Memoranda of understanding - USA

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In view of the fact that GE Capital International Financing Corporation, a New York State-chartered banking organization, is the parent of GE Capital Bank, a.s., a banking institution located in the Czech Republic, the State of New York Banking Department and the Czech National Bank, both hereinafter referred to jointly as "the Supervisors", have reached the following understanding in order to establish an arrangement for the sharing of supervisory information to facilitate the performance of their respective duties and to promote the safe and sound functioning of these financial institutions in their respective countries. This statement demonstrates the commitment of the Supervisors to the principles of effective consolidated supervision and cooperation between banking supervisors.

The Supervisors express, through this understanding, their willingness to cooperate with each other on the basis of mutual trust and understanding in the supervision of cross-border establishments within their respective jurisdictions. The Supervisors will use their best endeavors to cooperate in routine supervisory procedures, and to notify and provide to each other relevant information regarding any material supervisory concerns in respect of a cross-border establishment.

Article 1 - Competent authorities
  1. The State of New York Banking Department (NYSBD) charters, supervises and examines various types of banking organizations, including, among others, New York State-chartered commercial banks and trust companies, savings banks, savings and loan associations, and investment companies. The Department also licenses, and together with the Federal Reserve (the U.S. Central Bank), supervises and examines over ninety percent of the branch, agency and representative offices of foreign banks operating in New York State, with the remainder being federally licensed by the Office of the Comptroller of the Currency.
  2. In the Czech Republic, in accordance with Act No. 6/1993 Coll., on the Czech National Bank (zákon č. 6/1993 Sb., o České národní bance, ve znění pozdějších předpisů), as amended, and Act No. 21/1992 Coll., on Banks (zákon č. 21/1992 Sb., o bankách, ve znění pozdějších předpisů), as amended, the Czech National Bank supervises the activities of banks, foreign bank branches and consolidated entities which include a bank having its registered office in the Czech Republic; the Czech National Bank also sees to the sound operation and purposeful development of the banking system in the Czech Republic.
Article 2 - Definitions

For the purposes of this Memorandum, the following definitions shall apply:

  1. a cross-border establishment:
    a branch, subsidiary, joint venture, or any other structure within the jurisdictions which, by common consent, gives rise to the need for consolidated supervision, an agency or a representative office maintained in the State of New York by a parent entity licensed in the Czech Republic;
  2. branch office:
    the organizational unit of a parent entity incorporated in the home country which has been granted a license in the host country;
  3. subsidiary:
    a legal entity incorporated in the host country which is controlled by a parent entity incorporated in the home country;
  4. joint-venture:
    direct or indirect participation of an entity from the home country in an undertaking of the host country which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the undertaking in which a participation subsists;
  5. parent entity
    a legal entity registered in the home country which has been granted a banking license (an authorization) pursuant to the Act on Banks in the Czech Republic or pursuant to the New York Banking Law;
  6. the "home country":
    the country or state where the parent entity is licensed;
  7. the "host country":
    the country or state in which that entity maintains branches, subsidiaries, joint-ventures, or representative offices.
Article 3 - Sharing of Information

The Supervisors recognize that information should be shared in order to facilitate effective consolidated supervision of banking organizations operating across their national borders. Information-sharing should include contact during the authorization and licensing process, in the supervision of the on-going activities of such entities and in the possible revocation of a license.

  1. In connection with the authorization process,
    1. the host supervisor will notify the home supervisor, without delay, of applications for approval to establish cross-border establishments in the host jurisdiction;
    2. upon request, the home supervisor should inform the host supervisor whether the applicant banking organization is in substantial compliance with banking laws and regulations and whether the banking organization may be expected, given its administrative structure and internal controls, to manage the cross-border establishment in an orderly manner;
    3. the home supervisor will inform the host supervisor about the nature and extent to which it will conduct consolidated supervision over the applicant banking organization;
    4. to the extent reasonable and permitted by law, the home and host supervisors will share information on the capability, integrity, or experience of the prospective managers of a cross-border establishment; and
    5. the home supervisor should exchange information on the regulatory system and supervisory procedures applicable to the home-based establishment.
  2. In connection with the ongoing supervision of the parent entities in the home country and of their cross-border establishments in the host country, the two supervisors undertake to use their best endeavors to:
    1. provide relevant information to their counterpart regarding material developments or supervisory concerns in respect of the operations of a cross-border establishment and of operations of the parent entity in the home country which could influence the operations or stability of the cross-border establishment;
    2. respond to requests for information on their respective national regulatory systems and inform each other about major changes, in particular those which have a significant bearing on the activities of cross-border establishments;
    3. inform their counterpart of material administrative penalties imposed, or other formal enforcement actions taken, against a cross-border establishment and against the parent entity if such information can be important in regard to the activities of the cross-border establishment; and
    4. facilitate the transmission of information that might be required to assist with the supervisory process.
  3. Upon receipt of a written request by the home/host supervisor, the host/home supervisor will use its best endeavors to provide information contained in examination or other reports in the extension described above in paragraphs 1 and 2, regarding the cross-border establishments of parent entities incorporated in the home country or regarding the parent entities themselves. Where the supervisory authorities perceive a need for expedited action, requests may be initiated in any form but should be confirmed subsequently in writing.
Article 4 - On-site Inspections

