FDIC Approves Final Rule Regarding Deposits at Foreign Branches of U.S. Banks (with Lofchie Comment)
The Board of Directors of the Federal Deposit Insurance Corporation ("FDIC") approved a final rule clarifying that deposits in foreign branches of U.S. banks are not FDIC-insured, even though they may be deposits for purposes of the national depositor preferences statute enacted in 1993. According to the FDIC, the purpose of the final rule is to protect the Deposit Insurance Fund against the liability that it would otherwise face as a potential global deposit insurer.
Lofchie Comment: Depositors should be mindful of the preference and insurance rules that govern the branch at which the deposit is "booked" (or "made"), whether it is a U.S. bank or a bank organized in another jurisdiction. It is not uncommon that different rules and a different set of preferences apply to the branches of various banks, and that branches outside of the home jurisdiction may be treated differently than branches within the home jurisdiction.