[Federal Register Volume 59, Number 79 (Monday, April 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9882]


[[Page Unknown]]

[Federal Register: April 25, 1994]


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FEDERAL RESERVE SYSTEM
 

CoreStates Financial Corp.; Acquisition of Company Engaged in 
Nonbanking Activities

    CoreStates Financial Corp., Philadelphia, Pennsylvania (Applicant), 
has applied pursuant to Section 4(c)(8) of the Bank Holding Company Act 
(12 U.S.C. 1843(c)(8)) and Sec.  225.23 of the Board's Regulation Y (12 
CFR 22.23) to acquire all of the voting securities of Rittenhouse 
Financial Services, Inc., Radnor, Pennsylvania (Company), and thereby 
engage in providing investment advisory services to trusts, estates, 
corporations, pension and profit sharing plans, registered investment 
companies, banks, thrifts, and individuals, including the exercise of 
investment discretion on behalf of individuals who do not qualify as 
institutional investors. Such activities will be conducted throughout 
the United States.
    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. This statutory 
test requires that two separate tests be met for an activity to be 
permissible for a bank holding company. First, the Board must determine 
that the activity is, as a general matter, closely related to banking. 
Second, the Board must find in a particular case that the performance 
of the activity by the applicant bank holding company may reasonably be 
expected to produce public benefits that outweigh possible adverse 
effects.
    A particular activity may be found to meet the closely related to 
banking test if it is demonstrated that banks have generally provided 
the proposed activity; that banks generally provide services that are 
operationally or functionally similar to the proposed activity so as to 
equip them particularly well to provide the proposed activity; or that 
banks generally provide services that are so integrally related to the 
proposed activity as to require their provision in a specialized form. 
National Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 (D.C. 
Cir. 1975). 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 asserts that the proposed investment advisory services 
are permissible under Secs.  225.25(b)(4)(ii) and 225.25(b)(4)(iii). In 
particular, Applicant asserts that Sec.  225.25(b)(4)(iii) of the 
Board's Regulation Y permits the provision of discretionary portfolio 
investment advisory services to customers other than institutional 
customers, when such services are not provided in combination with 
brokerage services as described in Sec.  225.25(b)(15) of the Board's 
Regulation Y. See 12 CFR 225.25(b)(4)(iii). In addition, Applicant 
contends that previous Board orders have approved portfolio management 
services to individuals on a discretionary basis. See Hong Kong and 
Shanghai Banking Corporation, 68 Federal Reserve Bulletin 782 (1982); 
Credit Suisse, 73 Federal Reserve Bulletin 160 (1987); Creditanstalt-
Bankverein, 72 Federal Reserve Bulletin 63 (1982).
    In order to satisfy the proper incident to banking test, section 
4(c)(8) of the BHC Act requires the Board to find that the performance 
of the activities 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 interest, or unsound banking practices. 
Applicant believes that the proposed activities will benefit the public 
by enabling Applicant to provide a broader range of services to its 
customers and thereby enhance Applicant's ability to compete and expand 
its participation in the investment advisory business. Applicant also 
believes that the proposed activities will not result in any unsound 
banking practices or other adverse effects.
    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, DC 20551, not later than May 16, 
1994. Any request for a hearing on this application must, as required 
by Sec.  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 Philadelphia.

    Board of Governors of the Federal Reserve System, April 19, 
1994.
Jennifer J. Johnson,
Associate Secretary of the Board.
[FR Doc. 94-9882 Filed 4-22-94; 8:45 am]
BILLING CODE 6210-01-F