Pact Draws a Road Map to Regulatory Maze Facing Foreign Banks with Offices in the U.S
Roderer, David W., American Banker
The regulatory burden is growing for foreign banks with offices in the United States.
In 1991, Congress broadened the Federal Reserve Board's supervisory powers over these offices. It did so after accusing the Fed and state regulators of inattention to non-U.S. banks and of failing to ensure their safety and soundness in conjunction with other countries' regulators.
With this expanded mandate, the Fed adopted various regulations affecting the licensing and permissible scope of activities of all foreign banking offices in the United States.
The agency has been recruiting and training a greatly expanded examination staff - a substantial task. The next phase, just begun, is to start on-site examinations of individual banking offices.
Accord with Niaga
The standards to be imposed were outlined in a recently released agreement between the Federal Reserve Bank of San Francisco and the U.S. agency of an Indonesian bank, PT Bank Niaga.
The 24 paragraphs of this agreement provide a convenient checklist for institutions subject to the Fed's enforcement of the Foreign Bank Supervision Enhancement Act of 1991.
Among the mandates that require communication with and oversight by the regulator:
* Improved asset quality.
* English-language documentation on all outstanding credits.
* Extensive, written loan-documentation policies, procedures, and internal controls. …