[Federal Register Volume 59, Number 211 (Wednesday, November 2, 1994)]
[Notices]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27162]
[[Page Unknown]]
[Federal Register: November 2, 1994]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20663; International Series Release No. 737; File No. 812-
9080]
Banque Paribas and Ottoman Bank, A.S.; Notice of Application
October 27, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
-----------------------------------------------------------------------
APPLICANTS: Banque Paribas and Ottoman Bank, A.S.
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
that would exempt applicants from section 17(f) of the Act.
SUMMARY OF APPLICATION: Applicants request an order permitting Ottoman
Bank to act as custodian in the Republic of Turkey for registered
investment companies.
FILING DATE: The application was filed on June 30, 1994, and amended on
September 16, 1994.
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 November 21,
1994, and should be accompanied by proof of service on 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
reason for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants, Ottoman Bank, A.S., Bankalar Cad. No.: 35-37, 80000
Karakoy--Istanbul/Turkey; Banque Paribas, 3, rue d'Antin, 75002 Paris,
France; c/o Anthony F. Essaye, Rogers & Wells, 607 14th Street NW.,
Washington, D.C. 20005.
FOR FURTHER INFORMATION CONTACT:
Bradley W. Paulson, Staff Attorney, at (202) 942-0147 or Robert A.
Robertson, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application is available for a fee from the
SEC's Public Reference Branch.
Applicants' Representations
1. Banque Paribas is a French banking institution that provides a
complete range of banking services. It is regulated by the Comite de la
Reglementation Bancaire (the Bank Regulation Committee), the Comite des
Etablissments de Credit (the Credit Establishment Committee), and the
Commission Bancaire (the Banking Commission), all of which are agencies
of the French Government. As of December 31, 1993, Banque Paribas had
consolidated shareholders' equity of U.S. $2.7 billion (excluding
minority interests).
2. Ottoman Bank is a Turkish banking organization. It is regulated
by the Turkish Treasury and Turkish Central Bank, both of which are
agencies of the Turkish Government.\1\ As of December 31, 1993, Ottoman
Bank had shareholders' equity of approximately U.S. $45 million. Banque
Paribas owns a 49.9% interest in Compagnie Financiere Ottomane, S.A., a
Luxembourg holding company, which, in turn, owns a 99.9% interest in
Ottoman Bank.
\1\Under a prior SEC order, Ottoman Bank has been acting as a
subcustodian of investment company assets for which Bankers Trust
Company, N.A. acts as custodian. In the Matter of Bankers Trust
Company, N.A., Investment Company Act Release Nos. 18046 (April 9,
1991) (notice) and 18085 (April 9, 1991) (order).
---------------------------------------------------------------------------
3. Applicants request on order to permit Ottoman Bank to maintain
custody of assets (``Assets'') of investment companies registered under
the Act other than those registered under section 7(b) of the Act
(``Investment Companies''). As used herein, the term ``Assets'' does
not include securities issued by the United States Government, any
state or political subdivision thereof, or any agency thereof, and does
not include securities issued by any entity organized under the laws of
the United States or any state thereof (other than certificates of
deposit, evidence of indebtedness, or other securities issued or
guaranteed by such an entity that have been issued and sold outside the
United States).
4. Ottoman Bank would accept deposits of Assets in Turkey pursuant
to a written, three-party agreement (the ``Agreement''). The Agreement
would be entered into by (a) Ottoman Bank, (b) Banque Paribas, and (c)
an Investment Company or its custodian. The Agreement would provide
that Ottoman Bank would act as custodian or subcustodian, and Banque
Paribas would be liable for any loss to the same extent as if Banque
Paribas had been required to provide custody services under such
agreement. Banque Paribas would not be liable for losses resulting from
political risk (e.g., exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife, or armed
hostilities) and other risks of loss (excluding bankruptcy or
insolvency of Ottoman Bank) for which neither Banque Paribas nor
Ottoman Bank would be liable (e.g., loss despite the exercise of
reasonable care, due to an act of God, or resulting from a nuclear
incident).
Applicants' Legal Analysis
1. Section 17(f) of the Act provides that a registered investment
company may maintain securities and similar assets in the custody of a
bank meeting the requirements of section 26(a) of the Act, a member
firm of a national securities exchange, the investment company itself,
or a system for the central handling of securities established by a
national securities exchange. Section 2(a)(5) of the Act defines
``bank'' to include banking institutions organized under the laws of
the United States, member banks of the Federal Reserve System, and
certain banking institutions or trust companies doing business under
the laws of any state or of the United States. Ottoman Bank does not
fall within the definition of ``bank'' as defined in the Act and, under
section 17(f), may not act as custodian for registered investment
companies.
2. Rule 17f-5 under the Act permits certain entities located
outside the United States to serve as custodian for investment company
assets. One such entity is a banking institution or trust company that
is incoroprated or organized under the laws of a country other than the
United States, that is regulated as such by the country's government or
an agency thereof, and that has shareholders' equity in excess of
U.S.$200 million. Banque Paribas qualifies as an eligible foreign
custodian under rule 17f-5. Ottoman Bank, however, does not qualify as
an eligible foreign custodian because it does not meet the minimum
shareholders' equity requirement.
3. Applicants request an order under section 6(c) of the Act that
would exempt them from the provisions of section 17(f) to the extent
necessary for Ottoman Bank to maintain custody of Investment Company
Assets. Applicants believe that the exemption should be granted because
it is necessary and appropriate in the public interest and is
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. Applicants believe
that the Agreement provides Investment Companies with the safety and
security of an eligible foreign custodian under section 17(f) and rule
17f-5.
Applicants' Conditions
1. The foreign custody arrangements with Ottoman Bank will comply
with the provisions of rule 17f-5 in all respects, except those
provisions relating to the minimum shareholders' equity requirement for
eligible foreign custodians.
2. Banque Paribas currently satisfies and will continue to satisfy
the minimum shareholders' equity requirement set forth in rule 17f-
5(c)(2)(i).
3. An Investment Company or a custodian for an Investment Company
will deposit Securities with Ottoman Bank only in accordance with a
three-party contractual agreement that will remain in effect at all
times during which Ottoman Bank fails to meet the requirement of rule
17f-5 relating to minimum shareholders' equity. Each agreement will be
a three-party agreement among (a) Banque Paribas, (b) Ottoman Bank, and
(c) the Investment Company or custodian of the Securities of the
Investment Company. Under the agreement, Ottoman Bank will undertake to
provide specified custodial or sub-custodial services. The agreement
will further provide that Banque Paribas will be liable for any loss,
damage, cost, expense, liability, or claim arising out of or in
connection with the performance by Ottoman Bank of its responsibilities
under the agreement to the same extent as if Banque Paribas had been
required to provide custody services under such agreement.
For the SEC, by the Division of Investment Management, under
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-27162 Filed 11-1-94; 8:45 am]
BILLING CODE 8010-01-M