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Financial Institution Letters


April 23, 2002

SUBJECT: Joint Agency Statement on Parallel-Owned Banking Organizations

The Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision have jointly adopted the attached statement concerning parallel-owned banking organizations. The statement describes the characteristics of these banking organizations, reviews potential associated risks, and sets forth the agencies' approach to supervising those risks.

A parallel-owned banking organization is created when at least one U.S. depository institution and one foreign bank are controlled either directly or indirectly by the same person or group of persons. It does not include structures in which one depository institution is a subsidiary of the other, or the organization is controlled by a company subject to the Bank Holding Company Act.

A fundamental risk presented by parallel-owned banking organizations is that they may be acting in a de facto organizational structure that is not subject to comprehensive consolidated supervision. The banking agencies' supervisory approach is to better understand how: the overall strategy and management of a parallel-owned banking organization affects the affiliated U.S. depository institution, the activities of foreign affiliates are supervised, home-country supervisors view the condition and operations of foreign affiliates, and affiliates could affect the U.S. depository institution. Enhanced communication and cooperation with foreign bank supervisors are important to this process. Examiner guidance based on the principles set forth in the statement will be issued separately by each of the agencies.

For more information, please contact your FDIC regional office; Karen Walter (202-898-3540) or Suzanne Williams (202-898-6788) in the Division of Supervision; or Rodney Ray (202-898-3556) in the Legal Division.

Michael J. Zamorski

Attachment: Joint Agency Statement on Parallel-Owned Banking Organizations

Distribution: FDIC-Supervised Banks (Commercial and Savings)

NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).

Last Updated 04/23/2002

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