Very often large banks, which operate in some countries across different time and currency zones issue notes acting through their foreign branches in another country for certain legal (for instance tax), administrative and regulatory reasons, including (without limitation) to facilitate timely access to funding markets. In these cases interest payments may be subject to applicable local tax laws and regulations of the country of a branch location.
A branch is not a subsidiary and does not constitute a separate legal entity. The obligations under the notes issued by an issuer acting through its foreign branch are of an issuer only, and investors’ claims under notes are only against an issuer.
A foreign branch is obligated to follow the regulations of both the home and host countries, operating in the country.
Bank of China, which is regulated by the People’s Bank of China has got branches in European, Asian and American financial centres to fund its foreign currency needs in EUR, USD, JPY needs. Another example is Credit Suisse AG acting through its London branch.
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