4
Annex I hereto.
CBC's powers to carry on a banking business
are clearly set forth in the Certificate.
Under paragraph 10 of Article Third of the Certificate, CBC has full banking powers outside the State of Delaware. Said paragraph permits CBC "to generally use, exercise and enjoy outside the State of Delaware all powers, rights, privileges and franchises incident to a banking company permitted under [the banking title of the Delaware code]" (emphasis supplied). The Certificate also sets forth a number of express banking powers including each of the powers referred to in the Ordinance. See in particular paragraphs 4, 5 and 15 of Article Third of the Certificate, which empower CBC (i) "to maintain current or time account facilities...for members of the public"; (ii) to accept funds in wholesale money markets; (iii) to provide finance in the form of overdraft or loan facilities; (iv) to lend funds; and (v) to provide foreign exchange and trade finance services.
CBC
CBC's powers to conduct an offshore banking business have been expressly recognized by the appropriate U.S. bank regulatory body, the Board, in its determinations approving the conduct by CBC of commercial banking business overseas. now conducts such activities (i) from within The Bahamas pursuant to a banking license granted under The Banks and Trust Companies Regulation Act 1965 of The Bahamas, (ii) as an Offshore Banking Unit in Bahrain pursuant to a license granted by the Bahrain Monetary Agency of the State of Bahrain under Article 41 of the Bahrain Monetary Agency Law, Decree - Law No. 23 of 1973 and (iii) in Jersey, Channel Islands pursuant to license granted under the Depositors and Investors (Prevention of Fraud) (Jersey) Law, 1967, as amended.
For the foregoing reasons, CBC believes it is a "bank" for purposes of the grant of a branch license in Hong Kong under the Ordinance. Nevertheless a question has been raised about CBC's status as an offshore bank which does not conduct a banking business in the United States and accordingly is not subject to regulation as a bank in the United States. As discussed below, CBC does not believe this status affects the conclusion that it is a "bank" under the Ordinance and cites Hong Kong precedent in support of its belief.
Because of applicable banking regulations in the United States, including the prohibition on interstate banking, CBC does not conduct its banking business in the United States. There is, of course, nothing in the Ordinance which specifies that a foreign bank must actually carry on business in the country or state in which it is incorporated and, indeed, "offshore" banks such as CBC have already become well recognized in the international financial community. Many
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