[Federal Register Volume 59, Number 4 (Thursday, January 6, 1994)]
[Notices]
[Pages 750-751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-217]


[[Page Unknown]]

[Federal Register: January 6, 1994]


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FEDERAL RESERVE SYSTEM
 

The Sumitomo Bank, Limited; Application To Engage in Certain 
Nonbanking Activities

    The Sumitomo Bank, Limited, Osaka, Japan (Applicant), has applied 
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 
1843(c)(8)) (BHC Act) and section 225.23 of the Board's Regulation Y 
(12 CFR 225.23), for approval to engage through its wholly owned 
subsidiary, Sumitomo Bank Securities, Inc., New York, New York 
(Company), in underwriting and dealing in, to a limited extent, certain 
municipal revenue bonds, 1-4 family mortgage-related securities, 
consumer receivable-related securities, and commercial paper. Applicant 
proposes to conduct the activities on a world-wide basis.

Closely Related to Banking Standard

    Section 4(c)(8) of the BHC Act provides that a bank holding company 
may, with Board approval, engage in any activity ``that the Board after 
due notice and opportunity for hearing has determined (by order or 
regulation) to be so closely related to banking or managing or 
controlling banks as to be a proper incident thereto''. In determining 
whether a proposed activity is closely related to banking for purposes 
of the BHC Act, the Board considers, inter alia, the matters set forth 
in National Courier Association v. Board of Governors of the Federal 
Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). These considerations 
are:
    (1) Whether banks generally have in fact provided the proposed 
services,
    (2) Whether banks generally provide services that are operationally 
or functionally so similar to the proposed services as to equip them 
particularly well to provide the proposed services; and
    (3) Whether banks generally provide services that are so integrally 
related to the proposed services as to require their provision in a 
specialized form. See 516 F.2d at 1237. In addition, the Board may 
consider any other basis that may demonstrate that the activity has a 
reasonable or close relationship to banking or managing or controlling 
banks. Board Statement Regarding Regulation Y, 49 FR 806 (1984).
    Applicant maintains that the Board previously has determined by 
order that the proposed activities, when conducted within the 
limitations established by the Board, are closely related to banking 
and consistent with section 20 of the Glass-Steagall Act (12 U.S.C. 
377). See, e.g., Citicorp, 73 Federal Reserve Bulletin 473 (1987), 
aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the 
Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert. denied, 486 
U.S. 1059 (1988); Order Approving Modifications to the Section 20 
Orders, 75 Federal Reserve Bulletin 751 (1989); The Sanwa Bank, 
Limited, 76 Federal Reserve Bulletin 568 (1990); Order Approving 
Modifications to the Section 20 Orders, 79 Federal Reserve Bulletin 226 
(1993); and Supplement to Order Approving Modifications to Section 20 
Orders, 79 Federal Reserve Bulletin 360 (1993).

Proper Incident to Banking Standard

    In order to approve the proposal, the Board must determine that the 
proposed activities to be conducted by Company ``can reasonably be 
expected to produce benefits to the public, such as greater 
convenience, increased competition, or gains in efficiency, that 
outweigh possible adverse effects, such as undue concentration of 
resources, decreased or unfair competition, conflicts of interests, or 
unsound banking practices.'' 12 U.S.C. 1843(c)(8).
    Applicant believes that the proposal will produce public benefits 
that outweigh any potential adverse effects. In particular, Applicant 
maintains that the proposal will enhance competition and result in 
greater convenience to Applicant's customers. In addition, Applicant 
states that the proposed activities will not result in adverse effects 
such as an undue concentration of resources, decreased or unfair 
competition, conflicts of interests, or unsound banking practices, and 
that Company will conduct the proposed activities in accordance with 
prudential limitations designed to safeguard against such potential 
adverse effects that have been relied upon by the Board in similar 
previous cases. See, e.g., Citicorp, supra; The Sanwa Bank, Limited, 
supra. In this regard, Applicant has requested that one of the 
prudential limitations be modified to permit one officer or one 
director of one of its United States banking affiliates to serve as a 
director of Company, a modification which Applicant maintains is 
consistent with prior Board actions. See, e.g., Synovus Financial 
Corp., et al., 77 Federal Reserve Bulletin 954 (1991).
    In publishing the proposal for comment, the Board does not take a 
position on issues raised by the proposal. Notice of the proposal is 
published solely in order to seek the views of interested persons on 
the issues presented by the application, and does not represent a 
determination by the Board that the proposal meets or is likely to meet 
the standards of the BHC Act.
    Any comments or requests for hearing should be submitted in writing 
and received by William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, Washington, D.C. 20551, not later than January 
26, 1994. Any request for a hearing on this application must, as 
required by section 262.3(e) of the Board's Rules of Procedure (12 CFR 
262.3(e)), be accompanied by a statement of the reasons why a written 
presentation would not suffice in lieu of a hearing, identifying 
specifically any questions of fact that are in dispute, summarizing the 
evidence that would be presented at a hearing, and indicating how the 
party commenting would be aggrieved by approval of the proposal. This 
application may be inspected at the offices of the Board of Governors 
or the Federal Reserve Bank of San Francisco.

    Board of Governors of the Federal Reserve System, December 30, 
1993.
Jennifer J. Johnson,
Associate Secretary of the Board.
[FR Doc. 94-217 Filed 1-5-94; 8:45 am]
BILLING CODE 6210-01-F