USA

Many member institutions of the Association of German Banks are represented on the US market. However, the strict separation that financial market supervisors there enforce between deposit and lending business on one side and investment business and insurance business on the other seriously restricted the activities of German universal banks in the United States for a long time.

Under the Gramm-Leach-Bliley Act, which came into force in March 2000, US bank holding companies are allowed for the first time to offer all three types of financial service through separate subsidiaries. A condition is that the subsidiary of such financial holding companies conducting deposit and lending business meets special capital and management requirements. The Act calls on the Federal Reserve to issue similar requirements for those foreign banks with US branches which wish to obtain US financial holding company status so that they can provide investment and insurance services there as well through subsidiaries.

The Fed’s provisional regulations to implement the Act contained provisions which discriminated heavily against foreign banks. Together with the German government and German banking supervisors, the Association of German Banks had pressed for a relaxation of these requirements. Happily, in its final implementing regulations the Fed considerably relaxed the requirements for foreign banks that posed problems from a competitive angle. As a result, it will be easier for German banks to obtain and preserve US financial holding company status in future


English translation of press release of 5 February 2001: Final US regulatory requirements for financial holding companies improve competitive prospects for German banks in the United States

The most important improvements at a glance