[Federal Register Volume 59, Number 171 (Tuesday, September 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21819]


[[Page Unknown]]

[Federal Register: September 6, 1994]


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FEDERAL RESERVE SYSTEM

 

The Bank of New York Company, Inc.; Notice of Applications to 
Engage de novo in Permissible Nonbanking Activities; Correction

    This notice corrects a notice (FR Doc. 94-16672) published on page 
35347 of the issue for Monday, July 11, 1994.
    Under the Federal Reserve Bank of New York heading, the entry for 
The Bank of New York Company, New York, New York, et al. is revised to 
read as follows:
    1. The Bank of New York Company, Inc., New York, New York; 
BayBanks, Inc., Boston, Massachusetts; The Chase Manhattan Corporation, 
New York, New York; Chemical Banking Corporation, New York, New York; 
Citicorp, New York, New York; Fleet Financial Group, Inc., Providence, 
Rhode Island; HSBC Holdings PLC, London, England; HSBC Holdings BV, The 
Netherlands; Marine Midland Banks, Inc., Buffalo, New York; Banco de 
Santander, S.A., Madrid, Spain; The Bank of Boston Corporation, Boston, 
Massachusetts; First Fidelity Bancorporation, Lawrenceville, New 
Jersey; Shawmut National Corporation, Hartford, Connecticut; National 
Westminster Bank PLC, London, England; and NatWest Holdings, Inc., New 
York, New York (collectively, Applicants), have applied pursuant to 
section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 1843(c)(8)) 
(BHC Act) and Sec.  225.23(a) of the Board's Regulation Y (12 CFR 
225.23(a)) to engage through InfiNet Payment Services, Inc., 
Hackensack, New Jersey (Company), in data processing and related 
nonbanking activities. Company will be formed through the merger of 
NENI Corporation, which operates a retail electronic funds transfer 
(EFT) network under the tradename Yankee 24, and The New York Switch 
Corporation, which operates the NYCE EFT network under various 
tradenames.
    In particular, Applicants propose to engage through Company in 
operating a retail EFT network, including the provision of automated 
teller machine (ATM) services that will permit customers to make 
withdrawals, obtain cash advances from lines of credit and credit card 
accounts, make deposit account inquiries, make transfers between 
accounts, and make deposits to the extent permitted by applicable law. 
These ATM services also would include the processing and transmission 
of data for bank participants in the network in connection with 
financial products offered to customers of such participants that would 
allow those customers to transfer funds, by ``sweep'' arrangements or 
otherwise, among their deposit accounts at the bank or other securities 
accounts maintained with affiliated or unaffiliated mutual fund 
companies or securities brokers. Applicants also propose to engage in 
various additional activities through Company, including the following:
    (1) point of sale (POS) services that will permit customers to use 
their ATM cards to purchase goods and services;
    (2) point of banking (POB) services that will permit customers to 
conduct transactions similar to those available at ATM terminals, but 
with the help of a third party;
    (3) scrip services, in which a customer receives a voucher (scrip) 
that is redeemable for cash at a retail register;
    (4) gateway services, by which Company will provide routing of 
transaction requests between Company's network and other EFT networks 
for participants in Company's network;
    (5) group purchasing, in which Company will purchase EFT-related 
supplies, such as signage, statement stuffers, and terminals, for the 
benefit of the financial institution participants in Company's network;
    (6) ownership of ATM terminals to the extent permitted by 
applicable state and federal law;
    (7) terminal driving services, such as routine database management 
and maintenance, problem resolution, telecommunications, help desk 
services, hardware maintenance, and currency provision;
    (8) card production and issuance, including ordering and embossing 
cards, establishing cardholder records, and assigning personal 
identification numbers;
    (9) electronic benefit transfer (EBT) services, in which recipients 
of government benefits such as food stamps and other recurring types of 
government transfer payments could access their benefits at ATM and POS 
machines through use of a card issued by a government agency;
    (10) home banking and bill payment services, in which customers 
could use devices such as the telephone, personal computer, or 
