[Federal Register Volume 59, Number 211 (Wednesday, November 2, 1994)]
[Rules and Regulations]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27057]


[[Page Unknown]]

[Federal Register: November 2, 1994]


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FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket No. R-0852]

 

Applications Under Regulation Y

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Interim rule with request for comments.

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SUMMARY: These rules are intended to implement the simplified notice 
procedures recently established under section 346 of the Riegle 
Community Development and Regulatory Improvement Act of 1994 for bank 
holding companies proposing to engage de novo or through an acquisition 
in nonbanking activities. Because Section 346 implements this procedure 
immediately, the Board has proposed the following as an interim rule 
that will take effect immediately and will apply to all notices filed 
subsequent to enactment of Section 346. The Board also is seeking 
comments on the interim rule, and will amend the rule as needed to 
address the comments received. The Board is currently developing 
additional initiatives to reduce the regulatory burden associated with 
its application and notice procedures, and the Board invites comment on 
any suggestions in furtherance of these initiatives.

DATES: Interim rule effective on November 2, 1994, comments must be 
received by December 5, 1994.

ADDRESSES: Comments should refer to Docket No. R-0852 and may be mailed 
to William W. Wiles, Secretary, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 
20551. Comments also may be delivered to Room B-2222 of the Eccles 
Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the Board's 
Security Control Room inside the Eccles Building courtyard on 20th 
Street (between Constitution Avenue and C Street, NW) anytime. Comments 
may be inspected in room MP-500 of the Martin Building between 9 a.m. 
and 5 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's 
rules regarding availability of information.

FOR FURTHER INFORMATION CONTACT: Scott G. Alvarez, Associate General 
Counsel (202/452-3583), or Terence F. Browne, Senior Attorney (202/452-
3707), Legal Division; or Don E. Kline, Associate Director (202/452-
3421), Nicholas A. Kalambokidis, Supervisory Financial Analyst (202/
452-3830), or Larry R. Cunningham, Senior Financial Analyst (202/452-
2701), Division of Banking Supervision and Regulation of the Board of 
Governors of the Federal Reserve System. For the hearing impaired only, 
Telecommunications Device for the Deaf (TDD), Dorothea Thompson (202/
452-3544).

SUPPLEMENTARY INFORMATION: Section 4 of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843) (BHC Act) prohibits bank holding companies from 
acquiring or retaining shares of any company that is not a bank or 
engaging in any activity other than managing and controlling banks, 
except under certain circumstances. The primary exception permits bank 
holding companies to conduct activities and acquire companies engaged 
solely in activities the Board has determined to be closely related to 
banking and a proper incident thereto. See 12 U.S.C. 1843(c)(8).
    Section 346 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (Pub. L. No. 103-325, section 346, 108 Stat. 
2160, 2239 (1994)(``Section 346'')) amends section 4 of the BHC Act to 
establish a new notice procedure for obtaining Board approval under 
sections 4(a)(2) and 4(c)(8) of the BHC Act.\1\ Under Section 346, a 
proposal requiring Board approval under section 4(a)(2) or 4(c)(8) may 
be consummated 60 days after providing the Board with a complete 
written notice of the proposal, unless the notice period is extended as 
provided in the statute. Section 346 also permits proposals to be 
consummated at anytime during this notice period if approved by the 
Board during this period.

    \1\Section 346 establishes a notice procedure for situations in 
which prior Board approval is required under section 4(c)(8) or 
4(a)(2) of the BHC Act, and was not intended to impose any new 
approval requirements on transactions that may otherwise be 
consummated under section 4 of the BHC Act without Board approval.
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    The proposed interim rule would replace the current application 
procedure of section 4(c)(8) of the BHC Act with the new notice 
procedure.\2\ The rule would streamline the current procedure for 
obtaining Board approval for nonbanking proposals in several respects. 
In particular, the proposed revisions would:

    \2\All applications and notices to engage in nonbanking 
activities that were filed with a Reserve Bank prior to September 
23, 1994 will continue to be processed under the existing rules.

     Establish a simplified notice procedure for action on 
proposals to engage de novo or through an acquisition in a listed 
activity (i.e., an activity on the Regulation Y list of permissible 
nonbanking activities\3\) within 30 days of receipt of the notice by 
the Reserve Bank;

    \3\12 CFR 225.25.
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     Establish a notice procedure for action on proposals to 
engage de novo or through an acquisition in an un-listed activity or 
a new activity within 60 days of filing of a complete notice;
     Eliminate the current 28 day pre-acceptance period for 
notices involving nonbanking proposals;
     Reduce from 30 days to 15 days the public comment 
period for proposals involving listed activities; and
     Specify in the regulation the core information that 
bank holding companies must provide for a nonbanking proposal.

