REGULATION OF FOREIGN BANK OPERATIONS.

SEC. 202. REGULATION OF FOREIGN BANK OPERATIONS. (a) Establishment and Termination of Foreign Bank Offices in the United States.— Section 7 of the International Banking Act 105 STAT. 2287of 1978 (12 U.S.C. 3105) is amended by striking subsection (d) and inserting the following new subsections: “(d) Establishment of Foreign Bank Offices in the United States .— “(1) Prior approval required.— No foreign bank may establish a branch or an agency, or acquire ownership or control of a commercial lending company, without the prior approval of the Board. “(2) Required standards for approval.— The Board may not approve an application under paragraph (1) unless it determines that— “(A) the foreign bank engages directly in the business of banking outside of the United States and is subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in its home country; and “(B) the foreign bank has furnished to the Board the information it needs to adequately assess the application. “(3) Standards for approval.— In acting on any application under paragraph (1), the Board may take into account— “(A) whether the appropriate authorities in the home country of the foreign bank have consented to the proposed establishment of a branch, agency or commercial lending company in the United States by the foreign bank; “(B) the financial and managerial resources of the foreign bank, including the bank’s experience and capacity to engage in international banking; “(C) whether the foreign bank has provided the Board with adequate assurances that the bank will make available to the Board such information on the operations or activities of the foreign bank and any affiliate of the bank that the Board deems necessary to determine and enforce compliance with this Act, the Bank Holding Company Act of 1956, and other applicable Federal law; and “(D) whether the foreign bank and the United States affiliates of the bank are in compliance with applicable United States law. “(4) Factor.— In acting on an application under paragraph (1), the Board shall not make the size of the foreign bank the sole determinant factor, and may take into account the needs of the community as well as the length of operation of the foreign bank and its relative size in its home country. Nothing in this paragraph shall affect the ability of the Board to order a State branch, agency, or commercial lending company subsidiary to terminate its activities in the United States pursuant to any standard set forth in this Act. “(5) Establishment of conditions.— Consistent with the standards for approval in paragraph (2), the Board may impose such conditions on its approval under this subsection as it deems necessary. “(e) Termination of Foreign Bank Offices in the United States.— “(1) Standards for termination.— The Board, after notice and opportunity for hearing and notice to any appropriate State bank supervisor, may order a foreign bank that operates a State branch or agency or commercial lending company subsidiary in 105 STAT. 2288the United States to terminate the activities of such branch, agency, or subsidiary if the Board finds that— “(A) the foreign bank is not subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in its home country; or “(B) (i) there is reasonable cause to believe that such foreign bank, or any affiliate of such foreign bank, has committed a violation of law or engaged in an unsafe or unsound banking practice in the United States; and “(ii) as a result of such violation or practice, the continued operation of the foreign bank’s branch, agency or commercial lending company subsidiary in the United States would not be consistent with the public interest or with the purposes of this Act, the Bank Holding Company Act of 1956, or the Federal Deposit Insurance Act. However, in making findings under this paragraph, the Board shall not make size the sole determinant factor, and may take into account the needs of the community as well as the length of operation of the foreign bank and its relative size in its home country. Nothing in this paragraph shall affect the ability of the Board to order a State branch, agency, or commercial lending company subsidiary to terminate its activities in the United States pursuant to any standard set forth in this Act. “(2) Discretion to deny hearing.— The Board may issue an order under paragraph (1) without providing for an opportunity for a hearing if the Board determines that expeditious action is necessary in order to protect the public interest. “(3) Effective date of termination order.— An order issued under paragraph (1) shall take effect before the end of the 120-day period beginning on the date such order is issued unless the Board extends such period. “(4) Compliance with state and federal law.— Any foreign bank required to terminate activities conducted at offices or subsidiaries in the United States pursuant to this subsection shall comply with the requirements of applicable Federal and State law with respect to procedures for the closure or dissolution of such offices or subsidiaries. “(5) Recommendation to agency for termination of a federal branch or agency.— The Board may transmit to the Comptroller of the Currency a recommendation that the license of any Federal branch or Federal agency of a foreign bank be terminated in accordance with section 4(i) if the Board has reasonable cause to believe that such foreign bank or any affiliate of such foreign bank has engaged in conduct for which the activities of any State branch or agency may be terminated under paragraph (1). “(6) Enforcement of orders.— “(A) In general.— In the case of contumacy of any office or subsidiary of the foreign bank against which the Board or, in the case of an order issued under section 4(i), the Comptroller of the Currency has issued an order under paragraph (1) or a refusal by such office or subsidiary to comply with such order, the Board or the Comptroller of the Currency may invoke the aid of the district court of the United States within the jurisdiction of which the office or subsidiary is located. 105 STAT. 2289 “(B) Court order.— Any court referred to in subparagraph (A) may issue an order requiring compliance with an order issued under paragraph (1). “(7) Criteria relating to foreign supervision.