While there has been a great amount of regulatory rigor impressed upon Chinese banks, it still remains to be seen whether or not the reforms really amount to "comprehensive supervision or regulation on a consolidated basis" as mandated by the FBSEA
. (89) The CBRC, the body created to establish standards of practice and provide supervision over the banking system, has been accused of being inept and lacking the talent to effectively police the system.
On December 19, 1991, the Board and the OCC issued a joint statement to guide foreign bank branches and agencies with respect to the new statutory limitation in the FBSEA on deposit taking.
The agencies further indicated that they would not consider a foreign bank branch or agency to be in violation of the law provided it continued to abide by the OCC and FDIC regulations under section 6 of the IBA.(6) A recent technical amendment to the FBSEA, adopted in October 1992, has clarified that the statutory prohibition on accepting deposits under $100,000 is limited to domestic retail deposits that require deposit insurance protection and does not apply to the broader category of all deposits "having balances of less than $100,000."(7)
On April 15, 1992, the Board issued an interim rule amending Regulation K (International Banking Operations) and Regulation Y (Bank Holding Companies and Change in Bank Control) to implement significant portions of the FBSEA.(9) The interim rule established procedures in Regulation K for the exercise of the Board's responsibilities relating to the approval, examination, and termination of foreign bank operations in the United States.
The FBSEA imposes the following two mandatory standards for the establishment by a foreign bank of a branch, agency, or commercial lending company subsidiary:
This approach is advocated in the Basle Minimum Supervision Standards.(15) In the Board's view, the mandatory language of the FBSEA does not permit this flexibility with respect to applications to establish branches, agencies, or commercial lending companies.
The FBSEA also contains other standards that the Board may consider in determining whether to approve any U.S.
Under the FBSEA, the Board has for the first time the authority to approve establishment of and examine such offices.
In the Board's view, the FBSEA requires that all direct U.S.
The legislative history of the FBSEA states that a representative office may not conduct "any banking activities, including deposit-taking, securities trading, foreign exchange dealing, and other similar activities."(17) No further prohibitions are noted.
The FBSEA reflects this critical distinction between banking offices and representative ofrices by imposing a lower standard for the approval of the establishment of representative offices than for the approval of branches and agencies that are permitted to conduct a banking business.