    These revisions to the current application procedures should result 
in an overall reduction in the total period of time involved in 
reviewing nonbanking proposals, and in a reduction in the paperwork 
burden associated with proposals to engage in nonbanking activities. 
Comment is invited on all aspects of this proposal.

Notice Procedure Under Interim Rule

    To implement these statutory changes, the Board proposes to amend 
Regulation Y to replace the application procedures for obtaining 
approval to engage in nonbanking activities with a notice procedure. 
The interim rule contemplates action by the Reserve Bank on nonbanking 
proposals involving listed activities within 30 days after a notice 
containing all of the information required in the rule has been 
received by the Reserve Bank, in cases that qualify for Reserve Bank 
action, and within 60 days of that date in cases involving any 
previously approved activity that are subject to Board action. While 
the rule also indicates that the Board will seek to act on notices 
involving new activities within 60 days of receipt of the notice by the 
Reserve Bank, proposals that involve activities that have not been 
previously approved by the Board often require substantial information 
and may continue to require a greater processing period.
    The interim rule specifies the different types of information 
required for proposals to engage de novo in listed activities, 
proposals to acquire a company engaged in listed activities, and 
proposals to engage in activities not previously approved by regulation 
(``unlisted activities'').

Listed Activities

    The proposed rule contemplates that proposals to engage de novo or 
to acquire a company engaged in a listed activity will be approved 
within 30 days of the original date of filing of the notice, even if 
additional information is subsequently requested by the Reserve Bank or 
the Board. Upon receipt of a notice to engage in or to acquire a 
company engaged in a listed activity (or an activity previously 
approved by order), the Reserve Bank shall immediately notify the 
Board, and the Board will publish notice of the proposal in the Federal 
Register inviting public comment for a period of 15 days. Within 30 
calendar days after receipt by the Reserve Bank of a notice filed under 
the interim rule, the Reserve Bank must approve the notice, extend the 
notice period for 15 calendar days, or refer the notice to the Board 
for decision because a substantive comment on the proposal has been 
received or action on the notice by the Reserve Bank is not 
appropriate. The Reserve Bank also may, within 15 calendar days of 
receipt of the notice, return the notice if it is informationally 
incomplete. Under the interim rule, the return of a notice by a Reserve 
Bank under such circumstances is deemed action on the notice.

Unlisted Activities

    As is the practice under the current rules, proposals to engage in 
activities not previously approved by the Board by regulation or order 
will be published by the Board in the Federal Register within 10 
business days of acceptance by the Reserve Bank, unless the Board 
determines to extend this 10-day period for an additional 30 days. 
Public notice of proposals to engage in such new activities shall 
invite comment for a period of generally 30 days, or if the Board 
determines that the notificant has not adequately demonstrated that the 
proposed activity is so closely related to banking as to be a proper 
incident thereto, the Board may return the notice and explain the 
reasons for its determination.
    The interim rule provides that the Board will attempt to act on all 
cases referred for Board action within 60 days of the date the notice 
is received by the Reserve Bank. As noted above, proposals that involve 
new activities that have not been previously approved by the Board are 
likely to require a greater processing period. In the event the Board 
does not act on the notice within 60 days of receipt by the Reserve 
Bank, the Board will notify the bank holding company, and explain the 
reasons for needing additional time as well as provide an anticipated 
date by which the Board expects to act on the notice.

Elimination of Pre-Acceptance Review Period

    As noted above, the interim rule eliminates the pre-acceptance 
review procedure currently contained in Regulation Y for proposals to 
engage in nonbanking activities. This procedure established a defined 
period of up to 28 days during which an applicant and the Reserve Bank 
could identify and address significant issues prior to the filing of a 
final application. This procedure has been particularly beneficial to 
the processing of complex proposals and applications to engage in 
activities not previously approved by the Board by regulation or order, 
where information requests often must be tailored to the specific 
proposal.
    While the elimination of pre-acceptance procedures should shorten 
the review process, the Board recognizes the utility of a pre-
acceptance procedure and anticipates that there will be certain 
proposals that could benefit from some form of pre-acceptance review. 
The Board invites comments as to whether some form of pre-notice review 
procedure should be reinstated in the final regulations.

