIC will not process a deposit insurance application for any U.S. branch or depository institution subsidiary of a foreign bank if the foreign bank fails to provide the written commitments, consent to U.S. jurisdiction, and designation of agent for service required by this section. (b) The FDIC will consider the existence and extent of any prohibition or restrictions, if any, on its ability to utilize the commitments, consent to U.S. jurisdiction, and designation of agent for service required by this section, in determining whether to grant or deny a deposit insurance application for the U.S. branch or depository institution subsidiary of the foreign bank. In addition, the FDIC may consider any additional assurances or commitments provided by the foreign bank, including that it will cooperate and assist the FDIC, without limitation, by seeking to obtain waivers and exemptions from applicable confidentiality or secrecy restrictions or requirements to enable the foreign bank or its affiliates to make information about the foreign bank and its affiliates located outside of the United States available to the FDIC for review. (c) The foreign bank's commitments, consent to U.S. jurisdiction, and designation of agent for service shall be signed by an officer of the foreign bank who has been so authorized by the foreign bank's board of directors and in all instances will be executed in a manner acceptable to the FDIC and shall be included with the branch or depository institution application for insurance. Any documents that are not in English shall be accompanied by an English translation. § 347.205 Record maintenance. The records of each insured branch shall be kept as though it were a separate entity, with its assets and liabilities separate from the other operations of the head office, other branches or agencies of the foreign bank and its subsidiaries or affiliates. Each insured branch must keep a set of accounts and records in the words and figures of the English language that accurately reflects the business transactions of the insured branch on a daily basis. A foreign bank that has more than one insured branch in a state may treat such insured branches as one entity for record-keeping purposes and may designate one branch to maintain records for all the branches in the state. § 347.206 Domestic retail deposit activity requiring deposit insurance by U.S. branch of a foreign bank. (a) Domestic retail deposit activity. (b) Exception. (c) Grandfathered insured branches. (d) Change in ownership of grandfathered insured branch. [70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009] § 347.207 Disclosure of supervisory information to foreign supervisors. (a) Disclosure by the FDIC. (b) Confidentiality. § 347.208 Assessment base deductions by insured branch. Deposits in an insured branch to the credit of the foreign bank or any of its offices, branches, agencies, or wholly owned subsidiaries may be deducted from the assessment base of the insured branch. § 347.209 Pledge of assets. (a) Purpose. (b) Amount of assets to be pledged. 4 4 (2) Risk-based assessment schedule. Asset maintenance level Supervisory risk subgroup A (%) B (%) C (%) Equal to or greater than 108% 2 3 4 Equal to or greater than 106% 4 5 6 Less than 106% 6 7 8 The appropriate asset pledge percentage will be determined based on the supervisory risk subgroup and asset maintenance level applicable to the insured branch. (3) Supervisory risk factors. (i) Subgroup “A”. This subgroup consists of financially sound institutions with only a few minor weaknesses; (ii) Subgroup “B”. This subgroup consists of institutions that demonstrate weaknesses which, if not corrected, could result in significant deterioration of the institution and increased risk of loss to the deposit insurance fund; and (iii) Subgroup “C”. This subgroup consists of institutions that pose a substantial probability of loss to the deposit insurance fund. (4) The FDIC may require a foreign bank to pledge additional assets or to compute its pledge on a daily basis whenever the FDIC determines that the condition of the foreign bank or the insured branch is such that the assets pledged under this section will not adequately protect the deposit insurance fund. In requiring a foreign bank to pledge additional assets, the FDIC will consult with the primary regulator for the insured branch. Among the factors to be considered in imposing these requirements are the concentration of risk to any one borrower or group of related borrowers, the concentration of transfer risk related to any one country, including the country in which the foreign bank's head office is located or any other factor the FDIC determines is relevant. (5) Each insured branch must separately comply with the requirements of this section. A foreign bank which has more than one insured branch in a state may, however, treat all of its insured branches in the same state as one entity and will designate one insured