Florida Regulations 69U-140.003: Principles of Adequate Supervision of an International Banking Corporation’s Foreign Establishments
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(1) Section 663.05(8)(a)3., F.S., states a license shall not be issued to an international banking corporation for the purpose of operating an international bank agency or an international branch in this state unless the international banking corporation is adequately supervised by the central bank or bank regulatory agency in the foreign country in which it is organized and chartered. Section 663.05(8)(b)2., F.S., also states that a license shall not be issued to an international banking corporation for the purpose of operating an international representative office or an international administrative office in this state unless the international banking corporation is adequately supervised by the central bank or bank regulatory agency in the foreign country in which it is organized and chartered.
(2) An international banking corporation with foreign establishments is considered adequately supervised if it is subject to consolidated supervision. Consolidated supervision is supervision which enables the central bank or bank regulatory agency of the home country (home country supervisor) to evaluate:
(a) The safety and soundness of the international banking corporation’s operations located within the home country supervisor’s primary jurisdiction; and,
(b) The safety and soundness of the operations performed by the international banking corporation’s offices, or subsidiaries, wherever located.
(3) An international banking corporation with no foreign establishments is considered adequately supervised if the home country supervisor can evaluate the safety and soundness of the international banking corporation’s operations through its offices or subsidiaries located in the home country.
(4) The home country supervisor is deemed to be able to evaluate the safety and soundness of the international banking corporation, including its offices or subsidiaries, if the home country supervisor maintains information on the following regulatory components:
(a) The technical competence and administrative ability of the management of the international banking corporation, its offices or subsidiaries;
(b) The adequacy of the accounting and internal control systems of the international banking corporation, particularly the international banking corporation’s ability to monitor and supervise the activities of its offices or subsidiaries wherever located;
(c) The asset quality of the international banking corporation, its offices or subsidiaries including information on the trend and severity of adverse asset classifications; the composition and trend of past due non-accrual and restructured troubled debt; the adequacy of reserves; and the ability of the international banking corporation to identify, administer and collect problem credits;
(d) The investment securities of the international banking corporation, its offices or subsidiaries; the adequacy of its investment policies and trading account activities; the risks associated with off-balance sheet items; the degree of concentration of credits, investments and transfer risks; and the effectiveness of lending policies and credit administration procedures;
(e) The capital adequacy of the international banking corporation, its offices or subsidiaries as specified by the capital adequacy guidelines in the home country or the capital adequacy guidelines established by the Basle Committee on Bank Supervision Basel III: A global regulatory framework for more resilient banks and banking systems;
(f) The liquidity and funds management practices of the international banking corporation, its offices or subsidiaries;
(g) The earnings of the international banking corporation including how the operations and activities of the international banking corporation’s offices and subsidiaries have affected earnings; and,
(h) The external and internal auditors’ reports as well as any management comment letters or any documented corrective action by management.
(5) Adequate supervision as described in subsections (2) and (3), does not necessarily require supervision of companies which control the international banking corporation or require supervision of companies under common control with the international banking corporation but not in the international banking corporation’s chain of control. However, in cases where a holding company is the only controlling element in a banking group, holding company supervision by a home country supervisor shall be required when it is needed to ensure consolidated supervision of all banking entities in the group.
(6) In cases where a holding company is not supervised, adequate supervision shall be considered to exist if the home country supervisor regulates transactions between the international banking corporation and controlling persons or entities under common control.
(7) An international banking corporation, its offices or subsidiaries, shall be considered adequately supervised if it is subject to comprehensive supervision. Comprehensive supervision is supervision which ensures that the supervisory processes and procedures are designed to inform the home country supervisor about the international banking corporation’s: financial condition, including capital position; asset quality; and the capability of management.
(8) Comprehensive supervision does not require the home country supervisor to conduct on-site examinations of the international banking corporation or its offices or subsidiaries. However, at a minimum, it requires that the home country supervisor:
(a) Determine that the international banking corporation, and its offices and subsidiaries, have adequate procedures for monitoring and controlling its domestic and foreign operations; and,
(b) Receives information (by examination, audits or by other means) on the domestic and foreign operations of the international banking corporation, including its offices and subsidiaries; and also receives financial reports which permit analysis of the consolidated condition of the international banking corporation.