Public Notice

    Regulation Y currently provides that (with the exception of 
proposals processed under the abbreviated procedure for small 
acquisitions) all proposals to engage in previously approved nonbanking 
activities must be published in the Federal Register and provide for a 
public comment period of not more than 30 days. Under the interim rule, 
the public comment period has been shortened from 30 days to 15 days 
for proposals to engage in activities previously approved by the Board 
by regulation or order. The interim rule also provides that the Reserve 
Bank may not act on a notice before the fifth business day following 
the close of the public comment period unless an emergency exists 
requiring expedited or immediate action.
    Section 346 authorizes the Board to prescribe shorter notice 
periods by regulation for particular activities or transactions. The 
Board invites comment on whether further shortening of the comment 
period is appropriate, particularly for notices to engage in activities 
previously approved by the Board. In particular, the Board requests 
comment on a proposal to reduce the public comment period to 5 calendar 
days for proposals that involve listed activities and/or activities 
that have been previously approved by Board order. This would enable 
the Reserve Banks to act on proposals that raise no substantive issues 
well within the 30-day target.
Statutory Period

    The interim rule incorporates the provisions of Section 346 that 
establish the permissible length of the notice period. Under the 
interim rule, a notice is deemed approved by operation of law 60 days 
after receipt of a complete notice, unless extended as provided in 
Section 346. As provided in the statute, the interim rule provides that 
a notice is deemed complete when it contains all information required 
in the interim rule and all other information requested by the Board or 
the Reserve Bank in connection with the notice. The Board may extend 
the notice period for an additional 30 days upon notice to the bank 
holding company. If the proposal involves an unlisted activity, the 
Board may extend the notice period for a 90-day period in addition to 
the 30-day extension, provided the Board notifies the bank holding 
company and explains the reasons for this additional extension. Further 
extensions are only permissible in the event the Board determines to 
conduct a hearing on the proposal, or the notificant has consented to 
an extension or tolling of the notice period.
    The interim rule adopts the provision in Section 346 that permits 
the Board to request additional information about a proposal at any 
time during the notice period. The rule also includes the provision of 
Section 346 that provides that the Board may deny any notice if the 
notificant neglects, fails, or refuses to furnish the Board all the 
information required by the Board.

Abbreviated Notice Procedure for Small Acquisitions

    The interim rule retains the current abbreviated notice procedure 
contained in Regulation Y for small acquisitions of assets or shares of 
companies engaged in activities previously approved by the Board by 
regulation.\4\ Currently, this abbreviated notice procedure may be used 
for acquisitions where neither the book value of the assets to be 
acquired nor the gross consideration to be paid for the securities or 
assets exceeds the greater of (i) $15 million or (ii) 5 percent of the 
consolidated assets of the acquiring company up to a maximum of $100 
million. The interim rule retains this abbreviated notice procedure for 
small acquisitions of companies engaged in laundry list activities, and 
increases the size limitation for acquisitions that qualify for this 
procedure from a maximum of $100 million to a maximum of $300 million.

    \4\This procedure is only available to bank holding companies 
that meet the Board's Capital Adequacy Guidelines and are proposing 
to acquire a company engaged in activities for which the bank 
holding company has previously received System approval.
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    The primary benefit of the abbreviated notice procedure for small 
acquisitions is the shortened approval process realized by opting to 
publish public notice of the proposal in local newspapers in the 
communities affected by the proposal. Since this provision of 
Regulation Y was adopted, notificants have increasingly opted to 
publish notice of the proposed acquisition in the Federal Register in 
order to conduct the nonbanking activity nationwide or throughout a 
geographic area so large that public notice of the proposal by means of 
local newspaper publication is unduly expensive or impracticable. 
Moreover, the streamlined notice procedure established by the interim 
rule would effectively shorten the notice period for all acquisitions 
involving listed activities.
    In light of this, the Board invites comment as to whether the 
abbreviated notice procedure for small acquisitions should be retained, 
eliminated, or amended.

Simplified Notice Procedures

    The Board believes that these proposals will substantially reduce 
the burden associated with the approval requirement under section 4 of 
the BHC Act without resulting in unsafe and unsound banking practices. 
Because the provisions of Section 346 are implemented immediately, the 
Board is proposing to adopt the following regulation as an interim rule 
in connection with nonbanking activities conducted pursuant to section 
4 of the BHC Act. The Board invites comments on all aspects of this 
interim rule, and will amend this rule as needed to reflect the 
comments received. The Board also invites suggestions on other means of 
reducing the regulatory burden associated with the System's application 
and notices procedures.

