Title 12 — Banks and Banking
Chapter 32 — Foreign Bank Participation in Domestic Markets
§ 3106. Nonbanking activities of foreign banks
Statutory text
Applicability of Bank Holding Company Acts
Except as otherwise provided in this section (1) any foreign bank that maintains a branch or agency in a State, (2) any foreign bank or foreign company controlling a foreign bank that controls a commercial lending company organized under State law, and (3) any company of which any foreign bank or company referred to in (1) and (2) is a subsidiary shall be subject to the provisions of the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.], and to section 1850 of this title and chapter 22 of this title in the same manner and to the same extent that bank holding companies are subject to such provisions.
Ownership or control of shares of nonbanking companies for certain period
Until , a foreign bank or other company to which subsection (a) applies on , may retain direct or indirect ownership or control of any voting shares of any nonbanking company in the United States that it owned, controlled, or held with power to vote on , or engage in any nonbanking activities in the United States in which it was engaged on such date.
Engagement in nonbanking activities after certain period
After , a foreign bank or other company to which subsection (a) applies on , or on the date of the establishment of a branch in a State an application for which was filed on or before , may continue to engage in nonbanking activities in the United States in which directly or through an affiliate it was lawfully engaged on (or on a date subsequent to , in the case of activities carried on as the result of the direct or indirect acquisition, pursuant to a binding written contract entered into on or before , of another company engaged in such activities at the time of acquisition), and may engage directly or through an affiliate in nonbanking activities in the United States which are covered by an application to engage in such activities which was filed on or before ; except that the Board by order, after opportunity for hearing, may terminate the authority conferred by this subsection on any such foreign bank or company to engage directly or through an affiliate in any activity otherwise permitted by this subsection if it determines having due regard to the purposes of this chapter and the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.], that such action is necessary to prevent undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices in the United States. Notwithstanding subsection (a) of this section, a foreign bank or company referred to in this subsection may retain ownership or control of any voting shares (or, where necessary to prevent dilution of its voting interest, acquire additional voting shares) of any domestically-controlled affiliate covered in 1978 which since , has engaged in the business of underwriting, distributing, or otherwise buying or selling stocks, bonds, and other securities in the United States, notwithstanding that such affiliate acquired after , an interest in, or any or all of the assets of, a going concern, or commences to engage in any new activity or activities. Except in the case of affiliates described in the preceding sentence, nothing in this subsection shall be construed to authorize any foreign bank or company referred to in this subsection, or any affiliate thereof, to engage in activities authorized by this subsection through the acquisition, pursuant to a contract entered into after , of any interest in or the assets of a going concern engaged in such activities. Any foreign bank or company that is authorized to engage in any activity pursuant to this subsection but, as a result of action of the Board, is required to terminate such activity may retain the ownership of control of shares in any company carrying on such activity for a period of two years from the date on which its authority was so terminated by the Board. As used in this subsection, the term “affiliate” shall mean any company more than 5 per centum of whose voting shares is directly or indirectly owned or controlled or held with power to vote by the specified foreign bank or company, and the term “domestically-controlled affiliate covered in 1978” shall mean an affiliate organized under the laws of the United States or any State thereof if (i) no foreign bank or group of foreign banks acting in concert owns or controls, directly or indirectly, 45 per centum or more of its voting shares, and (ii) no more than 20 per centum of the number of directors as established from time to time to constitute the whole board of directors and 20 per centum of the executive officers of such affiliate are persons affiliated with any such foreign bank. For the purpose of the preceding sentence, the term “persons affiliated with any such foreign bank” shall mean (A) any person who is or was an employee, officer, agent, or director of such foreign bank or who otherwise has or had such a relationship with such foreign bank that would lead such person to represent the interests of such foreign bank, and (B) in the case of any director of such domestically controlled affiliate covered in 1978, any person in favor of whose election as a director votes were cast by less than two-thirds of all shares voting in connection with such election other than shares owned or controlled, directly or indirectly, by any such foreign bank.
