IIB INSTITUTE NEWS Published by the INSTITUTE OF INTERNATIONAL BANKERS TIMOTHY F. GEITHNER TO SPEAK AT JUNE 9 TH MEMBERSHIP LUNCHEON PRECEDING ANNUAL GENERAL MEETING Timothy F. Geithner, President of the Federal Reserve Bank of New York, will speak at the membership luncheon preceding the Institute s Annual General Meeting and Elections in New York on Wednesday, June 9 th. Mr. Geithner, who became President of the New York Fed on November 17, 2003, has been asked to talk about the major challenges facing the economy and financial markets. Timothy F. Geithner, President of the Federal Reserve Bank of New York. In his capacity as President of the New York Fed, Mr. Geithner also serves as the Vice Chairman and a permanent member of the Federal Open Market Committee (FOMC), which is responsible for formulating U.S. monetary policy. Prior to joining the New York Fed, Mr. Geithner was Director of the Policy Development and Review Department of the International INSTITUTE S ANNUAL SEMINAR ON U.S. TAXATION OF INTERNATIONAL BANKS TO BE HELD ON JUNE 23-24 IN NEW YORK Arrangements are being completed for the Institute s annual seminar on U.S. taxation of international banks on Wednesday, June 23 rd and Thursday, June 24 th at the Grand Hyatt New York (Park Avenue at Grand Central). As in past years, the Institute s comprehensive twoday tax seminar will feature government officials and privatesector experts (including representatives of Institute member banks and member firms of our Professional Liaison Committee), who will address the latest developments affecting internationally headquartered financial institutions operating in the United States. Members of the Institute s Tax Committee will serve as moderators of the various panels. The program will include discussions of key issues that March 31, 2004 SENIOR POLICYMAKERS, INDUSTRY LEADERS ADDRESS INSTITUTE S ANNUAL CONFERENCE IN WASHINGTON ON MARCH 1 st AND 2 nd Over 260 representatives of member institutions as well as other interested professionals and invited governmental guests heard senior policymakers and industry leaders discuss Basel II, corporate governance and accounting issues, reform of the regulatory oversight of Fannie Mae and Freddie Mac, proposed SEC umbrella supervision, business strategies for competing in the U.S. and global financial markets and other key topics at the Institute s Annual Washington Conference (March 1-2) at the Four Seasons Hotel. Speaker presentations are available on the Institute s web site at www.iib.org. The conference program began with an address Monday morning, March 1 st by Senator Richard C. Shelby, Chairman of the Senate Banking Committee, who talked about his committee s agenda for 2004. Later in the afternoon, Rep. Michael G. Oxley, Chairman of the House Financial Services Committee, discussed the financial services agenda on the House side of the Capitol. (Continued on page 4) (Continued on page 2) tax professionals need to consider with their senior management as well as practical how-to sessions for tax specialists and other interested professionals. Topics to be covered at the seminar will include: allocation of income and expense to permanent establishments ; an update on key federal tax legislation; state and local tax developments; developments regarding tax shelters; limitations on net operating losses and other tax attributes under Section 382 of the Internal Revenue Code; new financial products; and issues/concerns affecting federal, state and local tax audits. Last year s seminar was attended by approximately 200 (Continued on page 4) The Institute s mission is to help resolve the many special legislative, regulatory and tax issues confronting internationally headquartered financial institutions that engage in banking, securities and/or insurance activities in the United States. 299 Park Avenue, 17th Floor, New York, N.Y. 10171 Telephone: (212) 421-1611 Facsimile: (212) 421-1119 E-Mail: IIB@IIB.ORG HTTP://WWW.IIB.ORG Everett Schenk, Chairman Lawrence R. Uhlick, Executive Director
