A British bank with $604.6bn of assets has been cleared to open an office in Stamford that may not lend a dollar, take a deposit, or do any banking at all

The office cannot take a deposit. It cannot lend money. Under the Board's own regulation it may not engage in any other banking activity either.

That is the thing the Federal Reserve approved on Thursday afternoon, in a seven page order clearing National Westminster Bank Plc of London to establish a representative office in Stamford, Connecticut. The bank had applied under section 10(a) of the International Banking Act, which requires a foreign bank to get the Board's approval before putting even a liaison office on American soil.

NatWest Bank held approximately $604.6bn of assets at the end of last year. Its parent, NatWest Group plc of Edinburgh, held $961.5bn on a consolidated basis. The bank runs exactly one branch outside the United Kingdom, in Frankfurt.

The lighter test

The substance of the order is a distinction most readers will never have had cause to notice, and it is stated plainly in the text.

When a foreign bank asks to open a branch or an agency, the Board has to satisfy itself that the bank is subject to comprehensive supervision on a consolidated basis by its home country supervisor. For a representative office, the Board has decided by rule that a lower bar applies: the supervisory framework need only be consistent with the activities the office will actually perform. The order calls this a lesser standard in as many words, and gives the reason in the same breath, which is that a representative office may not engage in banking activities in the first place.

So the finding here is narrower than it looks. The Board determined that NatWest Bank's supervision by the Prudential Regulation Authority and the Financial Conduct Authority fits the work of a liaison office, and it leaned on its own back catalogue of orders involving British banks to get there, a footnote running from Crown Agents Bank in 2025 back through Lloyds, Standard Chartered, Barclays and The Royal Bank of Scotland Group in 2003.

Nobody objected

Notice of the application ran in the Stamford Advocate on 1 May. The comment period closed, and the Board records that it received nothing at all.

The approval did not come from the Board. It was signed out by the Director of the Division of Supervision and Regulation, with the general counsel concurring, under delegated authority, and the associate secretary Michele Taylor Fennell put her name to it. Connecticut keeps a separate say: the state banking department's licensing power is untouched by the federal approval.

Stamford already had one

The group is not arriving. NatWest Markets Plc, the investment bank, is a swap dealer registered with the Commodity Futures Trading Commission, its American business runs through a Stamford broker-dealer called NatWest Markets Securities Inc., and it already operates a representative office in Stamford of its own. Thursday's order adds a second one, for the commercial bank.

Two conditions travel with it. NatWest has committed to hand the Board whatever information it wants on the bank or its affiliates, and to help clear any legal obstacle to doing so. If that access is ever obstructed, the order says the Board may require termination of any of NatWest Bank's direct or indirect activities in the United States.