Institutsfiktion

19:53 Aug 17, 2020 

Thanks for this clarification, Robin. You have made a significant contribution to this discussion and I greatly appreciate that.

19:43 Aug 17, 2020 

Banks etc. are known as "institutions" in German and EU law, it's standard regulatory terminology and totally appropriate here. Note also that "for regulatory purposes" is a way round saying "as defined in section (NOT: article!) 53 of the Banking Act" without having to go into such a level of detail.
Finally, these are *branches* (which may be subsidiaries, but do not have to be). The operative term here is "Zweigstelle" (not "Tochterinstitut"). It may well have the company law status of a subsidiary, but that's not relevant for the purposes of prudential regulation.

18:06 Aug 17, 2020 

Yes, meant to be a de facto independent institution governed by German banking regulations, with the majority interest (i.e. share count) held by the American parent.

17:11 Aug 17, 2020 

I don't actually agree with Robin's suggestions. I think Institut specifically means bank, not institution, and it doesn't say "for regulatory purposes", it says "as defined in article 53 of the Banking Act".

16:58 Aug 17, 2020 

That does make sense, and I will probably rearrange the wording from your answer to comport with RobinB's recommendations in order to add some of the legal nuance.

16:55 Aug 17, 2020 

Exactly! They're "pretending" (hence "Fiktion") that it's German.

16:31 Aug 17, 2020 

Thanks for your explanation and proposal. I just would like to mention that the letter from BaFin is actually addressed to the "Frankfurt Branch" of XYZ bank. But I think you are correct to assert that the local "branch" or "subsidiary" needs to be regarded as a bank in its own right, i.e., functionally separate from the parent company.
Does the "notional status" of the bank just mean that, under German law, it is treated as a domestic bank, even though its headquarters are in another country?