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X-30U3

(Superseding X-2002)

Form

  of

  Agreement required,

  by the

  Federa l

Reserve Board

  of

  Foreign Banking Corpora-

t i ons

  a s a

  Condition Precedent

  t o t h e P u r -

chase  of  t he i r S t oc k  b y  National Bank under

t h e  P r ov i s i ons  of  Sec t ion  2$ of the  Federa l

Reserve  A c t .

A .

  GENERAL:

I n  orde r  t o  enable  you and  o the r corpora t ions  o f t h e  same

c h a r a c t e r  t o  compe te e f fec t ive ly  i n  f o r e i g n c o u n t r i e s ,  i t i s  n e c e s -

s a r y t ha t l a t i t ude  b e  given  i n t h e  development  of  bus iness abroad,

an d th e  Board be l i ev es th a t ,  f o r t h e  p r e s e n t  a t  l e a s t , r e s t r i c t i o n s

should

  n o t b e

  r i g i d

  o r t o o

  much

  i n

  d e t a i l ,

  an d

  t h a t

  i t i s

  d e s i r a b l e

t o

  presc r ibe on ly gene ra l ru le s

  f o r

  your guidance.

  As

  occas ion requires ,

t h e

  Board will modify

  i t s

  r e gu l a t i ons

  i n

  such manner

  a s

  expe r ience

  may

prove  t o b e  necessa ry .

B .  POWERS:

1 . I n t h e

  Uni ted Sta tes :

a .

  Depos i t s :

  I t i s

  c lea r tha t

  i n

  o r de r

  t o

  avoid compet i t ion

  i n

t h e  m a t t e r  of  rec e iv ing dep osi ts wi th na t io na l banks  and  s ta te banks ,

which  d o n o t  en joy  t h e  wide powers which  y o u  mus t necessa r i ly possess

i n

  o r de r

  t o

  Compete successfully

  i n

  f o r e i g n c o u n t r i e s ,

  y o u

  should

  n o t

b e  pe r mi t t e d  i n t h e  ttaited States  t o  rece ive individual depos i t accounts

o r

  domestic bank exchange

  o r

  c o l l e c t i on a c c oun t s .

  You

  w i l l

  b e

  pe r mi t -

t e d ,  however,  t o  rece ive  an y  deposit which  i s  i n c i d e n t a l  t o , o r f o r t h e

purpose

  o f ,

  c a r r y i ng

  o u t

  t r a ns a c t i ons

  i n

  f o r e i gn c oun t r i e s

  o r

  depend-

enc ie s  of the  United States, where  y o u  have es ta bl ish ed agen cies ,

branches ,  o r  bus ine ss connect io ns . Deposi ts  o f  t h i s c ha r a c t e r  may be

made  b y  ind iv i dua l s , f i rm s , corpora t ions  o r  banks , whether fo re ig n  o r

domest ic ,  and may be  t ime deposi ts  o r o n  demand.

Reserves .

  I t

  w i l l

  b e

  requi red tha t , aga ins t

  a l l

  such de po si ts

rece ived  i n t h e  Uni ted Sta tes ,  you  ma in ta in  a  r e s e r ve  i n t h e  amount  r e -

quired

  b y l aw

  aga ins t such dep osi ts

  of

  member ban ks lo ca te d

  i n

  c e n t r a l

r e s e r v e c i t i e s .  The  Federal Reserve Banks  a r e  a u t h o r i z e d ,  f o r  purposes

of  c l e a r i n g  o r  c o l l e c t i o n ,  t o  re ce iv e dep os it s fr om non-member ba nk s,

a n d  your reserve aga ins t domest ic depos i ts  may be  mainta ined  b y  open-

i n g a

  c lear ing account wi th

  t h e

  Federal Reserve Bank

  of

  y o u r d i s t r i c t ,

where  a n  adequate ba lance  may be  c a r r i e d  b y y o u .

b .  Acceptances .  The  Board  h a s  concluded that  y o u  should  b e p e r -

mi t t e d  t o  a c c e p t d r a f t s  a n d  b i l l s  of  exchange upon  t h e  same terms  and.

s u b j e c t

  t o t h e

  same con di t i ons , l i mi ta t i on s

  a n d

  r e s t r i c t i o n s

  a s

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17

X-3043

a r e  p resc r ib ed  i n  Paragraph Xlll  of the  Board's Regulation  K,  Series

of 1920,  with reference  t o t h e  exerc ise  o t h e  acceptance  pow rs  o

fo r ei gn banking co rp ora ti ons organized under  t h e  terms  of  Section  2 5 ( a )

of the

  Federal Reserve

  A c t .

  That paragr aph reads

  a s

  fo l lows:

Kinds.

  - Any

  Corporation

  may

  accept

  ( l )

  d r a f t s

  and

  b i l l s

  of

  exchange

drawn upon  i t  which grow  out of  transact ions involving  t h e  importation

o r

  ex p o r ta t io n

  of

  goods,

  and (2 )

  d r a f t s

  and

  b i l l s

  of

  exchange which

  a r e

drawn  b y  banks  o r  bankers lo ca te d  i n  fore ign countr ies  o r  dependencies

o r

  insu lar possess ions

  of t he

  United States

  f o r t h e

  purpose

  of

  f u r n i s h -

i n g  dollar exchange  a s  required  b y t h e  usages  of  t rade  i n  such countries,

dependencies,

  and

  pos se ss io ns , provided, however, tha t except wit h

  the

approval  of the  Federal Reserve Board  and  sub ject  t o  such l imitat ions

as i t may

  p r e s c r i b e ,

  n o

  Corporation shall exercise

  i t s

  power

  t o

  accept

d r a f t s

  o r

  b i l l s

  of

  exchange

  i f a t t he

  time such d r a f t s

  o r

  b i l l s

  a r e p r e -

sented

  f o r

  acceptance

  i t h a s

  outstanding

  any

  debentures, bonds, notes,

o r  other such obligations issued  b y i t .

