Florida Regulations 69U-140.015: Capital Equivalency or Asset Maintenance
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(1) Section 663.07(1)(a), F.S., requires each international bank agency or international branch to maintain, with one or more banks insured by the Federal Deposit Insurance Corporation and located within the United States, evidence of dollar deposits or investment securities of the type that may be held by a state bank for its own account pursuant to Florida Statutes § 658.67 The aggregate amount of dollar deposits and investment securities for an international bank agency or international branch shall, at a minimum equal the greater of $4 million; or 7 percent of the total liabilities of the international bank agency or international branch (excluding accrued expenses and amounts due as well as other liabilities to affiliated branches, offices, agencies, or entities.)
(2) The capital equivalency deposits shall be maintained pursuant to a deposit agreement between the international banking corporation and the depository bank on Form OFR-U-29, Capital Equivalency Deposit Agreement, which shall be available from OFR. Funds deposited in investment securities placed in safekeeping at the depository bank to satisfy the capital equivalency requirements shall: be segregated on the books and records of the depository bank; not be diminished in aggregate value, by withdrawal, without the prior approval of OFR; be pledged to OFR; and be free from any lien, charge, right of set off, credit or preference in connection with any claim of the depository bank against the international banking corporation. So long as it continues business in the ordinary course, the international banking corporation shall be permitted to collect income on the securities and the funds so deposited and will be allowed from time to time to exchange such securities. In the event of the voluntary closure of the international bank agency or international branch, OFR shall determine the time for the release of the capital equivalency dollar deposits and investment securities. The time for release shall be based upon a determination by OFR that satisfactory arrangements have been made by the international banking corporation for the payment of creditors and the settlement of depositors of the international bank agency or international branch.
(3) Each international bank agency or international branch shall maintain a capital equivalency account and shall record for each business day the amount of liabilities requiring capital equivalency coverage. On the last business day of each month, the average daily balance of such liabilities shall be computed. Based on this computation, any increase in the dollar deposits or investment securities that may be necessary to maintain the minimum capital equivalency amount or capital equivalency ratio shall be made within the first seven business days of the following month. If an international banking corporation has two or more international bank agencies or international branches, the capital equivalency deposits and the amount of liabilities requiring capital equivalency coverage shall be determined on an aggregate basis.
(4) In lieu of the capital equivalency deposit required in Florida Statutes § 663.07(1), an international bank agency or international branch may elect to hold in this state, assets equal to at least $4 million or 107 percent of the amount of liabilities (excluding accrued expenses and amounts due as well as other liabilities to affiliated branches, offices, agencies, or entities.)
(5) The required amount of assets shall be maintained as: cash on hand; deposits or placements with other banks, including the total amount of any reserves deposited at the Federal Reserve Bank; cash items in process of collection; earning assets such as federal funds sold, bonds, notes, debentures, bills of exchange, acceptances, loan participation certificates; or other evidences of indebtedness payable in United States funds or in funds freely convertible into United States funds. Assets held pursuant to this subsection shall exclude accrued income and amounts due from affiliated branches, agencies, or offices.
(6) Notwithstanding the limitations of Florida Statutes § 658.67, an international bank agency or international branch is authorized to use securities issued by foreign governments, or foreign government sponsored entities, for the purpose of satisfying the capital equivalency or asset maintenance requirements of Florida Statutes § 663.07, provided that:
(a) The bonds or other obligations used for this purpose are current as to all payments of principal and interest and otherwise supported as to investment quality and marketability by a credit rating file compiled and maintained in current status;
(b) Performing trade credits, bank credits, bonds or other securities in the countries in which these governments or government sponsored entities are located are not classified as valued impaired, substandard or loss by ICERC; and,
(c) Such securities shall be payable in funds freely convertible into United States funds and the amount shall not exceed 25 percent of the amount required for capital equivalency or asset maintenance compliance.
(7) To determine compliance with the capital equivalency and asset maintenance requirements, each international bank agency or international branch shall file with OFR a capital equivalency report on Form OFR-U-52, Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities, revised 3/2003, or an asset maintenance report on Form OFR-U-50, Quarterly Report of Monthly Asset Maintenance, revised 3/2003.
(8) Notwithstanding the provisions of subsection (3), an international banking corporation with two or more agencies or branches may consolidate the capital equivalency or asset maintenance reports for these offices. Thus, compliance with this section shall be determined on the basis of the aggregate eligible assets and liabilities requiring coverage, of the international bank agencies and branches operating in Florida.
(9) An international bank agency with zero liabilities shall not be required to maintain assets in the state and shall reflect such zero asset condition in its Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities.
(10) An international bank agency or international branch shall pay, to OFR, a fine if the agency or branch fails to correct any asset maintenance or capital equivalency deposit deficiency within 7 days following the end of the month in which the deficiency occurs. The fine shall be equal to the amount of the asset maintenance or capital equivalency deposit deficiency multiplied by a rate (consisting of the sum of the Federal Reserve Board’s daily discount rate at the end of the month in which the deficiency occurs plus 500 basic points, divided by 365 days and multiplied by the days of the deficiency.) The minimum fine shall be $1,000. Instructions for computing the asset maintenance/capital equivalency deposit deficiency fine shall be included in the asset maintenance/capital equivalency report forms, OFR-U-50 and OFR-U-52, revised 3/2003.