ANNUAL CONFERENCE (Continued from page 1) Senator Richard C. Shelby, Chairman of the Senate Banking Committee. Rep. Michael G. Oxley, Chairman, House Financial Services Committee. Brian C. Roseboro, Acting Under Secretary of the Treasury for Domestic Finance. Chairman Shelby focused his remarks on his legislative plans to create a new independent regulator for Fannie Mae and Freddie Mac, the housing government-sponsored enterprises (GSEs), as well as for the Federal Home Loan Banks. He also discussed his committee s efforts to address abuses in the mutual fund industry. In addition, Chairman Shelby said the Banking Committee plans to hold hearings on the funding of terrorism, the state of the banking industry, and the implementation of the Gramm-Leach-Bliley and Sarbanes-Oxley acts. Chairman Oxley spoke about his committee s role in the overall process of reforming the Basel capital accord, noting that at the subcommittee level, legislation was unanimously approved requiring all federal banking regulators to have a common position before reaching a conclusion on the new accord in the Basel Committee. To date, the federal banking regulators still have not found a common view on whether the new Basel framework would be good or bad for the U.S. financial system, Chairman Oxley remarked. He also addressed international monetary policy issues, including China s efforts to move toward a more flexible exchange rate regime. Brian C. Roseboro, Acting Under Secretary of the Treasury for Domestic Finance, told conference attendees that Treasury continues to carefully monitor and analyze developments regarding revision of the Basel capital accord, although Treasury itself has not taken a direct role in the process. He also discussed the Bush Administration s initiatives regarding GSE regulatory reform and said the Administration will continue to work closely with House and Senate leadership on this issue. In wide-ranging remarks, Federal Reserve Board Governor Mark W. Olson touched on issues regarding the USA Patriot Act, corporate governance, globalization, umbrella supervision, and the performance of the U.S. banking industry. Addressing the SEC s proposed umbrella supervision framework Mark W. Olson, Member of the Board of Governors of the Federal Reserve System. Page 2 Donald E. Powell, Chairman, Federal Deposit Insurance Corporation. Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision. William J. McDonough, Chairman of the Public Company Accounting Oversight Board. for affiliate groups that include an SEC-registered broker-dealer, Governor Olson said the Federal Reserve was fully supportive of the underlying motivation of putting the regulations out and that he was encouraged by discussions between the Fed and the SEC to try to eliminate some areas of duplication. Later in the afternoon, SEC Commissioner Cynthia A. Glassman also discussed the proposal, which would implement consolidated supervision in anticipation of the European Union s Financial Conglomerates Directive. The EU Directive requires the application of consolidated supervision to EU financial firms, including European affiliates of U.S. firms. We are particularly mindful of the potential burden to firms that are already subject to consolidated supervision, and we are not looking to usurp the role of that supervisor, Commissioner Glassman said in response to concerns that the SEC proposal will duplicate regulatory oversight by home country consolidated supervision. BALANCE SHEET HOUSEKEEPING Donald E. Powell, Chairman of the Federal Deposit Insurance Corporation, told conference attendees that the current period of economic growth provides an opportunity for balance sheet housekeeping that should start with cleaning up the definition of tier 1 capital by removing a variety of hybrid capital instruments that have significant attributes of debt, such as trustpreferred securities. The capital negotiations in Basel are trending toward the notion that capital exists to absorb unexpected loss and accordingly, we should ensure, both domestically and internationally, that we allow into tier 1 only those instruments that are available to absorb unanticipated loss on a going-concern basis, Chairman Powell said. Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, said the Committee is well on track to resolve outstanding issues in connection with the new accord by mid-2004, in keeping with the schedule set last October, which envisions (Continued on page 3)
