On February 12, the Federal Deposit Insurance Corporation (“FDIC”) proposed for public comment a rule that would exclude from federal deposit insurance coverage those deposits made at insured U.S. banks that are payable at a foreign branch of a U.S. bank, including those deposits that are payable both at domestic and overseas branches (“dually payable deposits”). The rule, however, also is intended to place a U.S. bank’s dually payable deposits on an equal depositor preference footing with purely domestic deposits in the event of a bank resolution. The FDIC’s action comes in large part as a direct response to action taken by UK regulators last fall to prohibit UK branches of a non-EU bank from taking deposits if those deposits are not accorded depositor preference status under the laws of the bank’s home country.
Comments on the FDIC’s proposal are due by April 22, 2013. We discuss the particulars and implications of the rule proposal below.
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