Non-U.S. Banks Make Up 79% of ‘Too Big to Fail’

U.S. regulators will oversee more foreign-owned than domestic banks under Dodd-Frank Act rules governing financial institutions deemed systemically important.

About 100 foreign-owned banks and financial companies with operations in the U.S. will be subject to rules designed to protect the U.S. economy from the failure of large firms, according to a Bloomberg Government study. Just 26 U.S.-owned banks and financial firms meet the criteria.

“Foreign-owned banks will be disproportionately affected by the law’s most stringent requirements,” said Cady North, the Bloomberg Government analyst who wrote the report. The entire report can be found at Bloomberg Government’s website, http://www.bgov.com.

Among the rules non-U.S. banks may have to follow are the so-called Volcker rule, which restricts proprietary trading; a requirement to file a resolution plan, or “living will,” with U.S. regulators outlining how to break up the company in case of failure; and capital requirements that exclude trust-preferred securities from being considered Tier 1 capital.

Bank holding companies owned by firms outside the U.S. that are expected to fall under Dodd-Frank rules include: Taunus Corp., owned by Frankfurt-based Deutsche Bank AG (DBK); HSBC North America Holdings Inc., owned by London-based HSBC Holdings Plc (HSBA); and TD Bank US Holding Company, owned by Toronto-based Toronto- Dominion Bank.

To contact the reporter on this story: Maura Reynolds in Washington at Mreynolds34@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net