For purposes of this subpart,
the following definitions apply:
(a) Eligible
asset means any asset of the U.S. branch or U.S. agency held in
the United States that is recorded on the general ledger of a U.S.
branch or U.S. agency of the foreign banking organization (reduced
by the amount of any specifically allocated reserves held in the United
States and recorded on the general ledger of the U.S. branch or U.S.
agency in connection with such assets), subject to the following exclusions
and, for purposes of this definition, as modified by the rules of
valuation set forth in paragraph (a)(2) of this section.
(1) The following assets do not qualify
as eligible assets:
(i) Equity securities;
(ii) Any assets classified as loss at
the preceding examination by a regulatory agency, outside accountant,
or the bank’s internal loan review staff;
(iii) Accrued income on assets classified
loss, doubtful, substandard or value impaired, at the preceding examination
by a regulatory agency, outside accountant, or the bank’s internal
loan review staff;
(iv) Any amounts due from the home office, other offices and affiliates,
including income accrued but uncollected on such amounts;
(v) The balance from time
to time of any other asset or asset category disallowed at the preceding
examination or by direction of the Board for any other reason until
the underlying reasons for the disallowance have been removed;
(vi) Prepaid expenses
and unamortized costs, furniture and fixtures and leasehold improvements;
and
(vii) Any other
asset that the Board determines should not qualify as an eligible
asset.
(2) The following rules of valuation apply:
(i) A marketable
debt security is valued at its principal amount or market value, whichever
is lower;
(ii) An
asset classified doubtful or substandard at the preceding examination
by a regulatory agency, outside accountant, or the bank’s internal
loan review staff, is valued at 50 percent and 80 percent, respectively;
(iii) With respect
to an asset classified value impaired, the amount representing the
allocated transfer risk reserve that would be required for such exposure
at a domestically chartered bank is valued at 0 and the residual exposure
is valued at 80 percent; and
(iv) Real estate located in the United
States and carried on the accounting records as an asset are valued
at net book value or appraised value, whichever is less.
(b) Foreign savings and loan holding company means a savings and loan holding company as defined in section 10
of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)) that is incorporated
or organized under the laws of a country other than the United States.
(c) Liabilities of all U.S. branches
and agencies of a foreign banking organization means all liabilities
of all U.S. branches and agencies of the foreign banking organization,
including acceptances and any other liabilities (including contingent
liabilities), but excluding:
(1) Amounts due to and other liabilities
to other offices, agencies, branches and affiliates of such foreign
banking organization, including its head office, including unremitted
profits; and
(2) Reserves
for possible loan losses and other contingencies.
(d) Pre-provision net revenue means revenue less
expenses before adjusting for total loan loss provisions.
(e) Stress test cycle has the same meaning as in
subpart F of this part.
(f) Total loan loss
provisions means the amount needed to make reserves adequate to
absorb estimated credit losses, based upon management’s evaluation
of the loans and leases that the company has the intent and ability
to hold for the foreseeable future or until maturity or payoff, as
determined under applicable accounting standards.