[Federal Register Volume 59, Number 85 (Wednesday, May 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10690]


[[Page Unknown]]

[Federal Register: May 4, 1994]


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FEDERAL RESERVE SYSTEM

 

Mellon Bank Corp.; Acquisition of Companies Engaged in Nonbanking 
Activities

    Mellon Bank Corporation, Pittsburgh, Pennsylvania (applicant), has 
applied pursuant to Section 4(c)(8) of the Bank Holding Company Act 
(BHC Act) (12 U.S.C. 1843(c)(8)) and Sec. 225,23 of the Board's 
Regulation Y (12 CFR 225.23) to acquire, directly or indirectly, all of 
the voting securities of the following directly or indirectly held 
subsidiaries of the Dreyfus Corporation, New York, New York (Dreyfus):
    (1) The Dreyfus Security Savings Bank, F.S.B., Paramus, New Jersey 
(DSSB), a federal savings bank (insured by the FDIC, Bank Insurance 
Fund), and thereby engage in operating a savings association pursuant 
to 12 CFR 225.25(b)(9);
    (2) The Dreyfus Trust Company, Uniondale, New York (DTC), a trust 
company holding a limited purpose charter from the New York Department 
of Banking, and thereby engage in operating a trust company pursuant to 
12 CFR 225.25(b)(3);
    (3) Dreyfus Realty Advisors, Inc., New York, New York and Atlanta, 
Georgia (DRA), and thereby engage in certain investment advisory 
activities related to the acquisition, management, and disposition of 
real estate and real estate-related investments (DRA also has 21 
wholly-owned corporate subsidiaries, each of which acts as a managing 
general partner in certain real estate limited or general 
partnerships); and
    (4) The Truepenny Corporation, New York, New York (Truepenny), a 
holding company for the Trotwood Corporation (Trotwood), New York, New 
York, and thereby engage in certain community development initiatives 
and, with two of their subsidiaries and through several partnerships, 
in a real estate development project in New York City, known as the 
Queens West Redevelopment Project.
    (5) Dreyfus Partnership Management, Inc., New York, New York (DPM), 
and thereby serve as a non-managing general partner of two mutual funds 
organized as limited partnerships which are sponsored, advised and 
managed by Dreyfus;
    (6) Major Trading Corporation, New York, New York (MTC), and 
thereby engage primarily in investing in securities, including shares 
of certain mutual funds advised by Dreyfus-affiliates; and
    (7) Dreyfus Acquisition Corporation, New York, New York (DAC), and 
thereby engage in making equity and debt investments, including 
investments in certain mutual funds advised by Dreyfus-affiliates and 
in certain limited partnerships.
    Applicant proposes to acquire the above companies simultaneously 
with the proposed acquisition of Dreyfus by its subsidiary, Mellon 
Bank, N.A., which has filed a notice with the Office of the Comptroller 
of the Currency regarding such proposed acquisition of Dreyfus. 
Applicant proposes to acquire DSSB, DTC, DRA, DPM, MTC, and DAC through 
a wholly owned subsidiary, MBC Investments Corporation (MBC), and to 
acquire Truepenny directly.
    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 outweight 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 Assn v. Board of Governors, 516 F.2d 1229, 1237 (DC 
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, January 6, (1984).
    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 of the subsidiaries that Applicant proposes to 
acquire can reasonably be expected to produce benefits to the public, 
such as greater convenience, increased competition, or gains in 
efficiency that outweight 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.
    The Board has previously determined in Secs. 225.25(b)(9) and 
225.25(b)(3) of Regulation Y that the operation of a savings 
association and a trust company, respectively, are activities closely 
related to banking and permissible for bank holding companies. 
Applicant states that DSSB and DTC will be operated in accordance with 
these sections. DSSB operates out of a principal office in Paramus, New 
Jersey, has a branch office in San Francisco, California, and has 
received approval from the Office of Thrift Supervision to open 13 
additional interstate offices.
    Applicant asserts that DRA's real estate-related investment 
activities are permissible under Sec. 225.25(b)(4) of Regulation Y. 
Applicant has committed that DRA will cease to engage in any activities 
that are impermissible for bank holding companies or their nonbank 
subsidiaries and that all subsidiaries of DRA will cease to engage in 
impermissible activities or be divested within 2 years after 
consummation of the proposed transaction.
    According to Applicant, the direct and indirect investments of 
Truepenny and Trotwood are authorized under Sec. 225.25(b)(6) of 
Regulation Y as equity and debt investments in corporations or projects 
designed primarily to promote community welfare. Applicant asserts that 
the Queens West Redevelopment Project is designed to make affordable 
housing available to persons of lower middle income and will create 
significant employment opportunities for low- and moderate-income 
communities.
    Applicant contends that its proposed investments in DPM, MTC and 
DAC are authorized under section 4(c)(7) of the BHC Act, which permits 
bank holding companies to acquire shares of investment companies that 
engage solely in acquiring 5 percent or less of the securities of other 
companies. With respect to the role of DPM as non-managing general 
partner to 2 mutual funds, Applicant claims that DPM engages only in 
investment activity permitted by section 4(c)(7) of the BHC Act and 
that the managing general partners have complete and exclusive control 
over the management, conduct and operation of the funds' business. 
Applicant commits to reduce any investment of DPM, MTC and DAC to below 
the 5% threshold in section 4(c)(7) of the BHC Act, including limited 
partnership interests that qualify as voting securities under 
Sec. 225.2(p) of Regulation Y.
    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 30, 
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 Cleveland.

    Board of Governors of the Federal Reserve System, April 28, 
1994.
William W. Wiles,
Secreary of the Board.
[FR Doc. 94-10690 Filed 5-3-94; 8:45 am]
BILLING CODE 6210-01-P-M