Branching out: foreign banks seek shelter from Fed rules

Randy Benjenk is quoted in a Risk article regarding U.S.-based branches of foreign banks experiencing a rise in total branch assets because they are exempt from the Federal Reserve's enhanced prudential standards for foreign banking organizations, such as requirements to set up intermediate holding companies (IHC), the Fed's annual stress test--the Comprehensive Capital Analysis and Review (CCAR), and the supplementary leverage ratio (SLR). According to Benjenk, “The Fed made a policy choice in establishing the IHC requirement that assets within a branch aren’t subject to the IHC requirement. It was recognized at the time and well understood that FBOs could restructure their activities within a branch, consistent with their business interests, and avoid application of the IHC requirement for those activities."