branch to be responsible for compliance with this section. (c) Depository. (d) Assets that may be pledged. (2) A foreign bank may pledge the kinds of assets set forth in this paragraph (d)(2), provided that: Such assets are denominated in United States dollars; such assets are investment grade, as that term is defined in § 347.202(r); and such assets are highly liquid, as that term is defined in § 347.202(l). Furthermore, for the purposes of calculating the amount of assets required to be pledged under paragraph (b) of this section, the assets that are eligible for pledging under this paragraph (d)(2) must be discounted at the rates set forth in Table 1 to § 347.209. (i) Cash; (ii) Treasury bills, interest bearing bonds, notes, debentures, or other direct obligations of or obligations fully guaranteed as to principal and interest by the United States or any agency thereof; (iii) Obligations of United States government-sponsored enterprises; (iv) Negotiable certificates of deposit that are payable in the United States and that are issued by any state bank, national bank, state or federal savings association, or branch of a foreign bank which has executed a valid waiver of offset agreement or similar debt instruments that are payable in the United States and that are issued by any agency of a foreign bank which has executed a valid waiver of offset agreement; provided, that the maturity of any certificate or issuance is not greater than one year; and provided further, that the issuing branch or agency of a foreign bank is not an affiliate of the pledging bank or from the same country as the pledging bank's domicile; (v) Obligations of the African Development Bank, Asian Development Bank, Inter-American Development Bank, and the International Bank for Reconstruction and Development; (vi) Commercial paper; (vii) Notes issued by bank and savings and loan holding companies, banks, or savings associations organized under the laws of the United States or any state thereof or notes issued by branches or agencies of foreign banks, provided that the notes are payable in the United States, and provided further, that the issuing branch or agency of a foreign bank is not an affiliate of the pledging bank or from the same country as the pledging bank's domicile; (viii) Banker's acceptances that are payable in the United States and that are issued by any state bank, national bank, state or federal savings association, or branch or agency of a foreign bank; provided, that the maturity of any acceptance is not greater than 180 days; and provided further, that the branch or agency issuing the acceptance is not an affiliate of the pledging bank or from the same country as the pledging bank's domicile; (ix) General obligations of any state of the United States, or any county or municipality of any state of the United States, or any agency, instrumentality, or political subdivision of the foregoing or any obligation guaranteed by a state of the United States or any county or municipality of any state of the United States; (x) Any other asset determined by the FDIC to be acceptable. (e) Pledge agreement. (1) Original pledge. (2) Additional assets required to be pledged. (3) Substitution of assets. (i) The foreign bank pledges assets of the kind described in paragraph (d) of this section having an aggregate value not less than the value of the pledged assets for which they are substituted and certified as such by the foreign bank; and (ii) The FDIC has not by written notification to the foreign bank, a copy of which shall be provided to the depository, suspended or terminated the foreign bank's right of substitution. (4) Delivery of other documents. (5) Acceptance and safekeeping responsibilities of the depository. (ii) The depository shall hold any such assets separate from all other assets of the foreign bank or the depository. Such assets may be held in book-entry form but must at all times be segregated on the records of the depository and clearly identified as assets subject to the pledge agreement. (6) Reporting requirements of the insured branch and the depository Initial reports. (A) The depository shall provide to the foreign bank and to the appropriate FDIC regional director a written report in the form of a receipt identifying each asset pledged and specifying in reasonable detail with respect to each such asset the complete title, interest rate, series, serial number (if any), principal amount (par value), maturity date and call date; and (B) The foreign bank shall provide to the appropriate regional director a written report certified as correct by the foreign bank which sets forth the value of each pledged asset and the aggregate value of all such assets, and which states that the aggregate value of all such assets is at least equal to the amount required pursuant to paragraph (b) of this section and that all such assets are of the kind described in paragraph (d) of this section. (ii) Quarterly