White Paper on the Separate Entity Doctrine as Applied to the U.S. Branches of Foreign Headquartered (Non-U.S.) Banks authored by Sullivan & Cromwell LLP in conjunction with Cleary Gottlieb and Davis Polk

Sullivan & Cromwell LLP - April 18, 2012

Although a branch of a bank is not a separate juridical entity from the bank of which it is a component, U.S. law treats branches as separate from the head office and other branches of a bank when such differentiation is appropriate for various purposes. Branches are a hybrid structure, at the same time both an integral part of the banks of which they are merely offices and separate legal entities for a number of U.S. regulatory and commercial law purposes. This feature of bank branches is a central tenet of federal banking statutes, and the law governing U.S. branches of foreign banks in particular.

This paper provides a summary of places in U.S. federal and state law where we believe the separate entity doctrine is, and is not, traditionally applied. Our hope is that this paper will both provide a convenient summary of the regulatory treatment of U.S. branches of foreign headquartered banks under various legal regimes, and highlight the hybrid nature of such branches.