Regulatory Flexibility Act Analysis

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the Board does not believe that these changes will 
have a significant adverse economic impact on a substantial number of 
small entities. This interim rule will reduce the regulatory burden on 
bank holding companies imposed by the Board's procedures, and the Board 
is inviting public comment on additional ways to reduce regulatory 
burden.

Paperwork Reduction Act Analysis

    No collections of information pursuant to section 3504(h) of the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in these 
changes, and comment is invited on a proposal that would reduce the 
current information collection requirements imposed in connection with 
certain applications.

List of Subjects in 12 CFR Part 225

    Administrative practice and procedure, Banks, Banking, Federal 
Reserve System, Holding companies, Reporting and recordkeeping 
requirements, Securities.

    For the reasons set forth in the preamble, the Board amends 12 CFR 
part 225 as follows:

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL 
(REGULATION Y)

    1. The authority citation for part 225 continues to read as 
follows:

    Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-1, 
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3907, 3909, 3310, and 
3331-3351.

    2. Sections 225.23 and 225.24 are revised to read as follows:


Sec. 225.23  Procedures for notices to engage in nonbanking activities.

    (a) Notice required for nonbanking activities. A notice for the 
Board's prior approval under Sec. 225.21(a) to engage in or acquire a 
company engaged in a nonbanking activity shall be filed by a bank 
holding company (including a company seeking to become a bank holding 
company) with the appropriate Reserve Bank in accordance with this 
section and the Board's Rules of Procedure (12 CFR 262.3).
    (1) Engaging de novo in listed activities. A bank holding company 
seeking to commence or to engage de novo, either directly or through a 
subsidiary, in a nonbanking activity listed in Sec. 225.25 shall file a 
notice containing the following:
    (i) A description of the activities to be conducted;
    (ii) The identity of the company that will conduct the activity; 
and
    (iii) If the notificant proposes to conduct the activity through an 
existing subsidiary, a description of the existing activities of the 
subsidiary.
    (2) Acquiring company engaged in listed activities. A bank holding 
company seeking to acquire or control voting securities or assets of a 
company engaged in a nonbanking activity listed in Sec. 225.25 shall 
file a notice containing the following:
    (i) A description of the proposal, including a description of each 
proposed activity, and the effect of the proposal on competition among 
entities engaging in each proposed activity;
    (ii) The identity of any entity involved in the proposal, and if 
the notificant proposes to conduct the activity through an existing 
subsidiary, a description of the existing activities of the subsidiary;
    (iii) A statement of the public benefits that can reasonably be 
expected to result from the proposal; and
    (iv) A description of the terms and sources of funds for the 
transaction; a copy of any pertinent purchase agreement(s); balance 
sheet and income statements for the most recent fiscal quarter and 
year-end for any company to be acquired; parent company only and 
consolidated pro forma balance sheets for the notificant as of the most 
recent fiscal quarter; and calculations of pro forma consolidated risk-
based capital ratios and leverage ratio for the notificant as of the 
most recent fiscal quarter.
    (3) Engaging in or acquiring company to engage in unlisted 
activities. A bank holding company seeking to commence or to engage de 
novo, or to acquire or control voting securities or assets of a company 
engaged in, any activity not listed in Sec. 225.25 shall file a notice 
containing the following:
    (i) Evidence that the proposed activity is so closely related to 
banking or managing or controlling banks as to be a proper incident 
thereto;
    (ii) A commitment to comply with all conditions and limitations 
that have been established by the Board governing the proposed 
activity; and
    (iii) The information required in paragraph (a)(2) of this section, 
as appropriate.
    (b) Notice provided to Board. The Reserve Bank shall immediately 
send to the Board a copy of any notice received under paragraphs (a)(2) 
or (a)(3) of this section.
    (c) Notice to public--(1) Listed activities and activities approved 
by order. A Reserve Bank that receives a notice involving an activity 
listed in Sec. 225.25 or previously approved by the Board by order 
shall immediately send notice of receipt of the proposal to the Board 
for publication in the Federal Register. The Federal Register notice 
shall invite public comment on the proposal for a period of 15 days.
    (2) New activities--(i) In general. In the case of a notice under 
this section involving an activity that is not listed in Sec. 225.25 
and that has not been previously approved by the Board by order, the 
Board shall send notice of the proposal to the Federal Register for 
publication, unless the Board determines that the notificant has not 
demonstrated that the activity is so closely related to banking or to 
