The Federal Reserve issued a proposed rule that would require large foreign banks to organize their U.S. operations under a single intermediate holding company. An intermediate holding company—or IHC—“would create a platform for the consistent supervision and regulation of the U.S. operations of foreign [banks] and help facilitate the resolution of failing U.S. operations of a foreign bank if needed,” the Fed said.
The proposal implements provisions of the Dodd-Frank Act in a manner that addresses the complexity, interconnectedness, and concentration of the U.S. operations of foreign banking organizations.
Under the proposal, foreign bank IHCs would be subject to the same risk-based and leverage capital standards applicable to U.S. bank holding companies.
IHCs with $50 billion or more in consolidated assets also would be subject to the Fed’s capital plan rule, the agency said. The Fed added that the domestic operations of foreign banks with combined U.S. assets of $50 billion or more would be required to meet enhanced liquidity risk-management standards, conduct liquidity stress tests, and hold a 30-day buffer of highly liquid assets.
The comment deadline on the proposal is March 31.
Read the proposed rule.