A well-regulated U.S. branch of a foreign bank can manage collective investment funds for U.S. employee benefit plans.
Louis Campagna, chief of the Fiduciary Interpretations Division at the U.S. Department of Labor, has come to that conclusion in Advisory Opinion 2007-03A.
Campagna issued the opinion at the request of the Bank of Ireland, Dublin, Ireland.
The bank has 5 U.S. subsidiaries, and 3 are registered in the United States as investment advisors, according to the bank’s lawyers.
A U.S. branch in Stamford, Conn., began doing business in October 2006, and it is subject to regulation both by the Connecticut Department of Banking and by the Federal Reserve System.
The bank asked the Labor Department whether the department would treat the branch as a “bank or trust company” for purposes of interpreting Section 408(b)(8) of the Employee Retirement Income Security Act, Section 4975(d)(8) of the Internal Revenue Code and Prohibited Transaction Exemption 91-38.
The ERISA and Internal Revenue Code provisions and the prohibited transaction exemption set forth the rules that permit banks and trust companies to run collective investment funds. A CIF is a kind of investment fund for benefit plans.