reports. (A) The depository shall provide to the appropriate regional director a written report specifying in reasonable detail with respect to each asset currently pledged (including any asset pledged to satisfy the requirements of paragraph (b)(4) of this section and identified as such), as of two business days after the end of the most recent calendar quarter, the complete title, interest rate, series, serial number (if any), principal amount (par value), maturity date, and call date, provided, that if no substitution of any asset has occurred during the reporting period, the reporting need only specify that no substitution of assets has occurred; and (B) The foreign bank shall provide as of two business days after the end of the most recent calendar quarter to the appropriate regional director a written report certified as correct by the foreign bank which sets forth the value of each pledged asset and the aggregate value of all such assets, which states that the aggregate value of all such assets is at least equal to the amount required pursuant to paragraph (b) of this section and that all such assets are of the kind described in paragraph (d) of this section, and which states the average of the liabilities of each insured branch of the foreign bank computed in the manner and for the period prescribed in paragraph (b) of this section. (iii) Additional reports. (7) Access to assets. (8) Release upon the order of the FDIC. (9) Release to the FDIC. (10) Interest earned on assets. (11) Expenses of agreement. (12) Substitution of depository. (i) The FDIC has approved in writing the successor depository; and (ii) A pledge agreement in form and substance satisfactory to the FDIC has been executed. (13) Waiver of terms. Table 1 to § 347.209—Supervisory Haircuts for Assets Pledged Under § 347.209( d Remaining maturity Haircut % assigned based on maturity and risk weight Risk weight (%) by issuer as specified in part 324.32 0% 20% 50% 100% ≤to 1 Year 0 1.0 2.0 4.0 >1 Year but ≤5 Years 0 4.0 6.0 8.0 >5 years 0 8.0 12.0 16.0 [70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 FR 20527, Apr. 21, 2006; 83 FR 9143, Mar. 5, 2018] § 347.210 Asset maintenance. (a) An insured branch of a foreign bank shall maintain on a daily basis eligible assets in an amount not less than 106 percent of the preceding quarter's average book value of the insured branch's liabilities or, in the case of a newly-established insured branch, the estimated book value of its liabilities at the end of the first full quarter of operation, exclusive of liabilities due to the foreign bank's head office, other branches, agencies, offices, or wholly owned subsidiaries. The Director of the Division of Supervision and Consumer Protection or his designee may impose a computation of total liabilities on a daily basis in those instances where it is found necessary for supervisory purposes. The FDIC Board of Directors, after consulting with the insured branch's primary regulator, may require that a higher ratio of eligible assets be maintained if the financial condition of the insured branch warrants such action. Among the factors which will be considered in requiring a higher ratio of eligible assets are the concentration of risk to any one borrower or group of related borrowers, the concentration of transfer risk to any one country, including the country in which the foreign bank's head office is located or any other factor the FDIC determines is relevant. Eligible assets shall be payable in United States dollars. (b) In determining eligible assets for the purposes of compliance with paragraph (a) of this section, the insured branch shall exclude the following: (1) Any asset due from the foreign bank's head office, or its other branches, agencies, offices or affiliates; (2) Any asset classified “Value Impaired,” to the extent of the required Allocated Transfer Risk Reserves or equivalent write down, or “Loss” in the most recent state or federal examination report; (3) Any deposit of the insured branch in a bank unless the bank has executed a valid waiver of offset agreement; (4) Any asset not supported by sufficient credit information to allow a review of the asset's credit quality, as determined at the most recent state or federal examination, as follows: (i) Whether an asset has sufficient credit information will be a function of the size of the borrower and the location within the foreign bank of the responsibility for authorizing and monitoring extensions of credit to the borrower. For large, well known companies, when credit responsibility is located in an office of the foreign bank outside the insured branch, the insured branch must have adequate documentation to show that the asset is of good quality and is being supervised adequately by the foreign bank. In such cases, copies of periodic memoranda that include an analysis of the borrower's recent financial statements and a report on recent developments in the borrower's