managing or controlling banks as to be a proper incident thereto. The 
Federal Register notice shall invite public comment on the proposal for 
a reasonable period of time, generally for 30 days.
    (ii) Time for publication. The Board shall send the notice required 
under this paragraph to the Federal Register within 10 business days of 
acceptance by the Reserve Bank. The Board may extend the 10-day period 
for an additional 30 calendar days upon notice to the notificant. In 
the event notice of a proposal is not published for comment, the Board 
shall inform the notificant of the reasons for the decision.
    (d) Action on notices--(1) Reserve Bank action.--(i) In general. 
Within 30 calendar days after receipt by the Reserve Bank of a notice 
filed pursuant to paragraphs (a)(1) or (a)(2) of this section, the 
Reserve Bank shall:
    (A) Approve the notice; or
    (B) Refer the notice to the Board for decision because substantive 
adverse comment has been received or because action under delegated 
authority is not appropriate.
    (ii) Return of incomplete notice. Within 15 calendar days of 
receipt, the Reserve Bank may return any notice as informationally 
incomplete that does not contain all of the information required by 
this subpart. The return of such a notice shall be deemed action on the 
notice.
    (iii) Extension of period for action. The Reserve Bank may, within 
the 30-day period provided in this paragraph for action on a notice, 
extend such 30-day period for an additional 15 calendar days.
    (iv) Notice of action. The Reserve Bank shall promptly notify the 
bank holding company of any action, referral or extension under this 
paragraph.
    (v) Close of public comment period. The Reserve Bank shall not 
approve any notice under this paragraph prior to the fifth business day 
after the close of the public comment period, unless an emergency 
exists that requires expedited or immediate action.
    (2) Board action--(i) Internal schedule. The Board seeks to act on 
every notice referred to it for decision within 60 days of the date 
that the notice is filed with the Reserve Bank. If the Board is unable 
to act within this period, the Board will notify the notificant and 
explain the reasons and the date by which the Board expects to act.
    (ii) Required time limit for Board action. The Board shall act on 
any notice under this section that is referred to it for decision 
within 60 calendar days after the submission of a complete notice.
    (iii) Extension of required period for action--(A) In general. The 
Board may extend the 60-day period required for Board action under 
paragraph (d)(2)(ii) of this section for an additional 30 days upon 
notice to the notificant.
    (B) Unlisted activities. If a notice involves a proposal to engage 
in an activity that is not listed in Sec. 225.25, the Board may extend 
the period required for Board action under paragraph (d)(2)(ii) of this 
section for an additional 90 days. This 90-day extension is in addition 
to the 30-day extension period provided in paragraph (d)(2)(iii)(A) of 
this section. The Board shall notify the notificant that the notice 
period has been extended and explain the reasons for the extension.
    (3) Requests for additional information. The Board or the Reserve 
Bank may at any time request any additional information that either 
believes is needed for a decision on any notice under this subpart.
    (4) Tolling of period. The Board or the Reserve Bank, as the case 
may be, may at any time extend or toll the time period for action on a 
notice for any period with the consent of the notificant.
    (5) Approval through failure to act. A notice under this subpart 
shall be deemed to be approved at the conclusion of the period that 
begins on the date the complete notice is received by the Reserve Bank 
or the Board and that ends 60 calendar days plus any applicable 
extension and tolling period thereafter.
    (6) Complete notice. A notice shall be deemed to be complete for 
purposes of this subpart at such time as it contains all information 
required by this subpart and all other information requested by the 
Board or the Reserve Bank in connection with the particular notice.
    (e) Expedited procedure for small acquisitions--(1) Filing notice. 
As an alternative to the notice procedure of paragraph (a)(2) of this 
section, a bank holding company may satisfy the notice requirement of 
this section in connection with the acquisition of voting securities or 
assets of a company engaged in an activity listed in Sec. 225.25 by:
    (i) Providing the appropriate Reserve Bank with a description of 
the transaction; and either
    (ii) Submitting a copy of a newspaper notice in the form prescribed 
by the Board; or
    (iii) Requesting the Board to publish notice of the proposal in the 
Federal Register as provided in paragraph (c)(1) of this section.
    (2) Contents of publication. A newspaper notice under this 
subsection shall be published in a newspaper of general circulation in 
the areas to be served as a result of the acquisition and shall provide 
an opportunity for interested persons to comment on the notice for a 
period of at least 10 calendar days.
    (3) Criteria for use of expedited procedure. The procedure in this 
paragraph is available only if:
    (i) Neither the book value of the assets to be acquired nor the 
gross consideration to be paid for the securities or assets exceeds the 