(Continued from page 2) Cynthia Glassman, Commissioner, Securities and Exchange Commission. James Mendenhall, Assistant U.S. Trade Representative, Office of the United States Trade Representative. implementation by year-end 2006. In his remarks on the new accord, Governor Caruana focused on what he viewed as two of its innovations encouraging improvements in banks internal risk management processes anchored on good corporate governance and promoting greater cooperation and coordination among supervisors across jurisdictions. The morning portion of the Monday program concluded with remarks by William J. McDonough, Chairman of the Public Company Accounting Oversight Board and former President of the Federal Reserve Bank of New York as well as Governor Caruana s immediate predecessor as Chairman of the Basel Committee. In his remarks, Chairman McDonough recited the corporate and accounting scandals that prompted the enactment of the Sarbanes-Oxley Act of 2002, under which the Oversight Board was created. In the wake of Enron and Arthur Andersen, the participants in our public markets were weighed and found wanting, but they were also given a shot at redemption. As Suzanne B. Labarge, Vice Chairman and Chief Risk Officer of RBC Financial Group. Dr. Martin Huefner, Chief Economist, Bayerische Hypo-und Vereinsbank AG. Charles E. Cook, Jr., Political Analyst Chairman of the PCAOB, my goal is to point accounting firms toward redemption, and help them take the steps to get there, if they aren t inclined to seek redemption on their own, Chairman McDonough said. Following the luncheon program, which featured a talk on the 2004 elections by political analyst Charles E. Cook, Jr., the afternoon session began with remarks by Suzanne B. Labarge, Vice Chairman and Chief Risk Officer of RBC Financial Group, who discussed RBC s strategy for competing in the U.S. and global markets. Since 2000, when it began implementing a U.S. growth strategy, RBC has invested about $5.5 billion in 12 acquisitions, three of which now form the core of the group s banking, brokerage and insurance platforms in the U.S., Ms. Labarge said. In addition to remarks by Chairman Oxley of the House Financial Services Committee and SEC Commissioner (Continued on page 4) Tax panel (from left): Lawrence R. Uhlick, Executive Director and General Counsel, Institute of International Bankers; Institute tax counsel Yaron Z. Reich, Partner, Cleary, Gottlieb, Steen & Hamilton; Barbara Angus, International Tax Counsel, Department of the Treasury; Steven A. Musher, Deputy Associate Chief Counsel (International), IRS; and Frank Lavadera, Principal, KPMG. Regulatory panel (from left): Lawrence R. Uhlick, Executive Director and General Counsel, Institute of International Bankers; Robert L.D. Colby, Deputy Director, Division of Market Regulation, Securities and Exchange Commission; Michael J. Zamorski, Director, Division of Supervision and Consumer Protection, Federal Deposit Insurance Corporation; Michael J. Lesser, Deputy Superintendent, Foreign Financial Services Division, New York State Banking Department; Nancy Wentzler, Deputy Comptroller, Global Banking and Financial Analysis, Office of the Comptroller of the Currency; Jack P. Jennings, Associate Director, Division of Banking Supervision and Regulation, Federal Reserve Board; and Donald T. Vangel, Partner, Ernst & Young LLP. Page 3
(Continued from page 3) Glassman, the Monday afternoon program also featured addresses by Dr. Martin W. Huefner, Chief Economist of Bayerische Hypo-und Vereinsbank, who discussed the outlook for the European economy and financial markets, and James Mendenhall, Assistant U.S. Trade Representative, who discussed trade issues relating to financial services. The Tuesday program consisted of panel discussions of tax and regulatory developments of importance to internationally headquartered financial institutions. Participants on the tax panel included: Barbara Angus, International Tax Counsel at the Department of the Treasury; Steven A. Musher, Deputy Associate Chief Counsel (International) at the IRS; Frank Lavadera, Principal, KPMG; and the Institute