(a) Scope. (1) This subpart implements section 11(a) of the Home Owners' Loan Act (12 U.S.C. 1468(a)). Section 11(a) applies sections 23A and 23B of the FRA (12 U.S.C. 371c and 371c1) to every savings association in the same manner and to the same extent as if the association were a member bank; prohibits certain types of transactions with affiliates; and authorizes the Board to impose additional restrictions on a savings association's transactions with affiliates.
(1) This subpart implements section 11(a) of the Home Owners' Loan Act (12 U.S.C. 1468(a)). Section 11(a) applies sections 23A and 23B of the FRA (12 U.S.C. 371c and 371c1) to every savings association in the same manner and to the same extent as if the association were a member bank; prohibits certain types of transactions with affiliates; and authorizes the Board to impose additional restrictions on a savings association's transactions with affiliates.
(2) For the purposes of this subpart, ``savings association'' is defined at section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), and also includes any savings bank or any cooperative bank that is a savings association under 12 U.S.C. 1467a(l). A non-affiliate subsidiary of a savings association is treated as part of the savings association. For purposes of this subpart, a ``non-affiliate subsidiary'' is a subsidiary of a savings association other than a subsidiary described at 12 CFR 223.2(b)(1)(i), and (b)(1)(iii) through (v).
(b) Sections 23A and 23B of the FRA. A savings association must comply with sections 23A and 23B of the Federal Reserve Act and this part as if it were a member bank, except as described in the following chart. ------------------------------------------------------------------------
(1) 12 CFR 223.2(a)(8)-- Does not apply. Savings association
``Affiliate'' includes a financial subsidiaries do not meet the
subsidiary. statutory definition of financial
subsidiary.(2) 12 CFR 223.2(a)(12)-- Read to include the following
Determination that ``affiliate'' statement: ``Affiliate also
includes other types of companies. includes any company that the
Board determines, by order or
regulation, to present a risk to
the safety and soundness of the
savings association.''(3) 12 CFR 223.2(b)(1)(ii)-- Does not apply. Savings association
``Affiliate'' includes a subsidiaries do not meet the
subsidiary that is a financial statutory definition of financial
subsidiary. subsidiary.(4) 12 CFR 223.3(d)--Definition of ``Capital stock and surplus'' for a
``capital stock and surplus.'' savings association has the same
meaning as under the regulatory
capital requirements applicable to
that savings association.(5) 12 CFR 223.3(h)(1)--Section 23A Read to incorporate paragraph
covered transactions include an (c)(1) of this section, which
extension of credit to the prohibits loans or extensions of
affiliate. credit to an affiliate, unless the
affiliate is engaged only in the
activities described at 12 U.S.C.
1467a(c)(2)(F)(i), as defined in
Regulation LL at 12 CFR 238.54.(6) 12 CFR 223.3(h)(2)--Section 23A Read to incorporate paragraph
covered transactions include a (c)(2) of this section, which
purchase of or investment in prohibits purchases and
securities issued by an affiliate. investments in securities issued
by an affiliate, other than with
respect to shares of a subsidiary.(7) 12 CFR 223.3(k)--Definition of Read to include the following
``depository institution.'' statement: ``For the purposes of
this definition, a non-affiliate
subsidiary of a savings
association is treated as part of
the depository institution.''(8) 12 CFR 223.3(p)--Definition of Does not apply. Savings association
``financial subsidiary.'' subsidiaries do not meet the
statutory definition of financial
subsidiary.(9) 12 CFR 223.3(w)--Definition of Read to include the following
``member bank.'' statement: ``Member bank also
includes a savings association.
For purposes of this definition, a
non-affiliate subsidiary of a
savings association is treated as
part of the savings association.''(10) 12 CFR 223.3(aa)--Definition Does not apply.
of ``operating subsidiary.''(11) 12 CFR 223.31--Application of Read to refer to ``a non-affiliate
section 23A to an acquisition of subsidiary'' instead of
an affiliate that becomes an ``operating subsidiary.''
operating subsidiary.(12) 12 CFR 223.32--Rules that Does not apply. Savings association
apply to financial subsidiaries of subsidiaries do not meet the
a bank. statutory definition of financial
subsidiary.(13) 12 CFR 223.42(f)(2)--Exemption Read to refer to ``Thrift Financial
for purchasing certain marketable Report'' instead of ``Call
securities. Report.'' References to ``state
member bank'' are unchanged.(14) 12 CFR 223.42(g)(2)--Exemption Read to refer to ``Thrift Financial
for purchasing municipal Report'' instead of ``Call
securities. Report.'' References to ``state
member bank'' are unchanged.(15) 12 CFR 223.61--Application of Does not apply to savings
sections 23A and 23B to U.S. associations or their
branches and agencies of foreign subsidiaries.
banks.------------------------------------------------------------------------
(c) Additional prohibitions and restrictions. A savings association must comply with the additional prohibitions and restrictions in this paragraph (c). Except as described in paragraph (b) of this section, the definitions in this part apply to these additional prohibitions and restrictions.
(1) Loans and extensions of credit. (i) A savings association may not make a loan or other extension of credit to an affiliate, unless the affiliate is solely engaged in the activities described at 12 U.S.C. 1467a(c)(2)(F)(i), as defined in Sec. 238.54 of Regulation LL (12 CFR 238.54). A loan or extension of credit to a third party is not prohibited merely because proceeds of the transaction are used for the benefit of, or are transferred to, an affiliate.
(i) A savings association may not make a loan or other extension of credit to an affiliate, unless the affiliate is solely engaged in the activities described at 12 U.S.C. 1467a(c)(2)(F)(i), as defined in Sec. 238.54 of Regulation LL (12 CFR 238.54). A loan or extension of credit to a third party is not prohibited merely because proceeds of the transaction are used for the benefit of, or are transferred to, an affiliate.
(ii) If the Board determines that a particular transaction is, in substance, a loan or extension of credit to an affiliate that is engaged in activities other than those described at 12 U.S.C. 1467a(c)(2)(F)(i), as defined in Sec. 238.54 of Regulation LL (12 CFR 238.54), or the Board has other supervisory concerns concerning the transaction, the Board may inform the savings association that the transaction is prohibited under this paragraph (c)(1), and require the savings association to divest the loan, unwind the transaction, or take other appropriate action.
(2) Purchases or investments in securities. A savings association may not purchase or invest in securities issued by any affiliate other than with respect to shares of a subsidiary. For the purposes of this paragraph (c)(2), subsidiary includes a bank and a savings association. [76 FR 56531, Sept. 13, 2011]