District Circular Letters

November 16, 1999

REGULATION K: INTERPRETATION OF PERMISSIBLE DATA PROCESSING ACTIVITIES

To State Member Banks,
Bank Holding Companies,
Edge Act Corporations,
U.S. Branches and Agencies of Foreign Banks, and
Others Concerned in the Twelfth Federal Reserve District

The Board of Governors of the Federal Reserve has issued an interpretation of Regulation K that clarifies the range in which a banking organization can engage in data processing activities outside the United States. When it was approved in 1979, Regulation K allowed an Edge Corporation to engage in somewhat broader data processing activities abroad than was permitted domestically. At that time, Regulation Y restricted the ability of a bank holding company to engage in data processing activities in the United States. Over the years, the provisions of Regulation Y that encompass data processing have been amended to the point that today it may be considered a wider grant of authority than under Regulation K. Therefore, the Board wishes to clarify that a banking organization can not engage in a broader range of data processing activities under Regulation K than is permissible under Regulation Y, without the Board's approval, under section 211.5 (d)(20) of Regulation K.

Copies

Copies of the Board's interpretation (12 CFR 211.604, effective November 1, 1999) are available from our Corporate Services Department. To request copies to be sent via mail, please call (415) 974-2748. To request copies to be sent via fax, please call (415) 974-3333, and specify document number 4185. Board notices are also available via the Federal Reserve Bank of San Francisco's Internet site.

Additional Information

For additional information regarding these matters, please contact our Banking Supervision and Regulation Department, at (415) 974-3007.

FEDERAL RESERVE BANK OF SAN FRANCISCO

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