s tax counsel Yaron Z. Reich, Partner, Cleary, Gottlieb, Steen & Hamilton. Participants on the regulatory panel included: Jack P. Jennings, Associate Director, Division of Banking Supervision and Regulation, Federal Reserve Board; Nancy Wentzler, Deputy Comptroller, Global Banking and Financial Analysis, Office of the Comptroller of the Currency; Michael J. Lesser, Deputy Superintendent, Foreign Financial Services Division, New York State Banking Department; Michael J. Zamorski, Director, Division of Supervision and Consumer Protection, Federal Deposit Insurance Corporation; Robert L.D. Colby, Deputy Director, Division of Market Regulation, Securities and Exchange Commission; and Donald T. Vangel, Partner, Ernst & Young LLP. The Sunday evening welcoming reception was sponsored by Cleary, Gottlieb, Steen & Hamilton; the Monday luncheon program was sponsored by Clark Consulting; and the Monday evening reception for conference attendees and the Washington community at the National Museum of Women in the Arts was sponsored by KPMG LLP. We are grateful to the sponsors for their generous support. (Continued on page 5) TAX SEMINAR (Continued from page 1) member bank representatives and tax professionals from both the United States and head offices and was very well received. Given the importance of these tax issues to your bottom-line results, we urge all member institutions to be represented. While the seminar is designed for tax specialists, all interested professionals from both the U.S. operations and head offices of our member institutions are encouraged to register. Attendees at the seminar who are licensed accountants in either New York or New Jersey will be eligible for Continuing Professional Education (CPE) credits. In addition, the Institute is filing with the New York Continuing Legal Education Board an application for accreditation of the seminar. In the event accreditation is granted, seminar attendees who are subject to the New York continuing legal education requirement will be eligible to receive CLE credit as authorized by the Board (in this connection, a copy of the Institute s financial hardship policy is available from the Institute on request). This year s seminar is being chaired by Institute Tax Committee member John Rozsa (Mizuho Corporate Bank, Ltd.) and is being organized in conjunction with the Institute s professional staff, Tax Committee Chairman Andrew Barkin (UFJ Bank Limited), and Yaron Reich (Cleary, Gottlieb, Steen & Hamilton), the Institute s tax counsel. The cost to attend the two-day seminar is $990 per registration ($1,190 for non-members). An on-line registration form is available on the Institute s web site at www.iib.org/ events/6-23-04taxseminar.htm. JUNE LUNCHEON (Continued from page 1) Monetary Fund in Washington. He served as Under Secretary of the Treasury for International Affairs from 1998 to 2001. The luncheon will be held at the Waldorf-Astoria Hotel, with a reception at 12:00 noon in the Jade Room (3 rd floor), followed by lunch at 12:30 p.m. in the Astor Room. The lunch will end no later than 2:00 p.m. All interested representatives of member institutions are encouraged to attend the luncheon and to invite their business customers and other colleagues as guests. Tables of ten may also be reserved in the name of member institutions and member firms of the Professional Liaison Committee. All member representatives are also encouraged to remain after the luncheon for the Annual General Meeting and Elections, which will last for approximately half an hour. An on-line registration form is available on the Institute s web site at http://www.iib.org/events/6-9-04mluncheon.htm. Page 4
