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The Federal Reserve Board announced today its approval of the application of Royal Bank of Canada, Montreal, Canada, to establish a representative office in Houston, Texas. Attached is the Board's Order relating to this action. |
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Royal Bank of Canada
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Royal Bank of Canada ("Bank"), Montreal, Canada, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a representative office in Houston, Texas. The Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States. Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Houston, Texas (Houston Chronicle, November 27, 1996). The time for filing comments has expired, and all comments have been considered. Bank, with total consolidated assets of approximately $162.0 billion1, is the largest bank in Canada. Bank's shares are publicly traded and widely held, and no shareholder owns more than 10 percent of Bank. Bank provides a wide range of consumer, commercial, and corporate banking services through its network of more than 1500�offices in Canada. Foreign operations are conducted in 35�countries. In the United States, Bank currently operates a federally licensed branch in New York, New York, state-licensed agencies in Los Angeles, California, and Miami, Florida, and a representative office in Chicago, Illinois. Bank also engages in securities activities in the United States through its subsidiary, RBC Dominion Securities Corporation, New York, New�York. |
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The purposes for establishing the proposed representative office are to market Bank's products and services and solicit loan business for Bank.
In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside of the United States and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24).2 The Board may also take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). In this case, with respect to supervision by home country authorities, the Board has considered the following information. Bank is supervised and regulated by the Office of the Superintendent of Financial Institutions ("OSFI"). The OSFI is responsible for the prudential supervision and regulation of federally regulated financial institutions. The Board has previously determined, in connection with applications involving other Canadian banks, that these banks were subject to home country supervision on a consolidated basis.3 Bank is supervised by the OSFI on substantially the same terms and conditions as these other banks. Based on all the facts of record, the Board has determined that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. The Board also has taken into account the additional standards set forth in section�7 of the IBA (See12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The OSFI has no objection to establishment of the proposed representative office. |
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With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board also has determined that financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the experience and capacity to support the proposed representative office and also has established controls and procedures for the proposed representative office to ensure compliance with U.S. law.
With respect to access to information about Bank's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities about access to information. Bank has committed to make available to the Board such information on the operations of Bank and any affiliate of Bank that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information may be prohibited by law, Bank has committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure. In addition, subject to certain conditions, the OSFI may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information the Board may request. On the basis of all the facts of record, and subject to the commitments made by Bank, as well as the terms and conditions set forth in this order, the Board has determined that Bank's application to establish the representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of the Bank's direct or indirect activities in the United States. Approval of this application is also specifically conditioned on Bank's compliance with the commitments made in connection with the application, and with the conditions in this order.4 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, and its affiliates. |
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By order of the Board of Governors,5 effective March�31, 1997.
(signed) Jennifer J. Johnson
Jennifer J. Johnson
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Footnotes 1 Asset data are as of October 31, 1996. 2 In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; and (v) evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential and other elements may inform the Board's determination. 3 See Bank of Montreal, 80 Federal Reserve Bulletin 925 (1994); National Bank of Canada, 82 Federal Reserve Bulletin 769 (1996). 4 The Board's authority to approve the establishment of the proposed office parallels the continuing authority of the Texas State Banking Department ("Department") to license offices of foreign banks. The Board's approval of this application does not supplant the authority of Texas and the Department to license the proposed office of Bank in accordance with any terms or conditions that the Department may impose. 5 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, and Meyer. Absent and not voting: Governor Phillips. |
1997 Orders on banking applications
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