Rulemaking Authority Florida Statutes § 655.012(2), 663.05(9) FS. Law Implemented 663.05(9) FS. History-New 8-24-93, Formerly 3C-140.051, 3C-140.003, Amended 1-1-18.
Terms Used In Florida Regulations 69U-140.003
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
(a) The safety and soundness of the international banking corporation’s operations located within the home country supervisor’s primary jurisdiction; and,
(b) The safety and soundness of the operations performed by the international banking corporation’s offices, or subsidiaries, wherever located.
(3) An international banking corporation with no foreign establishments is considered adequately supervised if the home country supervisor can evaluate the safety and soundness of the international banking corporation’s operations through its offices or subsidiaries located in the home country.
(4) The home country supervisor is deemed to be able to evaluate the safety and soundness of the international banking corporation, including its offices or subsidiaries, if the home country supervisor maintains information on the following regulatory components:
(a) The technical competence and administrative ability of the management of the international banking corporation, its offices or subsidiaries;
(b) The adequacy of the accounting and internal control systems of the international banking corporation, particularly the international banking corporation’s ability to monitor and supervise the activities of its offices or subsidiaries wherever located;
(c) The asset quality of the international banking corporation, its offices or subsidiaries including information on the trend and severity of adverse asset classifications; the composition and trend of past due non-accrual and restructured troubled debt; the adequacy of reserves; and the ability of the international banking corporation to identify, administer and collect problem credits;
(d) The investment securities of the international banking corporation, its offices or subsidiaries; the adequacy of its investment policies and trading account activities; the risks associated with off-balance sheet items; the degree of concentration of credits, investments and transfer risks; and the effectiveness of lending policies and credit administration procedures;
(e) The capital adequacy of the international banking corporation, its offices or subsidiaries as specified by the capital adequacy guidelines in the home country or the capital adequacy guidelines established by the Basle Committee on Bank Supervision Basel III: A global regulatory framework for more resilient banks and banking systems;
(f) The liquidity and funds management practices of the international banking corporation, its offices or subsidiaries;
(g) The earnings of the international banking corporation including how the operations and activities of the international banking corporation’s offices and subsidiaries have affected earnings; and,
(h) The external and internal auditors’ reports as well as any management comment letters or any documented corrective action by management.
(5) Adequate supervision as described in subsections (2) and (3), does not necessarily require supervision of companies which control the international banking corporation or require supervision of companies under common control with the international banking corporation but not in the international banking corporation’s chain of control. However, in cases where a holding company is the only controlling element in a banking group, holding company supervision by a home country supervisor shall be required when it is needed to ensure consolidated supervision of all banking entities in the group.
(6) In cases where a holding company is not supervised, adequate supervision shall be considered to exist if the home country supervisor regulates transactions between the international banking corporation and controlling persons or entities under common control.
(7) An international banking corporation, its offices or subsidiaries, shall be considered adequately supervised if it is subject to comprehensive supervision. Comprehensive supervision is supervision which ensures that the supervisory processes and procedures are designed to inform the home country supervisor about the international banking corporation’s: financial condition, including capital position; asset quality; and the capability of management.
(8) Comprehensive supervision does not require the home country supervisor to conduct on-site examinations of the international banking corporation or its offices or subsidiaries. However, at a minimum, it requires that the home country supervisor:
(a) Determine that the international banking corporation, and its offices and subsidiaries, have adequate procedures for monitoring and controlling its domestic and foreign operations; and,
(b) Receives information (by examination, audits or by other means) on the domestic and foreign operations of the international banking corporation, including its offices and subsidiaries; and also receives financial reports which permit analysis of the consolidated condition of the international banking corporation.
Rulemaking Authority Florida Statutes § 655.012(2), 663.05(9) FS. Law Implemented 663.05(9) FS. History-New 8-24-93, Formerly 3C-140.051, 3C-140.003, Amended 1-1-18.