WASHINGTON - The Federal Reserve Board late last month proposed allowing well-capitalized banks to invest in overseas companies without getting prior regulatory approval.
The Fed would expand an exemption to Regulation K, allowing banks to invest without preapproval up to $25 million or 5% of Tier 1 capital, whichever is less. The draft rules would extend this exemption to most investments by "strongly capitalized and well-managed" banks. It would apply to first-time and subsequent investments in a project.
"This expanded general consent authority is intended to reduce the burden associated with obtaining approval for such investments for U.S. banking organizations meeting these requirements," the Fed said.
Bankers won't avoid all reporting requirements. The rules would require institutions to provide the Fed within 10 days a description of the deal, the terms and sources of financing, and the entities involved.
The proposal does not cover a bank's initial investment in a particular country or its acquisition of a foreign financial institution.
The industry has until Oct. 30 to submit comments to the Fed.