operations and borrowing relationships with the foreign bank generally would constitute sufficient information. For other borrowers, periodic memoranda must be supplemented by information such as copies of recent financial statements, recent correspondence concerning the borrower's financial condition and repayment history, credit terms and collateral, data on any guarantors, and where necessary, the status of any corrective measures being employed; (ii) Subsequent to the determination that an asset lacks sufficient credit information, an insured branch may not include the amount of that asset among eligible assets until the FDIC determines that sufficient documentation exists. Such a determination may be made either at the next federal examination, or upon request of the insured branch, by the appropriate regional director; (5) Any asset not in the insured branch's actual possession unless the insured branch holds title to such asset and the insured branch maintains records sufficient to enable independent verification of the insured branch's ownership of the asset, as determined at the most recent state or federal examination; (6) Any intangible asset; (7) Any other asset not considered bankable by the FDIC. (c) A foreign bank which has more than one insured branch in a state may treat all of its insured branches in the same state as one entity for purposes of compliance with paragraph (a) of this section and shall designate one insured branch to be responsible for maintaining the records of the insured branches' compliance with this section. (d) The average book value of the insured branch's liabilities for a quarter shall be, at the insured branch's option, either an average of the balances as of the close of business for each day of the quarter or an average of the balances as of the close of business on each Wednesday during the quarter. Quarters end on March 31, June 30, September 30, and December 31 of any given year. For days on which the insured branch is closed, balances from the previous business day are to be used. Calculations of the average book value of the insured branch's liabilities for a quarter shall be retained by the insured branch until the next federal examination. § 347.211 Examination of branches of foreign banks. (a) Frequency of on-site examination. (1) The FRB; (2) The FDIC, if an insured branch; (3) The OCC, if the branch or agency of the foreign bank is licensed by the OCC; or (4) The state supervisor, if the office of the foreign bank is licensed or chartered by the state. (b) 18-month cycle for certain small institutions Mandatory standards. (i) Has total assets of less than $3 billion; (ii) Has received a composite ROCA supervisory rating (which rates risk management, operational controls, compliance, and asset quality) of 1 or 2 at its most recent examination; (iii) Satisfies the requirement of either the following paragraph (b)(iii)(A) or (B): (A) The foreign bank's most recently reported capital adequacy position consists of, or is equivalent to, Tier 1 and total risk-based capital ratios of at least 6 percent and 10 percent, respectively, on a consolidated basis; or (B) The insured branch has maintained on a daily basis, over the past three quarters, eligible assets in an amount not less than 108 percent of the preceding quarter's average third party liabilities (determined consistent with applicable federal and state law) and sufficient liquidity is currently available to meet its obligations to third parties; (iv) Is not subject to a formal enforcement action or order by the FRB, FDIC, or the OCC; and (v) Has not experienced a change in control during the preceding 12-month period in which a full-scope, on-site examination would have been required but for this section. (2) Discretionary standards. (i) Any of the individual components of the ROCA supervisory rating of an insured branch is rated “3” or worse; (ii) The results of any off-site monitoring indicate a deterioration in the condition of the insured branch; (iii) The size, relative importance, and role of a particular insured branch when reviewed in the context of the foreign bank's entire U.S. operations otherwise necessitate an annual examination; and (iv) The condition of the parent foreign bank gives rise to such a need. (c) Authority to conduct more frequent examinations. (d) From December 2, 2020, through December 31, 2021, for purposes of determining eligibility for the extended examination cycle described in paragraph (b) of this section, the total assets of an insured branch shall be determined based on the lesser of: (1) The assets of the insured branch as of December 31, 2019; and (2) The assets of the insured branch as of the end of the most recent calendar quarter. [70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 72 FR 17803, Apr. 10, 2007; 81 FR 10070, Feb. 29, 2016; 83 FR 43965, Aug. 29, 2018; 85 FR 77364, Dec. 2, 2020] § 347.212 FDIC approval to conduct activities that are