(Continued from page 3) WELCOMING RECEPTION The Institute s welcoming reception for conference attendees, sponsored by Cleary, Gottlieb, Steen & Hamilton, was held on Sunday evening at the Four Seasons Hotel. From left: Everett Schenk, CEO - North America, BNP Paribas, and Institute Chairman; Kenneth L. Bachman, Partner, Cleary, Gottlieb, Steen & Hamilton; Paul Glotzer, Partner, Cleary, Gottlieb, Steen & Hamilton; and Sally Schenk. Gonzalo de Las Heras (left), Executive Vice President, Grupo Santander, and Past Chairman of the Institute, and Luc de Clapiers, President & Chief Executive Officer, CDC IXIS North America, Inc., and Institute Trustee. From left: Robert C. O Brien, Managing Director, Credit Suisse First Boston, and Chairman of the Institute s Strategic Planning Committee; Einar Thodal- Ness, President & General Manager, Skandinaviska Enskilda Banken, and Institute Treasurer; and Stefan Johansson, Chief Operating Officer, Skandinaviska Enskilda Banken. From left: Jens A. Westrick, Executive Vice President and General Manager, Nord/LB - Norddeutsche Landesbank Girozentrale, and Foreign Bank Representative on the New York State Banking Board; Hernan Donoso, Senior Vice President & General Manager USA, Banco de Chile, and Chairman of the Institute s Membership Committee; and Maria Teresa Donoso. From left: Dr. Martin W. Huefner, Chief Economist, Bayerische Hypo-und Vereinsbank AG; Giuseppe Zadra, General Manager, Associazione Bancaria Italiana; James A. Bardon, Director General, The Irish Bankers Federation; and Dr. Hans-Joachim Massenberg, Managing Director, Bundesverband deutscher Banken. Matthew McKercher (left), Director, Integrated Compliance Solutions, and Eduardo D Angelo Pereira Silva, Past President, The Cayman Islands Bankers Association. (Continued on page 6) Page 5
(Continued from page 5) RECEPTION FOR THE WASHINGTON COMMUNITY The Institute s reception for conference attendees and the Washington community, sponsored by KPMG LLP, was held on Monday evening at the National Museum of Women in the Arts. Annette L. Nazareth, Director, Division of Market Regulation, Securities and Exchange Commission, and her husband Roger W. Ferguson, Jr., Vice Chairman, Board of Governors of the Federal Reserve System. Leonard Glassman and SEC Commissioner Cynthia Glassman. From left: Robert P. Garrett, Partner, KPMG LLP; Carol Uhlick and Lawrence R. Uhlick, Executive Director and General Counsel, Institute of International Bankers. From left: Robert O Sullivan, Senior Vice President, Bank Supervision, Federal Reserve Bank of New York; Michael A. Carnovali, Assistant Deputy Comptroller for Federal Branches, Office of the Comptroller of the Currency; Nancy Bengali and M. Rafiq Bengali, Regional Chief Executive - Americas and Europe, National Bank of Pakistan, and Institute Trustee. Waldo M. Abbot, Vice President & General Manager, Royal Bank of Canada, and Institute Vice Chairman, and Suzanne B. Labarge, Vice Chairman & Chief Risk Officer, RBC Financial Group. Jean-Marc Moriani (left), Chief Executive Officer, Credit Lyonnais Americas, and Jean-Claude Gruffat, former Chairman of the Institute and currently Chief Country Officer & Market Manager, France, Belgium & Luxembourg, Citigroup International. Page 6
SCHEDULE OF EVENTS THROUGH OCTOBER 2004 All interested officers of member institutions are urged to put these dates on their calendars. In particular, we encourage you to attend the Institute s Annual General Meeting/Elections and Membership Luncheon on Wednesday, June 9, 2004 at the Waldorf-Astoria Hotel. Wednesday, June 9, 2004 12:00 noon Institute s Annual General Meeting/Elections and Membership Luncheon, at the Waldorf-Astoria Hotel. The luncheon speaker will be Timothy F. Geithner, President of the Federal Reserve Bank of New York. Wednesday, June 23 - Thursday, June 24, 2004 Institute s Annual Seminar on U.S. Taxation of International Banks, at the Grand Hyatt New York. This comprehensive two-day program provides a detailed and authoritative review of the key issues and developments affecting internationally headquartered banking/financial institutions operating in the United States. Tuesday, September 14, 2004 Annual Institute Golf Outing at the Piping Rock Club, Locust Valley, Long Island. Monday, October 4, 2004 7:30 a.m. Breakfast Dialogue with Government Officials during the IMF/World Bank Meetings, at the Four Seasons Hotel in Washington D.C. Wednesday, October 27 - Thursday, October 28, 2004 Annual Institute Seminar on Regulatory Examination and Compliance Issues Affecting International Banks, at the Grand Hyatt New York. Dates for additional seminars, workshops and other events, including the Institute s fall Membership Luncheon, will be provided in the near future Page 7