The Supervisors agree that cooperation is particularly useful in assisting each other in carrying out on-site inspections of cross-border establishments in the host country. Prior to deciding whether an on-site examination or inspection is necessary, the home supervisor should review relevant information received from the host supervisor according to Article 3. The home supervisor undertakes to notify the host supervisor of plans to inspect or examine a cross-border establishment and to indicate the purposes and scope of the visit, and details of the persons performing the inspection. The host supervisor will allow the home supervisor to conduct on-site inspections. The host supervisor has the right to have a representative accompany any such on-site inspection and shall be kept informed of the results of such an on-site inspection to a reasonable extent and in a timely manner.

Article 5 - Protection of Information

Information should be shared to the extent reasonable and subject to relevant statutory provisions, including those restricting disclosure. The request for information under this understanding may be denied on grounds of public interest or national security or when disclosure would interfere with an ongoing investigation.

Any confidential information received from the other supervisor will be used exclusively for lawful supervisory purposes. To the extent permitted by law, each supervisor will hold confidential all information obtained. This obligation shall remain in effect even in case of the termination of this Memorandum. In this regard, employees of both supervisory authorities are generally bound to hold confidential all information obtained in the course of their duties. It is understood that, in certain circumstances, a supervisor in one jurisdiction that receives confidential information from a supervisor in another jurisdiction may, to the extent permitted by law, disclose that information to a third party supervisory authority. This should only be done, however, if there is a legitimate common interest in the matter and if the latter is also bound to hold the information confidential. The supervisor will consult with the supervisor that originated the information prior to passing it to a third party supervisory authority.

In cases where a supervisor receives a request for information from a third party, but disclosure is not legally compelled, the supervisor receiving the request shall consult with the supervisor that provided the information in order to receive its views on the propriety of releasing such information. In the event that a supervisor is legally compelled to disclose the information that has been provided in accordance with the principles of mutual assistance/cooperation underlying this understanding, it is understood that this supervisor will consult with the supervisor that originated the information, indicating what information it is compelled to release and, if so required by the latter supervisor, will use its best endeavors to preserve the confidentiality of the information to the extent permitted by law.

Article 6 - Ongoing Coordination

The Supervisors may promote their cooperation through visits for information purposes and by exchanges of staff. In addition, the Supervisors may pursue areas where the training of staff at either agency would benefit from input and support by the other agency in order to reinforce sound banking supervisory practices in both countries.

The Supervisors would conduct meetings as often as appropriate to discuss issues concerning banking organizations that maintain cross-border establishments within their respective jurisdictions.

Article 7 - Miscellaneous
  1. This Memorandum shall enter into force on the day of its signing by both Supervisors. Cooperation and assistance in accordance with this Memorandum shall continue until the expiration of 30 days after one of the Supervisors gives written notice to the other Supervisor of its intention to discontinue cooperation and assistance. In this case the Memorandum shall terminate on the thirtieth day following receipt of the notice of withdrawal by the other Supervisor, unless agreed otherwise. If one Supervisor gives such notice of withdrawal, cooperation and assistance in accordance with this Memorandum shall continue with respect to all requests for assistance that were made before the effective date of notification until the requesting Supervisor withdraws the matter for which assistance was requested.
  2. Any amendment to this Memorandum shall be made in writing only. Any such amendment to the Memorandum shall enter into force when signed by both Supervisors.
  3. Within 30 days of the day this Memorandum enters into force, both Supervisors shall exchange lists of the persons authorized to request and provide information on the Supervisors behalf pursuant to this Memorandum. The list shall contain the following contact data: the first name and surname, position (function), e-mail address and telephone and fax numbers of the authorized persons. Persons other than those specified by both Supervisors may neither request nor provide information pursuant to this Memorandum. Both Supervisors shall inform each other of any modifications to the list of authorized persons without undue delay.


Date: 23/12/2002
Michael J. Lesser, Deputy Superintendent of Banks

Date: 12/12/2002
The Czech National Bank
Pavel Racocha, Member of the Bank Board
Věra Mašindová, Executive Director