The authority conferred by this subsection on a foreign bank or other company shall terminate 2 years after the date on which such foreign bank or other company becomes a “bank holding company” as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); except that the Board may, upon application of such foreign bank or other company, extend the 2-year period for not more than one year at a time, if, in its judgment, such an extension would not be detrimental to the public interest, but no such extensions shall exceed 3 years in the aggregate.
Termination of grandfathered rights.—
In general.—
If any foreign bank or foreign company files a declaration under section 4(l)(1)(C) 1 of the Bank Holding Company Act of 1956 [12 U.S.C. 1843(l)(1)(C)], any authority conferred by this subsection on any foreign bank or company to engage in any activity that the Board has determined to be permissible for financial holding companies under section 4(k) of such Act [12 U.S.C. 1843(k)] shall terminate immediately.
Restrictions and requirements authorized.—
If a foreign bank or company that engages, directly or through an affiliate pursuant to paragraph (1), in an activity that the Board has determined to be permissible for financial holding companies under section 4(k) of the Bank Holding Company Act of 1956 [12 U.S.C. 1843(k)] has not filed a declaration with the Board of its status as a financial holding company under such section by the end of the 2-year period beginning on , the Board, giving due regard to the principle of national treatment and equality of competitive opportunity, may impose such restrictions and requirements on the conduct of such activities by such foreign bank or company as are comparable to those imposed on a financial holding company organized under the laws of the United States, including a requirement to conduct such activities in compliance with any prudential safeguards established under section 1828a of this title.
Construction of terms
Nothing in this section shall be construed to define a branch or agency of a foreign bank or a commercial lending company controlled by a foreign bank or foreign company that controls a foreign bank as a “bank” for the purposes of any provisions of the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.], or section 1850 of this title, except that any such branch, agency or commercial lending company subsidiary shall be deemed a “bank” or “banking subsidiary”, as the case may be, for the purposes of applying the prohibitions of chapter 22 of this title and the exemptions provided in sections 4(c)(1), 4(c)(2), 4(c)(3), and 4(c)(4) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(1), (2), (3), and (4)) to any foreign bank or other company to which subsection (a) applies.
Footnotes
- 1 See References in Text note below.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
International Banking Act of 1978
Pub. L. 95–369 § 8(a) · 92 Stat. 607
Enacted · 12 U.S.C. § 3106
Pub. L. 95–369, § 8(a)–(d), Sept. 17, 1978, 92 Stat. 622, 623
Source evidence
Code source credit
Pub. L. 95–369, § 8(a)–(d), Sept. 17, 1978, 92 Stat. 622, 623Enacted provision · exact public law section
(a) Except as otherwise provided in this section (1) any 12 USC 3106. foreign bank that maintains a branch or agency in a State, (2) any foreign bank or foreign company controlling a foreign bank that controls a commercial lending company organized under State law, and (3) any company of which any foreign bank or company referred to in (1) and (2) is a subsidiary shall be subject to the provisions of the Bank Holding Company Act of 1956, and to sections 105 and 12 USC 1841 note. 12 USC 1850, 1971–1978. 106 of the Bank Holding Company Act Amendments of 1970 in the same manner and to the same extent that bank holding companies are subject thereto, except that any such foreign bank or company shall not by reason of this subsection be deemed a bank holding company for purposes of section 3 of the Bank Holding Company Act of 1956.Garn-St Germain Depository Institutions Act of 1982
Pub. L. 97–320 § 704 · 96 Stat. 1469
Inserted · 12 U.S.C. § 3106(c)
Pub. L. 97–320, § 704, inserted “or on the date of the establishment of a branch in a State an application for which was filed on or before July 26, 1978” after “September 17, 1978,”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 97–320, § 704, inserted “or on the date of the establishment of a branch in a State an application for which was filed on or before July 26, 1978” after “September 17, 1978,”.Enacted provision · exact public law section
Sec. 704. applicability of the international banking act of 1978 Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by inserting in the first sentence immediately after the words “on the date of enactment of this Act” the following: “or on the date of the establishment of a branch in a State an application for which was filed on or before July 26, 1978”.Garn-St Germain Depository Institutions Act of 1982
