Appendix A to Part 31 - Interpretations: Deposits Between Affiliated Banks
12:1.0.1.1.28.0.28.4.18 : Appendix A
Appendix A to Part 31 - Interpretations: Deposits Between
Affiliated Banks
a. General rule. A deposit made by a bank in an
affiliated bank is treated as a loan or extension of credit to the
affiliate bank under 12 U.S.C. 371c, as this statute is implemented
by the Federal Reserve Board's Regulation W, 12 CFR part 223. Thus,
unless an exemption from Regulation W is available, these deposits
must be secured in accordance with 12 CFR 223.14. However, a
national bank may not pledge assets to secure private deposits
unless otherwise permitted by law (see, e.g., 12 U.S.C. 90
(permitting collateralization of deposits of public funds); 12
U.S.C. 92a (trust funds); and 25 U.S.C. 156 and 162a (Native
American funds)). Thus, unless one of the exceptions to 12 CFR part
223 noted in paragraph b. of this interpretation applies, unless
another exception applies that enables a bank to meet the
collateral requirements of § 223.14, or unless a party other than
the bank in which the deposit is made can legally offer and does
post the required collateral, a national bank may not:
1. Make a deposit in an affiliated national bank;
2. Make a deposit in an affiliated State-chartered bank unless
the affiliated State-chartered bank can legally offer collateral
for the deposit in conformance with applicable State law and 12 CFR
223.14; or
3. Receive deposits from an affiliated bank.
b. Exceptions. The restrictions of 12 CFR part 223 (other
than 12 CFR 223.13, which requires affiliate transactions to be
consistent with safe and sound banking practices) do not apply to
deposits:
1. Made in an affiliated depository institution or affiliated
foreign bank provided that the deposit represents an ongoing,
working balance maintained in the ordinary course of correspondent
business. See 12 CFR 223.42(a); or
2. Made in an affiliated, insured depository institution that
meets the requirements of the “sister bank” exemption under 12 CFR
223.41(a) or (b).
[73 FR 22251, Apr. 24, 2008]