MODIFICATION OF SUPERVISION PROGRAM FOR U.S. OPERATIONS OF FOREIGN BANKS.

The Federal Reserve Board announced on October 24, 2000, that it is updating and streamlining the interagency program for supervising the U.S. operations of foreign banks in cooperation with other federal and state authorities involved in supervising the banks.

The changes, outlined in a supervisory letter (SR 00-14) to Federal Reserve supervisors, include sharing supervisors' Strength of Support Assessment (SOSA) rankings with the senior managers of foreign banks and the banks' home country supervisors. Also, the five current SOSA rankings, A to E, were streamlined into three rankings, 1 to 3.

SOSA rankings, which have been used since 1995, assess a foreign bank's ability to provide financial, liquidity, and management support to its U.S. operations. They serve as a starting point for U.S. bank supervisors in assessing the risks of foreign banks' operations in the United States and in formulating a strategy for their supervision.

Sharing SOSA rankings "should strengthen communications with bank management, as well as enhance information sharing, collaboration, and coordination between the host (U.S.) and home country authorities in the supervision of multinational banking organizations," wrote Richard Spillenkothen, director of the Board's Division of Banking Supervision and Regulation.

U.S. supervisors will continue to provide the senior management of foreign banks and their home country supervisors with examination ratings of the foreign banking organizations' operations in the United States.

Supervisory letters are the Federal Reserve's primary means of communicating key policy directives to its supervisory staff and the banking industry. They can be viewed on the Board's web site: www.federalreserve.gov/boarddocs/srletters.