Examination Manual for U.S.

Branches and Agencies of Foreign Banking Organizations

Second Printing, September 1997

Inquiries or comments relating to the contents of this manual should be addressed to: Director, Division of Banking Supervision and Regulation Board of Governors of the Federal Reserve System Washington, D.C. 20551 Copies of this manual may be obtained from: Publications Services Mail Stop 127 Board of Governors of the Federal Reserve System Washington, D.C. 20551 The price is $40.00 per copy. Remittance should be made payable to the Board of Governors of the Federal Reserve System by check or money order, drawn on a U.S. bank; or by VISA or Master Charge. Updates are available at an additional charge. For information about updates or to order by credit card, call 202-452-3244.

Table of Contents
Section Section

1000
1000 1010 1020

INTRODUCTION
Acknowledgements General Introduction Format and Use of Manual

3230 3240

Deposit Accounts Due From/Due to Related Offices OFF-BALANCE SHEET ACTIVITIES Off-Balance-Sheet Activities Guarantees Issued Letters of Credit Trading Activities OTHER Income and Expenses Management Information Systems Other Assets and Other Liabilities Private Banking

2000
2000 2001 2002 2003 2010 2020 2030 2040

GENERAL
Enhanced Framework for Supervising the U.S. Operations of Foreign Banking Organizations Strength-of-Support Assessment for Foreign Banking Organizations with U.S. Operations Examination Planning and the Assessment of the U.S. Operations of Foreign Banking Organizations Rating System for U.S. Branches and Agencies of Foreign Banking Organizations Risk-Focused Approach to Pre-Examination Planning Loan Sampling Workpapers Supervisory Follow-up Actions

3300 3310 3320 3330

3400 3410 3420 3430

4000
4000 4010 4020 4030 4040 4050 4060

OPERATIONAL CONTROLS
Introduction Internal and External Audits Internal Control Emergency Preparedness Measures Cash Accounts Consigned Items and Other Nonledger Control Accounts Payment System Risk and Electronic Funds Transfer Activities

3000
3000 3010 3020 3030 3040 3050 3060 3070 3080 3090 3100 3110 3120 3130

RISK MANAGEMENT
Introduction Credit Risk Management Asset-Based Lending Asset Securitization Bankers’ Acceptances Commercial Loans Corporate Restructurings Due From Nonrelated Banks Financing Foreign Receivables Other Real Estate Owned Real Estate Loans Real Estate Construction Loans Securities and Broker Dealer Loans Securities Activities ASSET AND LIABILITY MANAGEMENT Funds Management and Liquidity Interest Rate Risk Management Borrowed Funds

5000
5000 5010 5020 5030 5040 5050 5060 5070

COMPLIANCE
Introduction Financial Recordkeeping and Reporting Regulations Asset Maintenance Asset Pledge and Capital Equivalency Deposit Suspicious Activities International Banking Facilities Review of Regulatory Reports Other Compliance Matters

6000
6000 6010 6020

ASSET QUALITY
Introduction Classification of Credits Transfer Risk
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3200 3210 3220

Branch and Agency Examination Manual

Table of Contents Section Section

7000
7010 7020

APPENDICES
Federal Deposit Insurance—Uninsured & Insured Branches Subsequent Events, Litigation, and Other Legal Matters

7030

Survey of Foreign Regulation in Selected States

8000

SUBJECT INDEX

September 1997 Page 2

Branch and Agency Examination Manual