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4000 - Advisory Opinions

Section 214 of FDICIA Allows Existing Insured Branches of Foreign Banks to Continue to Operate But Does Not Authorize Foreign Banks to Open Additional Insured Branches


March 25, 1992

Jeffrey M. Kopchik, Counsel

This is in response to your letter of February 28th to General Counsel Alfred J. T. Byrne concerning the effect of section 214 of the FDIC Improvement Act of 1991 ("Improvement Act") on your bank's ability to open additional insured branches in the New York area.

The FDIC Legal Division staff does not share your view that section 214(a) of the Improvement Act permits foreign banks which maintained at least one insured branch as of December 19, 1991 to subsequently open additional insured branches which accept and maintain deposit accounts having balances of less than $100,000. It is my opinion that the plain language and legislative history of section 214 make it quite clear that the "grandfather" provision contained in new section 6(c)(2) of the International Banking Act of 1978 ("IBA") was intended only to permit existing insured branches of foreign banks to continue to operate after the enactment of the Improvement Act without the requirement that they be "rolled up" into a newly chartered subsidiary bank. This section clearly states that "[d]eposit accounts with balances of less than $100,000 may be accepted or maintained in a branch of a foreign bank only if such branch was an insured branch on the date of enactment of this subsection." (Emphasis added). See also 137 Cong. Rec. S18813-14 (daily ed. December 18, 1991) (statement of Senator Garn).

If I can answer any other questions, please do not hesitate to contact me.

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