Pub. L. 97–320 § 705(a) · 96 Stat. 1469
Substituted · 12 U.S.C. § 3106(c)
Pub. L. 97–320, § 705(a), substituted provision that the term “domestically-controlled affiliate covered in 1978” shall mean an affiliate organized under the laws of the United States or any State thereof if no foreign bank or group of foreign banks acting in concert owns or controls, directly or indirectly, 45 per centum or more of its voting shares, and no more than 20 per centum of the number of directors as established from time to time to constitute the whole board of directors and 20 per centum of the executive officers of such affiliate are persons affiliated with any such foreign bank, for provision that it meant any affiliate the majority of whose voting shares was owned by a company or group of companies organized under the laws of the United States or any State thereof, if it had been under continuous domestic majority-controlling ownership since July 26, 1978, and if a foreign bank or group of foreign banks did not own or control, directly or indirectly, 25 per centum or more of its voting shares, and defined “persons affiliated with any such foreign bank”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 97–320, § 705(a), substituted provision that the term “domestically-controlled affiliate covered in 1978” shall mean an affiliate organized under the laws of the United States or any State thereof if no foreign bank or group of foreign banks acting in concert owns or controls, directly or indirectly, 45 per centum or more of its voting shares, and no more than 20 per centum of the number of directors as established from time to time to constitute the whole board of directors and 20 per centum of the executive officers of such affiliate are persons affiliated with any such foreign bank, for provision that it meant any affiliate the majority of whose voting shares was owned by a company or group of companies organized under the laws of the United States or any State thereof, if it had been under continuous domestic majority-controlling ownership since July 26, 1978, and if a foreign bank or group of foreign banks did not own or control, directly or indirectly, 25 per centum or more of its voting shares, and defined “persons affiliated with any such foreign bank”.Enacted provision · exact public law section
(a) The last sentence of section 8(c) of the International Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by striking out all after “company, and” and inserting in lieu thereof the following: “the term ‘domestically-controlled affiliate covered in 1978’ shall mean an affiliate organized under the laws of the United States or any State thereof if (i) no foreign bank or group of foreign banks acting in concert owns or controls, directly or indirectly, 45 per centum or more of its voting shares, and (ii) no more than 20 per centum of the number of directors as established from time to time to constitute the whole board of directors and 20 per centum of the executive officers of such affiliate are persons affiliated with any such foreign bank. For the purpose of the preceding sentence, the term ‘persons affiliated with any such foreign bank’ shall mean (A) any person who is or was an employee, officer, agent, or director of such foreign bank or who otherwise has or had such a relationship with such foreign bank that would lead such person to represent the interests of such foreign bank, and (B) in the case of any director of such domestically controlled affiliate covered in 1978, any person in favor of whose election as a director votes were cast by less than two-thirds of all shares voting in connection with such election other than shares owned or controlled, directly or indirectly, by any such foreign bank.”.Garn-St Germain Depository Institutions Act of 1982
Pub. L. 97–320 § 705(b) · 96 Stat. 1469
Substituted · 12 U.S.C. § 3106(c)
Pub. L. 97–320, § 705(b), substituted “since July 26, 1978, has engaged” for “engages” before “in the business of underwriting”
Inserted · 12 U.S.C. § 3106(c)
Pub. L. 97–320, § 705(b), inserted “, notwithstanding that such affiliate acquired after July 26, 1978, an interest in, or any or all of the assets of, a going concern, or commences to engage in any new activity or activities” after “and other securities in the United States”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 97–320, § 705(b), substituted “since July 26, 1978, has engaged” for “engages” before “in the business of underwriting”, and inserted “, notwithstanding that such affiliate acquired after July 26, 1978, an interest in, or any or all of the assets of, a going concern, or commences to engage in any new activity or activities” after “and other securities in the United States”.Enacted provision · exact public law section
