International Operations of U.S. Banking Organizations – Establishing Foreign Branches

Section 211.3 of Regulation K

Who must file?

Prior notice under section 211.3 of Regulation K is required for foreign branches to be established by member banks, Edge corporations, agreement corporations, direct subsidiaries of a member bank, and any other subsidiary held pursuant to subpart A of Regulation K. No prior notice is required for a nonbanking affiliate (that is, an organization that is not a member bank, an Edge or agreement corporation, or foreign bank) to establish foreign branches. Additionally, no prior notice is required to establish additional branches in a foreign country where the banking organization operates one or more branches.

Publication requirements--newspaper/Federal Register

None.

Required form

The information required in Form FR K-1 must be submitted. Note that a response should be provided for all report items. Please enter “not applicable” or “N/A,” where appropriate.

Processing time frames

For proposals to establish a branch in the first two foreign countries, the notice period expires 30 calendar days after the notice is received by the Federal Reserve. For proposals to establish a branch in an additional country by a banking organization that operates branches in two or more foreign countries, the notice period expires 12 business days after receipt of the notice. Based on the circumstances presented, the Federal Reserve may waive a portion of the notice period, suspend processing of the notice, or act on the notice under the specific consent procedure.

Factors reviewed

The factors reviewed by the Federal Reserve generally include the financial and managerial condition of the banking organization, management's experience in international banking, the branch's proposed activities, and the ability of the Federal Reserve to obtain access to necessary information about the branch's operations.

Consummation period

Foreign branching proposals may be consummated immediately after the expiration of the notice period. However, authority to establish a branch expires one year from the date of disposition unless extended by the Federal Reserve.