(a) Authority. This part is issued under the authority of the national banking laws, 12 U.S.C. 1, et seq.

(b) Policy. (1) In furtherance of the effort to pursue the overall improvement of supervisory methods and tools, this Office has undertaken a stepped-up program of examination and supervision of the international operations of national banks. A special corps of national bank examiners has been assigned to a newly-established Department of International Banking under a Deputy Comptroller of the Currency. These examiners will be based in Washington, and will make periodic on-the-spot examinations in foreign countries of the international operations of national banks. This Office is also expanding its economic research in the international field to lay the groundwork for more intensive supervision in this area.

(2) Two developments in recent years have prompted these expanded activities in this Office. National banks which are long-established in the international field have been extending their foreign activities. Some national banks are undertaking, or are planning to undertake, their first foreign ventures. The expansion of international financial activities enhances their importance to the sound condition of a bank. These are matters which fall within the supervisory responsibilities of the Comptroller of the Currency for national banks.

(3) Prior notification will be required of the intention of a national bank to establish a branch in a foreign country, to acquire directly a controlling interest in an Edge Act corporation, agreement corporation or foreign bank, to establish offices of such controlled corporations or foreign banks, or to acquire a controlling

interest in banks or other enterprises through such corporations or foreign banks. Actions of this nature, which may involve substantial risk, are not easily reversed, and hence, there is a need for advance knowledge by the Comptroller of the Currency. In addition, certain other international operations, such as the acquisition of less than a controlling interest in a foreign bank, must be reported to the Comptroller within 30 days of the event. The required notifications and reports will provide the basis, where needed, for special examinations by this Office, and for the issuance of appropriate instructions to a bank wherever such instructions are required in the exercise of the Comptroller's supervisory responsibilities.

(4) The prior notification and reporting procedure was chosen as the least burdensome means of supervising these important activities of national banks, considering the licensing authority over foreign branches and Edge Act corporations which rests with the Federal Reserve Board. This aspect of bank regulation would be greatly simplified if the licensing authority were lodged with the supervisory agency, rather than separated as it is at present. Pending such a transfer of authority, however, this Office will rely on the prior notification and reporting procedure, together with instructions issued under its supervisory authority, to provide the required supervision of the international financial activities of national banks.

§ 20.2

Definitions and terms.

For the purposes of this part:

(a) "Edge Act corporation" means a corporation organized under the provisions of 12 U.S.C. 611-632.

(b) "Agreement corporation" means a corporation which has entered into an agreement or undertaking in accordance with the provisions of 12 U.S.C. 603.

(c) "Foreign bank" means a corporation or other association organized under the laws of a foreign country, or of a dependency or insular possession of the United States or a foreign country, which is principally engaged in a commercial banking business.

(d) "Control" of a bank or corporation by a national bank or by an Edge Act corporation or an agreement corporation shall be presumed where a national bank, an Edge Act corporation

or an agreement corporation has acquired 25 percent or more of the voting shares of the bank or corporation.

§ 20.3

Prior notification of international operations.

On and after the effective date hereof: (a) Prior notification. Prior notification to the Comptroller of the Currency shall be required before a national bank may engage in any of the following international operations:

(1) The establishment of a branch of a national bank in a foreign country, or in a dependency or insular possession of the United States or a foreign country.

(2) The establishment in the United States, in a foreign country, or in a dependency or insular possession of the United States or a foreign country, of an office, branch or agency of an Edge Act corporation, agreement corporation or foreign bank which is controlled by a national bank.

(3) The direct acquisition by a national bank of a controlling interest in an Edge Act corporation, agreement corporation or foreign bank.

(4) The acquisition by a national bank, through an Edge Act corporation, agreement corporation or foreign bank which is controlled by it, of a controlling interest in a foreign bank or in any other corporation or association organized under the laws of a foreign country, or under the laws of a dependency or insular possession of the United States or a foreign country.

(b) Forms. Prior notification shall be made on forms provided by the Comptroller of the Currency.

§ 20.4 Reporting of international oper

ations.

On and after the effective date hereof:

(a) Reports. A report shall be made to the Comptroller of the Currency within 30 days of the occurrence of any of the following international operations: (1) The relocation of a branch of a national bank in a foreign country, or in a dependency or insular possession of the United States or a foreign country.

(2) The relocation in the United States, in a foreign country, or in a dependency or insular possession of the United States or a foreign country, of an office, branch, or agency of an Edge Act corporation, agreement corporation or foreign bank which is controlled by a national bank.

(3) The direct acquisition by a national bank of an interest in an Edge Act corporation, agreement corporation or foreign bank, where the acquisition does not result in control of the Edge Act corporation, agreement corporation or foreign bank.

(4) The acquisition by a national bank, through an Edge Act corporation, agreement corporation or foreign bank which is controlled by it, of an interest in a foreign bank or in any other corporation or association organized under the laws of a foreign country, or under the laws of a dependency or insular possession of the United States or a foreign country, where the acquisition does not result in control of the foreign bank or other corporation or association.

(b) Forms. Reports shall be made on forms provided by the Comptroller of the Currency.