(b) The second sentence of section 8(c) of such Act is amended to read as follows: “Notwithstanding subsection (a) of this section, a foreign bank or company referred to in this subsection may retain ownership or control of any voting shares (or, where necessary to prevent dilution of its voting interest, acquire additional voting shares) of any domestically-controlled affiliate covered in 1978 which since July 26, 1978, has engaged in the business of underwrit-ing, distributing, or otherwise buying or selling stocks, bonds, and other securities in the United States, notwithstanding that such affiliate acquired after July 26, 1978, an interest in, or any or all of the assets of, a going concern, or commences to engage in any new activity or activities.”.Competitive Equality Banking Act of 1987
Pub. L. 100–86 title II § 204 · 101 Stat. 552
Amended · 12 U.S.C. § 3106(c)
Pub. L. 100–86 designated existing provisions as par. (1)
Added · 12 U.S.C. § 3106(c)
Pub. L. 100–86 added par. (2)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 100–86 designated existing provisions as par. (1) and added par. (2).Enacted provision · exact public law section
SEC. 204. AMENDMENTS TO THE INTERNATIONAL BANKING ACT OF 1978. (a) Termination of Certain Nonbanking Activities.— Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by adding at the end thereof the following new paragraph: “(2) The authority conferred by this subsection on a foreign bank or other company shall terminate 2 years after the date on which such foreign bank or other company becomes a ‘bank holding company’ as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); except that the Board may, upon application of such foreign bank or other company, extend the 2-year period for not more than one year at a time, if, in its judgment, such an extension would not be detrimental to the public interest, but no such extensions shall exceed 3 years in the aggregate.”. (b) Clerical Amendment.— Section 8 of the International Banking Act of 1978 is amended by striking out “(c) After” and inserting in lieu thereof “(c)(1) After”.Foreign Bank Supervision Enhancement Act of 1991
Pub. L. 102–242 title II § 207 · 105 Stat. 2236
Substituted · 12 U.S.C. § 3106(a)
Pub. L. 102–242 substituted “to such provisions” for “thereto, except that any such foreign bank or company shall not by reason of this subsection be deemed a bank holding company for purposes of section 3 of the Bank Holding Company Act of 1956”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 102–242 substituted “to such provisions” for “thereto, except that any such foreign bank or company shall not by reason of this subsection be deemed a bank holding company for purposes of section 3 of the Bank Holding Company Act of 1956”.Enacted provision · exact public law section
SEC. 207. APPROVAL REQUIRED FOR ACQUISITION BY FOREIGN BANKS OF SHARES OF UNITED STATES BANKS. Section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)) is amended by striking “thereto” and all that follows through the period and inserting “to such provisions.”.Pub. L. 106–102 title I § 141 · 113 Stat. 1338
Added · 12 U.S.C. § 3106(c)(3)
Pub. L. 106–102 added par. (3)
Source evidence
Code amendment note
Subsec. (c)(3). Pub. L. 106–102 added par. (3).Enacted provision · exact public law section
SEC. 141. FOREIGN BANKS THAT ARE FINANCIAL HOLDING COMPANIES. Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by adding at the end the following new paragraph: “(3) Termination of grandfathered rights.— “(A) In general.— If any foreign bank or foreign company files a declaration under section 4(1)(1)(C) of the Bank Holding Company Act of 1956, any authority conferred by this subsection on any foreign bank or company to engage in any activity that the Board has determined to be permissible for financial holding companies under section 4(k) of such Act shall terminate immediately. “(B) Restrictions and requirements authorized.— If a foreign bank or company that engages, directly or through an affiliate pursuant to paragraph (1), in an activity that the Board has determined to be permissible for financial holding companies under section 4(k) of the Bank Holding Company Act of 1956 has not filed a declaration with the Board of its status as a financial holding company under such section by the end of the 2-year period beginning on the date of the enactment of the Gramm-Leach-Bliley Act, the Board, giving due regard to the principle of national treatment and equality of competitive opportunity, may impose such restrictions and requirements on the conduct of such activities by such foreign bank or company as are comparable to those imposed on a financial holding company organized under the laws of the United States, including a requirement to conduct such activities in compliance with any prudential safeguards established under section 114 of the Gramm-Leach-Bliley Act.”.Effective date note
Amendment by Pub. L. 106–102 effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106–102, set out as a note under section 24 of this title.
