[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6115]


[[Page Unknown]]

[Federal Register: March 16, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20127; International Series Release No. 639; 812-8792]

 

Westpac Banking Corp.; Application

March 10, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANT: Westpac Banking Corporation (the ``Bank'').

RELEVANT ACT SECTION: Exemption requested under section 6(c) from the 
provisions of section 17(f).

SUMMARY OF APPLICATION: The Bank seeks an order to permit the 
maintenance of foreign securities and other assets of registered 
investment companies other than investment companies registered under 
section 7(d) (an ``Investment Company'') with Westpac Custodian 
Nominees Limited (``Westpac Custodian''), an indirect, wholly-owned 
subsidiary of the Bank.

FILING DATE: The application was filed on January 25, 1994. By 
supplemental letter dated March 9, 1994, counsel, on behalf of 
applicants, agreed to file an amendment during the notice period to 
make certain technical changes. This notice reflects the changes to be 
made to the application by such amendment.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on April 4, 1994, 
and should be accompanied by proof of service on the applicants, in the 
form of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reasons 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the SEC's 
Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicant: Westpac Banking Corporation, 60 Martin Place, Sydney NSW 
2000, Australia.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at 
(202) 504-2259, or Barry D. Miller, Senior Special Counsel, at (202) 
272-3018 (Division of Investment Management, Office of Investment 
Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicant's Representations

    1. The Bank, together with its subsidiaries (the ``Westpac 
Group''), is one of four major banking organizations in Australia. The 
Bank is a corporation organized under the laws of New South Wales, 
Australia, and regulated by the Reserve Bank of Australia, which is 
responsible for the supervision and regulation of the Australian 
banking system. As of September 30, 1993, the Bank had shareholders' 
equity of A$7.1 billion (approximately U.S.$4.58 billion, based on the 
then-current exchange rate).
    2. Westpac Custodian, an indirect, wholly-owned subsidiary of the 
Bank, was incorporated in New South Wales in 1984 to provide a wide 
range of custody related services, including reporting, reconciliation, 
settlement, safekeeping of physical securities, payment of taxes, 
income collection, proxy voting, and valuation. It is one of the 
largest providers of custodian services in Australia, with custody of 
over A$36.6 billion in assets as of September 30, 1993 (approximately 
U.S.$23.1 billion). Westpac Custodian is an authorized trustee 
corporation and is regulated by the Australian Securities Commission.
    3. Westpac Group desires, as part of the global custody services it 
offers, to provide a network of custodial and sub-custodial services 
for Investment Companies and their custodians through the Bank and 
Westpac Custodian.

Applicant's Legal Analysis

    1. Section 17(f) of the Act requires that every registered 
management investment company place and maintain its securities and 
similar investments in the custody of certain enumerated entities, 
including ``banks'' having at all times aggregate capital, surplus, and 
undivided profits of at least $500,000. ``Bank,'' as defined in section 
2(a)(5) of the Act, includes (i) a banking institution organized under 
the laws of the United States, (ii) a member bank of the Federal 
Reserve System, and (iii) any other banking institution or trust 
company, whether incorporated or not, doing business under the laws of 
any state or of the United States, a substantial portion of the 
business of which consists of receiving deposits or exercising 
fiduciary powers similar to those permitted to national banks under the 
authority of the Comptroller of the Currency, and which is supervised 
and examined by state or federal authority having supervision over 
banks, and which is not operated for the purpose of evading the 
provision of the Act. Section 17(f) therefore restricts those entitles 
located outside the United States that are permitted to serve as 
custodian for Investment Companies to overseas branches of domestic 
banks.
    2. Rule 17f-5 expanded the group of entities that are permitted 
under section 17(f) of the Act to serve as foreign custodians. The rule 
defines an ``Eligible Foreign Custodian'' to mean, among other things, 
``a banking institution or trust company, incorporated or organized 
under the laws of a country other than the United States, that is 
regulated as such by that country's government or an agency thereof and 
that has shareholders' equity in excess of $200,000,000.''
    3. The Bank meets the requirements of rule 17f-5 for an Eligible 
Foreign Custodian since it has shareholders' equity in the Australian 
dollar equivalent of approximately U.S.$4.4 billion, is organized under 
the laws of Australia and is authorized and regulated there as a bank 
by the Reserve Bank of Australia. Except with respect to the minimum 
shareholders' equity requirement, Westpac Custodian also satisfies the 
requirements under rule 17f-5. Because Westpac Custodian does not 
satisfy the minimum shareholders' equity requirement, it will not, 
absent exemptive relief, qualify as an Eligible Foreign Custodian.
    4. The Bank requests an order under section 6(c) of the Act 
exempting (i) the Bank and Westpac Custodian, (ii) any Investment 
Company, and (iii) any custodian for an Investment Company from the 
provisions of section 17(f) of the Act to the extent necessary to 
permit the Bank, any such Investment Company, and any such custodian, 
to maintain foreign securities, as defined in rule 17f-5, cash, and 
cash equivalents in the custody of Westpac Custodian. The Bank proposes 
to offer and provide custodial services through Westpac Custodian to 
Investment Companies that wish to hold securities of Australian or New 
Zealand issuers as part of their global portfolios.
    5. Westpac Custodian is experienced in providing custodial services 
and is capable and well-qualified to provide custodial and sub-
custodial services to Investment Companies and, under the foreign 
custody arrangements proposed, the protection of investors would not be 
diminished.

Applicant's Conditions

    The Bank agrees that the order of the Commission granting the 
requested relief shall be subject to the following conditions:
    1. The foreign custody arrangements proposed with respect to 
Westpac Custodian will satisfy the requirements of rule 17f-5 in all 
respects other than with regard to the minimum shareholders' equity 
requirement for an eligible foreign custodian.
    2. The Bank currently satisfies and will continue to satisfy the 
minimum shareholders' equity requirement set forth in rule 17f-
5(c)(2)(i).
    3. The Bank will deposit securities in Australia or New Zealand 
with Westpac Custodian only in accordance with a three-party 
contractual agreement, which will remain in effect at all times during 
which Westpac Custodian fails to meet the requirement of rule 17f-5 
relating to minimum shareholders' equity, among (a) the Investment 
Company or a custodian of the securities of the Investment Company for 
which the Bank acts as sub-custodian, (b) the Bank, and (c) Westpac 
Custodian. Pursuant to the terms of this agreement, the Bank will 
provide specified custodial or sub-custodial services for the 
Investment Company or the custodian, as the case may be, and will 
delegate to Westpac Custodian such of its duties and obligations as 
will be necessary to permit Westpac Custodian to hold the securities in 
custody in Australia or New Zealand. The agreement will further provide 
that the Bank will be liable for any loss, damage, cost, expense, 
liability, or claim arising out of or in connection with the 
performance by Westpac Custodian of its responsibilities under the 
agreement to the same extent as if the Bank had been required to 
provide custody services under such agreement.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6115 Filed 3-15-94; 8:45 am]
BILLING CODE 8010-01-M