not permissible for federal branches. (a) Scope. et seq. (b) Exceptions. (c) Agency activities. (1) permissible agency activity for a state-chartered bank located in the state which the state-licensed insured branch of the foreign bank is located; (2) permissible agency activity for a state-licensed branch of a foreign bank located in that state; and (3) permissible pursuant to any other applicable federal law or regulation. (d) Conditions of approval. (2) In the case of an application to initially engage in an activity, as opposed to an application to continue to conduct an activity, the insured state branch shall not commence the activity until it has been approved in writing by the FDIC pursuant to this part and the FRB, and any and all conditions imposed in such approvals have been satisfied. (e) Divestiture or cessation. (2) A foreign bank operating an insured state branch which elects not to apply to the FDIC for permission to continue to conduct an activity which is rendered impermissible by any change in statute, regulation, official bulletin or circular, written order or interpretation, or decision of a court of competent jurisdiction shall submit a plan of divestiture or cessation to the appropriate regional director. (3) All plans of divestitures or cessation required by this paragraph must be completed within one year from the date of the disapproval, or within such shorter period as the FDIC may direct. (f) Procedures. [70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 FR 20527, Apr. 21, 2006] § 347.213 Establishment or operation of noninsured foreign branch. (a) A foreign bank may establish or operate a state branch, as provided by state law, without federal deposit insurance whenever: (1) The branch only accepts initial deposits in an amount equal to the SMDIA or greater; or (2) The branch meets the criteria set forth in § 347.214 or § 347.215. (b) [Reserved] [70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009] § 347.214 Branch established under section 5 of the International Banking Act. A foreign bank may operate any state branch as a noninsured branch whenever the foreign bank has entered into an agreement with the FRB to accept at that branch only those deposits as would be permissible for a corporation organized under section 25(a) of the Federal Reserve Act (12 U.S.C. 611 et seq. § 347.215 Exemptions from deposit insurance requirement. (a) Deposit activities not requiring insurance. (1) Individuals who are not citizens or residents of the United States at the time of the initial deposit; (2) Individuals who: (i) Are not citizens of the United States; (ii) Are residents of the United States; and (iii) Are employed by a foreign bank, foreign business, foreign government, or recognized international organization; (3) Persons (including immediate family members of natural persons) to whom the branch or foreign bank (including any affiliate thereof) has extended credit or provided other nondeposit banking services within the past twelve months or has entered into a written agreement to provide such services within the next twelve months; (4) Foreign businesses, large United States businesses, and persons from whom an Edge or agreement corporation may accept deposits under 12 CFR 211.6(a)(1); (5) Any governmental unit, including the United States government, any state government, any foreign government and any political subdivision or agency of any of the foregoing, and recognized international organizations; (6) Persons who are depositing funds in connection with the issuance of a financial instrument by the branch for the transmission of funds or the transmission of such funds by any electronic means; and (7) Any other depositor, but only if: (i) The branch's average deposits under this paragraph (a)(7) do not exceed one percent of the branch's average total deposits, as calculated under paragraph (a)(7)(ii) if this section ( de minimis (ii) For purposes of calculating this exception: (A) The branch's average deposits under this paragraph and the average total deposits must be computed by summing the close of business figures for each of the last 30 calendar days, ending with and including the last day of the calendar quarter, and dividing the resulting sum by 30; (B) For days on which the branch is closed, balances from the last previous business day are to be used; (C) The branch may exclude deposits in the branch of other offices, branches, agencies or wholly owned subsidiaries of the bank to determine its average deposits; (D) The branch must not solicit deposits from the general public by advertising, display of signs, or similar activity designed to attract the attention of the general public; and (E) A foreign bank that has more than one state branch in the same state may aggregate deposits in such branches (excluding deposits of other branches, agencies or wholly owned subsidiaries of the bank) for the purpose of this paragraph (a)(7). (b) Application