9 of 9 references resolved to an enrolled provision
Editorial Notes
References in Text
The Bank Holding Company Act of 1956, referred to in subsecs. (a), (c), and (d), is act May 9, 1956, ch. 240, 70 Stat. 133, which is classified principally to chapter 17 (§ 1841 et seq.) of this title. Section 4(l)(1)(C) of the Act was redesignated section 4(l)(1)(D) by Pub. L. 111–203, title VI, § 606(a)(2), , 124 Stat. 1607, and is classified to section 1843(l)(1)(D) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1841 of this title and Tables.
For definition of “this chapter”, referred to in subsec. (c), see References in Text note set out under section 3101 of this title.
Amendments1982–1999 · 4 rounds
1999
Subsec. (c)(3). Pub. L. 106–102 added par. (3).
1991
Subsec. (a). Pub. L. 102–242 substituted “to such provisions” for “thereto, except that any such foreign bank or company shall not by reason of this subsection be deemed a bank holding company for purposes of section 3 of the Bank Holding Company Act of 1956”.
1987
Subsec. (c). Pub. L. 100–86 designated existing provisions as par. (1) and added par. (2).
1982
Subsec. (c). Pub. L. 97–320, § 704, inserted “or on the date of the establishment of a branch in a State an application for which was filed on or before ” after “,”.
Pub. L. 97–320, § 705(a), substituted provision that the term “domestically-controlled affiliate covered in 1978” shall mean an affiliate organized under the laws of the United States or any State thereof if no foreign bank or group of foreign banks acting in concert owns or controls, directly or indirectly, 45 per centum or more of its voting shares, and no more than 20 per centum of the number of directors as established from time to time to constitute the whole board of directors and 20 per centum of the executive officers of such affiliate are persons affiliated with any such foreign bank, for provision that it meant any affiliate the majority of whose voting shares was owned by a company or group of companies organized under the laws of the United States or any State thereof, if it had been under continuous domestic majority-controlling ownership since , and if a foreign bank or group of foreign banks did not own or control, directly or indirectly, 25 per centum or more of its voting shares, and defined “persons affiliated with any such foreign bank”.
Pub. L. 97–320, § 705(b), substituted “since , has engaged” for “engages” before “in the business of underwriting”, and inserted “, notwithstanding that such affiliate acquired after , an interest in, or any or all of the assets of, a going concern, or commences to engage in any new activity or activities” after “and other securities in the United States”.
Statutory Notes and Related Subsidiaries
Effective Date of 1999 Amendment
Amendment by Pub. L. 106–102 effective 120 days after , see section 161 of Pub. L. 106–102, set out as a note under section 24 of this title.
Credits
1978–1999 · 5 acts
- 1978Pub. L. 95–369, § 8(a)–(d), , 92 Stat. 622, 623
- 1982Pub. L. 97–320, title VII, §§ 704, 705, , 96 Stat. 1539
- 1987Pub. L. 100–86, title II, § 204, , 101 Stat. 584
- 1991Pub. L. 102–242, title II, § 207, , 105 Stat. 2295
- 1999Pub. L. 106–102, title I, § 141, , 113 Stat. 1383.
Show as published
(Pub. L. 95–369, § 8(a)–(d), , 92 Stat. 622, 623; Pub. L. 97–320, title VII, §§ 704, 705, , 96 Stat. 1539; Pub. L. 100–86, title II, § 204, , 101 Stat. 584; Pub. L. 102–242, title II, § 207, , 105 Stat. 2295; Pub. L. 106–102, title I, § 141, , 113 Stat. 1383.)