greater of:
    (A) $15 million; or
    (B) Five percent of the consolidated assets of the acquiring 
company up to a maximum of $300 million;
    (ii) The bank holding company has previously received Board 
approval to engage in the activity involved in the acquisition; and
    (iii) The bank holding company meets the Board's Capital Adequacy 
Guidelines (Appendix A of subparts A through E of this part).
    (4) Action on notice. Within 5 business days after the close of the 
comment period specified in the Federal Register notice or within 15 
calendar days after receipt by the Reserve Bank of the newspaper 
notice, the Reserve Bank shall either approve the proposal or refer it 
to the Board for decision if action under delegated authority is not 
appropriate. The Board shall act in accordance with paragraph (d)(2) of 
this section on a notice under this paragraph that is referred to it 
for decision. The Reserve Bank, upon written notice to the notificant, 
may extend the time period for approval under this paragraph for a 
reasonable period of time not to exceed 30 days.
    (f) Hearings--(1) Procedure to request hearing. Any request for a 
hearing on a notice under this section shall comply with the provisions 
of 12 CFR 262.3(e).
    (2) Determination to hold hearing. The Board may order a formal or 
informal hearing or other proceeding on a notice as provided in 12 CFR 
262.3(i)(2). The Board shall order a hearing only if there are disputed 
issues of material fact that cannot be resolved in some other manner.
    (3) Extension of period for hearing. The Board may extend the time 
for action on any notice for such time as is reasonably necessary to 
conduct a hearing and evaluate the hearing record. Such extension shall 
not exceed 91 calendar days after the date of submission to the Board 
of the complete record on the notice. The procedures for computation of 
the 91-day rule as set forth in Sec. 225.14(g) apply to notices under 
this subpart that involve hearings.
    (g) Notice to expand or alter nonbanking activities--(1) De novo 
expansion. A notice under paragraph (a)(1) of this section is required 
to open a new office or to form a subsidiary to engage in, or to 
relocate an existing office engaged in, a nonbanking activity that the 
Board has previously approved for the bank holding company under this 
regulation, only if:
    (i) The Board's prior approval was limited geographically;
    (ii) The activity is to be conducted in a country outside of the 
United States and the bank holding company has not previously received 
prior Board approval under this regulation to engage in the activity in 
that country; or
    (iii) The Board or appropriate Reserve Bank has notified the 
company that a notice under paragraph (a)(1) of this section is 
required.
    (2) Activities outside United States. With respect to activities to 
be engaged in outside the United States that require approval under 
this subpart, the procedures of this section apply only to activities 
to be engaged in directly by a bank holding company that is not a 
qualifying foreign banking organization or by a nonbank subsidiary of a 
bank holding company approved under this subpart. Regulation K (12 CFR 
part 211) governs other international operations of bank holding 
companies.
    (3) Alteration of nonbanking activity. A notice under paragraph 
(a)(1) of this section is required to alter a nonbanking activity in 
any material respect from that considered by the Board in acting on the 
application or notice to engage in the activity.
    (h) Emergency thrift institution acquisitions. In the case of a 
notice to acquire a thrift institution, the Board may modify or 
dispense with the public notice and hearing requirements of this 
section if the Board finds that an emergency exists that requires the 
Board to act immediately and the primary Federal regulator of the 
institution concurs.


Sec. 225.24  Factors considered in acting on nonbanking proposals.

    (a) In general. In evaluating a notice under Sec. 225.23, the Board 
shall consider whether the performance by the notificant of the 
activities can reasonably be expected to produce benefits to the public 
(such as greater convenience, increased competition, and gains in 
efficiency) that outweigh possible adverse effects (such as undue 
concentration of resources, decreased or unfair competition, conflicts 
of interest, and unsound banking practices).
    (b) Financial and managerial resources. Consideration of the 
factors in paragraph (a) of this section includes an evaluation of the 
financial and managerial resources of the notificant, including its 
subsidiaries, and any company to be acquired, and the effect of the 
proposed transaction on those resources.
    (c) Competitive effect of de novo proposals. Unless the record 
demonstrates otherwise, the commencement or expansion of a nonbanking 
activity de novo is presumed to result in benefits to the public 
through increased competition.
    (d) Denial for lack of information. The Board may deny any notice 
submitted under this subpart if the notificant neglects, fails, or 
refuses to furnish all information required by the Board.

    By order of the Board of Governors of the Federal Reserve 
System, effective October 26, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-27057 Filed 11-1-94; 8:45 am]
BILLING CODE 6210-01-P