for an exemption. (2) Procedures for applications under this section are set out in § 303.186. (c) Transition period. A noninsured state branch may maintain a retail deposit lawfully accepted prior to April 1, 1996 pursuant to regulations in effect prior to July 1, 1998: (1) If the deposit qualifies pursuant to paragraph (a) or (b) of this section; or (2) If the deposit does not qualify pursuant to paragraph (a) or (b) of this section, in the case of a time deposit, no later than the first maturity date of the time deposit after April 1, 1996. [70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009] § 347.216 Depositor notification. Any state branch that is exempt from the insurance requirement pursuant to § 347.215 shall: (a) Display conspicuously at each window or place where deposits are usually accepted a sign stating that deposits are not insured by the FDIC; and (b) Include in bold face conspicuous type on each signature card, passbook, and instrument evidencing a deposit the statement “This deposit is not insured by the FDIC”; or require each depositor to execute a statement which acknowledges that the initial deposit and all future deposits at the branch are not insured by the FDIC. This acknowledgment shall be retained by the branch so long as the depositor maintains any deposit with the branch. This provision applies to any negotiable certificates of deposit made in a branch on or after July 6, 1989, as well as to any renewals of such deposits which become effective on or after July 6, 1989. Subpart C—International Lending Source: 70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, unless otherwise noted. § 347.301 Purpose, authority, and scope. Under the International Lending Supervision Act of 1983 (Title IX, Pub. L. 98-181, 97 Stat. 1153) (12 U.S.C. 3901 et seq. § 347.302 Definitions. For the purposes of this subpart: (a) Administrative cost (b) Banking institution (c) Federal banking agencies (d) International assets (e) International loan (f) Restructured international loan (1) The borrower is unable to service the existing loan according to its terms and is a resident of a foreign country in which there is a generalized inability of public and private sector obligors to meet their external debt obligations on a timely basis because of a lack of, or restraints on the availability of, needed foreign exchange in the country; and (2) Either: (i) The terms of the existing loan are amended to reduce stated interest or extend the schedule of payments; or (ii) A new loan is made to, or for the benefit of, the borrower, enabling the borrower to service or refinance the existing debt. (g) Transfer risk § 347.303 Allocated transfer risk reserve. (a) Establishment of Allocated Transfer Risk Reserve. (b) Procedures and standards Joint agency determination. (i) Which international assets subject to transfer risk warrant establishment of an ATRR; (ii) The amount of the ATRR for the specified assets; and (iii) Whether an ATRR established for specified assets may be reduced. (2) Standards for requiring ATRR Evaluation of assets. (A) Whether the quality of a banking institution's assets has been impaired by a protracted inability of public or private obligors in a foreign country to make payments on their external indebtedness as indicated by such factors, among others, as whether: ( 1 ( 2 ( 3 (B) Whether no definite prospects exist for the orderly restoration of debt service. (ii) Determination of amount of ATRR. ( 1 ( 2 ( 3 ( 4 (B) The initial year's provision for the ATRR shall be ten percent of the principal amount of each specified international asset, or such greater or lesser percentage determined by the federal banking agencies. Additional provision, if any, for the ATRR in subsequent years shall be fifteen percent of the principal amount of each specified international asset, or such greater or lesser percentage determined by the federal banking agencies. (3) FDIC notification. (i) Of the amount of the ATRR to be established by the institution for specified international assets; and (ii) That an ATRR established for specified assets may be reduced. (c) Accounting treatment of ATRR Charge to current income. (2) Separate accounting. (3) Consolidation. (4) Alternative accounting treatment. (5) Reduction of ATRR. [70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 84 FR 4249, Feb. 14, 2019] § 347.304 Accounting for fees on international loans. (a) Restrictions on fees for restructured international loans. (b) Accounting treatment. § 347.305 Reporting and disclosure of international assets. (a) Requirements. (2) Pursuant to section 907(b) of ILSA, a banking institution shall submit to the FDIC information regarding concentrations in its holdings of international assets that are material in relation to total assets and to capital of the institution, such information to be made publicly available by the FDIC on request. (b) Procedures. de minimis (c) Reservation of Authority.