Fewer Exams Are in the Cards For Foreign Banks' U.S. Units

United States will be examined every 18 months instead of once a year under a final rule federal regulators adopted Thursday.

About 160 of the 400 branches and agencies of foreign banks are affected, according to a Federal Reserve Board spokesman. The rule, which has been in place on an interim basis since August 1998, takes effect today.

To qualify, the agency or branch must have less than $250 million of assets and be well capitalized and well managed. Also required are high marks from regulators for risk management, operational controls, compliance, and asset quality.

The longer exam cycle was approved to treat foreign banks the same as healthy domestic banks, which is required under a 1996 law. The examination cycle for similarly qualified state and federal banks was extended to 18 months in April 1998.

-- Katharine Fraser

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