— Not later than 1 year after the date of enactment of this subsection, the Board, in consultation with the Secretary of the Treasury, shall develop and publish criteria to be used in evaluating the operation of any foreign bank in the United States that the Board has determined is not subject to comprehensive supervision or regulation on a consolidated basis. In developing such criteria, the Board shall allow reasonable opportunity for pubic review and comment. “(f) Judicial Review.— “(1) Jurisdiction of united states courts of appeals.— Any foreign bank— “(A) whose application under subsection (d) or section 10(a) has been disapproved by the Board; “(B) against which the Board has issued an order under subsection (e) or section 10(b); or “(C) against which the Comptroller of the Currency has issued an order under section 4(i) of this Act, may obtain a review of such order in the United States court of appeals for any circuit in which such foreign bank operates a branch, agency, or commercial lending company that has been required by such order to terminate its activities, or in the United States Court of Appeals for the District of Columbia Circuit, by filing a petition for review in the court before the end of the 30-day period beginning on the date the order was issued. “(2) Scope of judicial review.— Section 706 of title 5, United States Code (other than paragraph (2)(F) of such section) shall apply with respect to any review under paragraph (1). “(g) Consultation With State Bank Supervisor.— The Board shall request and consider any views of the appropriate State bank supervisor with respect to any application or action under subsection (d) or (e). “(h) Limitations on Powers of State Branches and Agencies.— “(1) In general.— After the end of the 1-year period beginning on the date of enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991, a State branch or State agency may not engage in any type of activity that is not permissible for a Federal branch unless— “(A) the Board has determined that such activity is consistent with sound banking practice; and “(B) in the case of an insured branch, the Federal Deposit Insurance Corporation has determined that the activity would pose no significant risk to the deposit insurance fund. “(2) Single borrower lending limit.— A State branch or State agency shall be subject to the same limitations with respect to loans made to a single borrower as are applicable to a Federal branch or Federal agency under section 4(b). “(3) Other authority not affected.— This section does not limit the authority of the Board or any State supervisory authority to impose more stringent restrictions.”. 105 STAT. 2290 (b) Standards for Approval of Federal Branches and Agencies.— Section 4(a) of the International Banking Act of 1978 (12 U.S.C. 3102(a)) is amended— (1) by striking “(a) Except as provided in section 5,” and inserting “(a) Establishment and Operation of Federal Branches and Agencies.— “(1) Initial federal branch or agency.— Except as provided in section 5,”; and (2) by adding at the end the following new paragraph: “(2) Board conditions required to be included.— In considering any application for approval under this subsection, the Comptroller of the Currency shall include any condition imposed by the Board under section 7(d)(5) as a condition for the approval of such application by the agency.”. (c) Standards for Approval of Additional Federal Branches and Agencies.— Section 4(h) of the International Banking Act of 1978 (12 U.S.C. 3102(h)) is amended— (1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; (2) by striking “(h) A foreign bank” and inserting “(h) Additional Branches or Agencies.— “(1) Approval of agency required.— A foreign bank”; and (3) by adding at the end the following new paragraph: “(2) Notice to and comment by board.— The Comptroller of the Currency shall provide the Board with notice and an opportunity for comment on any application to establish an additional Federal branch or Federal agency under this subsection.”. (d) Disapproval for Failure To Agree To Provide Necessary Information.— Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) is amended— (1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; (2) by striking “(c) The Board shall” and inserting “(c) Factors for Consideration by Board.— “(1) Competitive factors.— The Board shall”; (3) by striking “In every case” and inserting “(2) Banking and community factors.—In every case”; (4) by striking “community to be served. Notwithstanding any other provision of law” and inserting “community to be served. “(4) Treatment of certain bank stock loans.— Notwithstanding any other provision of law”; and (5) by inserting after paragraph (2) (as so designated by paragraph (3) of this subsection) the following new paragraph: “(3) Supervisory factors.— The Board shall disapprove any application under this section by any company if— “(A) the company fails to provide the Board with adequate assurances that the company will make available to the Board such information on the operations or activities of the company, and any affiliate of the company, as the Board determines to be appropriate to determine and enforce compliance with this Act; or “(B) in the case of an application involving a foreign bank, the foreign bank is not subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank’s home country.”. (e) Conforming Amendments.— 105 STAT. 2291 (1) Affiliate defined.— Section 1(b)(13) of the International Banking Act of 1978 (12 U.S.C. 3101(13)) is amended by inserting “ ‘affiliate,’ ” after “the terms” the 1st place such term appears. (2) Definitions.— Section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101(b)) is amended— (A) by striking “and” at the end of paragraph (13); (B) by striking the period at the end of paragraph (14) and inserting a semicolon; and (C) by adding at the end the following new paragraphs: “(15) the term ‘representative office’ means any office of a foreign bank which is located in any State and is not a Federal branch, Federal agency, State branch, State agency, or subsidiary of a foreign bank; “(16) the term ‘office’ means any branch, agency, or representative office; and “(17) the term ‘State bank supervisor’ has the meaning given to such term in section 3 of the Federal Deposit Insurance Act.”.