(11) Forms OFR-U-29, Capital Equivalency Deposit Agreement, effective 10-05-89, revised 3/2003; OFR-U-50, Quarterly Report of Monthly Asset Maintenance, revised 3/2003; and OFR-U-52, Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities, revised 3/2003 are hereby incorporated by reference and available by mail from the Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida 32399-0371.
Rulemaking Authority 655.012(2), 663.13, 663.07(1) FS. Law Implemented 663.07(1), (3), (5), (7), (9), 663.12(4) FS. History-New 3-10-82, Amended 11-21-85, Formerly 3C-15.10, Amended 10-5-89, Formerly 3C-15.010, Amended 8-24-93, Formerly 3C-140.007, 3C-140.015, Amended 10-29-12, 1-1-18, 2-16-23.
Terms Used In Florida Regulations 69U-140.015
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(3) Each international bank agency or international branch shall maintain a capital equivalency account and shall record for each business day the amount of liabilities requiring capital equivalency coverage. On the last business day of each month, the average daily balance of such liabilities shall be computed. Based on this computation, any increase in the dollar deposits or investment securities that may be necessary to maintain the minimum capital equivalency amount or capital equivalency ratio shall be made within the first seven business days of the following month. If an international banking corporation has two or more international bank agencies or international branches, the capital equivalency deposits and the amount of liabilities requiring capital equivalency coverage shall be determined on an aggregate basis.
(4) In lieu of the capital equivalency deposit required in Florida Statutes § 663.07(1), an international bank agency or international branch may elect to hold in this state, assets equal to at least $4 million or 107 percent of the amount of liabilities (excluding accrued expenses and amounts due as well as other liabilities to affiliated branches, offices, agencies, or entities.)
(5) The required amount of assets shall be maintained as: cash on hand; deposits or placements with other banks, including the total amount of any reserves deposited at the Federal Reserve Bank; cash items in process of collection; earning assets such as federal funds sold, bonds, notes, debentures, bills of exchange, acceptances, loan participation certificates; or other evidences of indebtedness payable in United States funds or in funds freely convertible into United States funds. Assets held pursuant to this subsection shall exclude accrued income and amounts due from affiliated branches, agencies, or offices.
(6) Notwithstanding the limitations of Florida Statutes § 658.67, an international bank agency or international branch is authorized to use securities issued by foreign governments, or foreign government sponsored entities, for the purpose of satisfying the capital equivalency or asset maintenance requirements of Florida Statutes § 663.07, provided that:
(a) The bonds or other obligations used for this purpose are current as to all payments of principal and interest and otherwise supported as to investment quality and marketability by a credit rating file compiled and maintained in current status;
(b) Performing trade credits, bank credits, bonds or other securities in the countries in which these governments or government sponsored entities are located are not classified as valued impaired, substandard or loss by ICERC; and,
(c) Such securities shall be payable in funds freely convertible into United States funds and the amount shall not exceed 25 percent of the amount required for capital equivalency or asset maintenance compliance.
(7) To determine compliance with the capital equivalency and asset maintenance requirements, each international bank agency or international branch shall file with OFR a capital equivalency report on Form OFR-U-52, Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities, revised 3/2003, or an asset maintenance report on Form OFR-U-50, Quarterly Report of Monthly Asset Maintenance, revised 3/2003.
(8) Notwithstanding the provisions of subsection (3), an international banking corporation with two or more agencies or branches may consolidate the capital equivalency or asset maintenance reports for these offices. Thus, compliance with this section shall be determined on the basis of the aggregate eligible assets and liabilities requiring coverage, of the international bank agencies and branches operating in Florida.
(9) An international bank agency with zero liabilities shall not be required to maintain assets in the state and shall reflect such zero asset condition in its Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities.
(10) An international bank agency or international branch shall pay, to OFR, a fine if the agency or branch fails to correct any asset maintenance or capital equivalency deposit deficiency within 7 days following the end of the month in which the deficiency occurs. The fine shall be equal to the amount of the asset maintenance or capital equivalency deposit deficiency multiplied by a rate (consisting of the sum of the Federal Reserve Board’s daily discount rate at the end of the month in which the deficiency occurs plus 500 basic points, divided by 365 days and multiplied by the days of the deficiency.) The minimum fine shall be $1,000. Instructions for computing the asset maintenance/capital equivalency deposit deficiency fine shall be included in the asset maintenance/capital equivalency report forms, OFR-U-50 and OFR-U-52, revised 3/2003.
(11) Forms OFR-U-29, Capital Equivalency Deposit Agreement, effective 10-05-89, revised 3/2003; OFR-U-50, Quarterly Report of Monthly Asset Maintenance, revised 3/2003; and OFR-U-52, Quarterly Report of Monthly Capital Equivalency Deposits or Investment Securities, revised 3/2003 are hereby incorporated by reference and available by mail from the Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida 32399-0371.
Rulemaking Authority 655.012(2), 663.13, 663.07(1) FS. Law Implemented 663.07(1), (3), (5), (7), (9), 663.12(4) FS. History-New 3-10-82, Amended 11-21-85, Formerly 3C-15.10, Amended 10-5-89, Formerly 3C-15.010, Amended 8-24-93, Formerly 3C-140.007, 3C-140.015, Amended 10-29-12, 1-1-18, 2-16-23.