Of the two: a foreign branch and a subsidiary bank, which one is more subject to U.S. regulations? Why?
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Answer: A foreign branch of a bank is legally a part of the parent bank, but it operates like a local bank. Foreign branch banks are subject to both the banking regulations of their home countries and the countries in which they operate. However, foreign branches of U.S. banks are not subject to U.S. reserve requirements and are not required to have federal deposit insurance. A subsidiary bank is also wholly or partly owned by a parent bank, but it is incorporated in the foreign country in which it is located. Subsidiary banks are therefore subject to the banking laws of the countries in which they are incorporated.
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