International Operations of U.S. Banking Organizations – Investment in a Foreign Company

Section 211.9 of Regulation K

Who must file?

A U.S. banking organization may make investments in foreign entities as provided in sections 211.8 through 211.10 of Regulation K without prior Federal Reserve approval if the investment amount does not qualify for general consent under section 211.9 of Regulation K. For an investment that does not qualify for the general consent procedures under paragraphs (b), (c), or (d) of section 211.9, the investing organization should submit prior notice to the Federal Reserve.

A banking organization's initial foreign investment and certain investments in foreign banks would not qualify for the general consent or prior notice procedures. Long-range investment plans also do not qualify for the general consent or prior notice procedures. For these types of proposals, the investing organization should submit an application for the specific consent of the Federal Reserve.

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

The notice period for a foreign investment expires 30 calendar days after the notice is received by the Federal Reserve. The Federal Reserve may waive a portion of the 30-day notice period, suspend processing of the notice, or act on the notice under the specific consent procedure based on the circumstances presented.

The Federal Reserve normally acts on an application for specific consent within 60 calendar days after receipt unless the Federal Reserve notifies the investor that the 60-day period is being extended.

Factors reviewed

The factors considered by the Federal Reserve include the size and nature of the proposed investment, the permissibility of the activities of the company to be invested in, the financial impact of the investment on the organization, and the overall financial and managerial condition of the organization.

Consummation period

Authority to make investments granted under the prior notice or specific consent procedures expires one year from the earliest date on which the authority could have been exercised unless the Federal Reserve extends the authority. The period during which an organization would have authority to implement a long-range investment plan would be determined on a case-by-case basis.