interactive cable television to conduct a variety of banking 
transactions such as transferring money between accounts, opening and 
closing accounts, and paying bills, as well as accessing banking, 
financial and economic databases from the home or office;
    (11) providing certain additional services not generally available 
at ATM machines, such as printing full account statements and 
dispensing travelers checks and postage stamps;
    (12) providing services in connection with stored value cards, 
including farecards used by public transportation systems, which are 
capable of having value assigned to them by use of a magnetic strip or 
computer chip;
    (13) check verification services for retailers;
    (14) purchasing and reselling or renting electronic equipment used 
to perform EFT services; and
    (15) electronic data capture and electronic data interchange 
services, in which merchants are provided with information relating to 
inventory and the buying patterns of customers.
    Applicants propose to engage in these activities worldwide. In this 
regard, Applicants propose to permit foreign bank affiliates of 
domestic banking participants in the network, as well as other foreign 
banks, to participate in the network.
    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 ``which 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 
Federal Register 806 (1984).
    Applicants maintain that the Board has previously determined that 
the majority of the proposed activities are closely related to banking 
within the meaning of the BHC Act. Specifically, Applicants maintain 
that the proposed ATM services; POS services; gateway services; 
terminal driving services; card production and issuance services; home 
banking and bill payment services; group purchasing activities; EBT 
services; POB services; electronic data capture and interchange 
services; scrip services; terminal ownership; and terminal sale, 
rental, and maintenance services are data processing and transmission 
activities that the Board has determined by regulation to be closely 
related to banking. See 12 CFR 225.25(b)(7). See also Banc One 
Corporation, et al., 79 Federal Reserve Bulletin 1158 (1993) (Banc 
One); BayBanks, Inc., et al., 79 Federal Reserve Bulletin 547 (1993); 
Banc One Corporation, et al., 79 Federal Reserve Bulletin 156-57 
(1993); BankAmerica Corporation, 78 Federal Reserve Bulletin 299 
(1992). Applicants further maintain that the Board also has previously 
determined by regulation that the issuance and sale of travelers 
checks, and the proposed check verification services, are closely 
related to banking. See 12 CFR 225.25(b)(12) and (b)(22). In addition, 
Applicants maintain that the Board has previously determined by order 
that the proposed stored value card services are closely related to 
banking within the meaning of the BHC Act. See Banc One, supra. 
Applicants propose to conduct the foregoing activities in accordance 
with the limitations set forth in Regulation Y and the Board's prior 
orders.
    Applicants also maintain that dispensing stamps and full statement 
printing are activities closely related to banking because banks 
conduct these activities. In this regard, Applicants state that 
national banks may operate postal substations pursuant to rulings 
issued by the Office of the Comptroller of the Currency. See 12 CFR 
7.7482. Applicants further state that banks are required to deliver 
periodic account statements to customers under regulations issued by 
the Board. See 12 CFR 205.9 and 230.6. In addition, Applicants maintain 
that the proposed farecard activities are closely related to banking 
because farecards are a form of stored value card and serve as a medium 
of exchange.
    Proper Incident to Banking Standard
    In order to approve the proposal, the Board also 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).
    Applicants believe that the proposal will produce public benefits 
that outweigh any potential adverse effects. In particular, Applicants 
maintain that the proposal will enhance customer convenience and 
efficiency. In addition, Applicants state 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.
    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 
September 26, 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, the Federal Reserve Bank of New York, the Federal Reserve 
Bank of Boston, or the Federal Reserve Bank of Philadelphia.

    Board of Governors of the Federal Reserve System, effective 
August 29, 1994.

William W. Wiles,
Secretary of the Board.
[FR Doc. 94-21819 Filed 9-2-94; 8:45 am]
BILLING CODE 6210-01-F