---
kind: "section"
citation: "12 C.F.R. § 7.1017"
title: "12"
number: "7.1017"
heading: "National bank as guarantor or surety on indemnity bond."
url: "https://uscodex.org/cfr/12/7.1017"
---

# §7.1017. National bank as guarantor or surety on indemnity bond.

- (a) A national bank may lend its credit, bind itself as a surety to indemnify another, or otherwise become a guarantor (including, pursuant to [12 CFR 28.4](/cfr/12/28.4.md), guaranteeing the deposits and other liabilities of its Edge corporations and Agreement corporations and of its corporate instrumentalities in foreign countries), if:
  - (1) The bank has a substantial interest in the performance of the transaction involved (for example, a bank, as fiduciary, has a sufficient interest in the faithful performance by a cofiduciary of its duties to act as surety on the bond of such cofiduciary); or
  - (2) The transaction is for the benefit of a customer and the bank obtains from the customer a segregated deposit that is sufficient in amount to cover the bank's total potential liability. A segregated deposit under this section includes collateral:
    - (i) In which the bank has perfected its security interest (for example, if the collateral is a printed security, the bank must have obtained physical control of the security, and, if the collateral is a book entry security, the bank must have properly recorded its security interest); and
    - (ii) That has a market value, at the close of each business day, equal to the bank's total potential liability and is composed of:
      - (A) Cash;
      - (B) Obligations of the United States or its agencies;
      - (C) Obligations fully guaranteed by the United States or its agencies as to principal and interest; or
      - (D) Notes, drafts, or bills of exchange or bankers' acceptances that are eligible for rediscount or purchase by a Federal Reserve Bank; or
    - (iii) That has a market value, at the close of each business day, equal to 110 percent of the bank's total potential liability and is composed of obligations of a State or political subdivision of a State.
- (b) In addition to [paragraph (a)](#a) of this section, a national bank may guarantee obligations of a customer, subsidiary or affiliate that are financial in character, provided the amount of the bank's financial obligation is reasonably ascertainable and otherwise consistent with applicable law.

## Notes

### Amendments

[61 FR 4862, Feb. 9, 1996, as amended at 64 FR 60099, Nov. 4, 1999; 73 FR 22241, Apr. 24, 2008]

### Authority

Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93, 93a, 95(b)(1), 371, 371d, 481, 484, 1462a, 1463, 1464, 1465, 1818, 1828, 3102(b), and 5412(b)(2)(B).

### Source

Source: 61 FR 4862, Feb. 9, 1996, unless otherwise noted.

### Amendments

[61 FR 4862, Feb. 9, 1996, as amended at 64 FR 60099, Nov. 4, 1999; 73 FR 22241, Apr. 24, 2008]