Maturity«  -  Except wit h  th e  approval  of the  Federal Reserve Board,  n o

Corporation shall accept

  an y

  d r a f t

  o r

  b i l l

  of

  exchange which grows

  ou t

of a  t ransact ion invo lv ing  t h e  importat ion  o r  ex p o r ta t io n  of  goods with

a

  matur i ty

  i n

  excess

  o f s i x

  months,

  o r

  shall accept

  an y

  d r a f t

  o r

  b i l l

  of

exchange drawn  f o r th e  purpose  of  f ur ni sh in g do ll ar exchange with  a ma-

t u r i t y

  i n

  excess

  of

  three months.

L imi ta t ions .  - ( l )  Indiv idua l drawers:  No  acceptances sh al l  b e  made

f o r t h e

  account

  of any one

  drawer

  in an

  amount aggregating

  a t any

  time

i n  excess  of 10 p e r  cent  of the  subscribed capital  an d  surp lus  of the

Corporation, unless  t h e  t r an sac t io n  b e  fu l ly secured  o r  represen ts  a n e x -

p o r ta t io n  o r  importat ion  of  commodities  and i s  guaranteed  b y a  bank  o r

bankers  of  undoubted solvency.  ( 2 )  Aggregates: Whenever  t h e  aggregate

of  acceptances outstanding  a t any  time  ( a )  exceeds  t h e  amount  of t he sub-

sc r ib ed cap i t a l  and  su rp lu s ,  5 0 p e r  cen t  o f a l l t h e  acceptances  i n  excess

of the  amount shall  b e  fu l ly secured ;  o r ( b )  exceeds twice  t h e  amount  of

t h e  subscr ibed cap i ta l  and  surp lus ,  a l l t h e  acceptances outstanding  i n e x -

cess  of  such amount shall  b e  fu l ly secu red .  (The  Corporat ion shal l elect

whichever requirement

  ( a ) o r ( b )

  c a l l s

  f o r t h e

  smaller amount

  of

  secured

accep tances) .

  I n n o

  event shal l

  a n y

  Corporation have outstanding

  a t any

one

  time acceptances drawn

  f o r th e

  purpose

  of

  f ur ni sh in g do l la r exchange

i n an  amount aggregating more than  5 0 p e r  cen t  o f i t s  subscribed ca p i ta l

and  surp lus ,

Reserves.  -  Against  a l l  accep tances o uts tan din g which mature  i n  J 0 days

o r

  l e s s

  a

  reserve

  of a t

  l e a s t

  1 5 p e r

  cen t shal l

  b e

  maintained,

  and

  against

alii acceptances outstanding which mature  i n  more than  3 0  days  a  reserve

of a t

  l e a s t

  3 p e r

  cen t shal l

  b e

  maint aine d. Reserves ag ai ns t acceptances

must  b e i n  l iq u id asse t s  o f a n y o r a l l o f t h e  fol lowing kinds;  ( l )  cash;

( 2 )  balances with other banks;  ( 3 )  bankers' accept ances;  and (4 )  such

s e c u r i t i e s  as t he  Federal Reserve Board  may  from time  t o  time permit.

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- 3 -

x-30Uj

2 . I n

  Fore

 ism

  c o u n t r i e s

  .

Yo u a re  au thor ized  t o  accept deposi ts  of any  kind from

banks , ind iv idua ls

  a n d

  corpora t ions

  i n

  fo re ig n c o u n t r i e s ,

  and

  general ly

t o

  ex er ci se such powers

  an d to d o

  such things

  a s a r e

  i n c i d e n t a l

  t o

  bank-

i n g

  conducted

  i n t h e

  c o u n t r i e s

  and

  dependencies

  i n

  which

  you may

  t r a n s -

a c t

  business.

  The

  Board assumes however that

  i n t h e

  ma t t e r

  of

  receiving

deposi ts , making loans,

  a nd i n a l l

  oth er business condu cted

  i n

  fore ign

c o u n t r i e s ,

  y o u

  w i l l

  h e

  guided pr imari ly

  by th e

  laws

  of

  those countr ies

and by

  sound busines s judgment

  an d

  banking pr in ci pl es . While

  t h e

  Board

w i l l

  n o t

  requ i re

  y o u t o

  carry abroad cash reserves against deposits

abroad, should

  i t

  appear

  a t a n y

  time tha t your business methods

  a r e

  such

as t o

  a f f o r d i n s u f f i c i e n t p r o t e c t i o n ,

  th e

  Board will formulate such

  r e -

s t r i c t i n g r e g u l a t i o n s  as may be  proper  i n t h e  circumstances ,

C .  REPORTS  AND EXAMINATIONS:

1, You

  w i l l

  h e

  required

  t o

  make

  tw o

  reports annual ly

  to t h e

Fede ral Reserve Board, c overing such d et ai l s  as may b e  p re sc r ib e d .

2 . You

  wi l l a l s o

  b e

  su b je c t

  t o

  such examinations

  a s t h e

  Board

may

  ord er, the se examinations

  to b e

  made either

  b y

  employees

  o r

  agents

o f t h e

  Board

  o r o f t h e

  Federal Reserve Bank

  of

  y ou r d i s t r i c t .