[Federal Register Volume 59, Number 218 (Monday, November 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27989]


[[Page Unknown]]

[Federal Register: November 14, 1994]


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FEDERAL RESERVE SYSTEM
 

United Carolina Bancshares Corporation, Whiteville, North 
Carolina; Application to Engage in Nonbanking Activities

    United Carolina Bancshares Corporation, Whiteville, North Carolina 
(Applicant), has 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 retain its 
investment in Southeast Switch, Inc. (Company), which engages in data 
processing and related nonbanking activities pursuant to Regulation Y. 
Applicant currently owns indirectly 8.33 percent of the Class A shares 
of Company. Applicant also has joined the application filed by Bank 
South Corporation, et al., for Company to provide card production and 
related services to entities that are not members of the Honor 
electronic funds transfer (EFT) network. See 59 FR 51197 (October 7, 
1994).

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 FR 806 
(January 5, 1984).
    Applicant would engage through Company in those nonbanking 
activities in which Company may currently engage and in providing card 
production and related services to entities that are not members of the 
Honor electronic funds transfer (EFT) network, as proposed by Bank 
South et al. Applicant maintains that the proposed card production 
activities are closely related to banking within the meaning of the BHC 
Act. Specifically, Applicant maintains that the Board has previously 
authorized bank holding companies to provide data processing services 
to nonfinancial customers. See, e.g., Citicorp, 72 Federal Reserve 
Bulletin 497 (1986). In addition, Applicant maintains that the Board 
has authorized card embossing and issuance functions with respect to 
medical benefits cards issued by payer organizations. Banc One 
Corporation, 80 Federal Reserve Bulletin 139 (1994). Applicant also 
maintains that the Board has authorized card embossing and encoding 
functions with respect to stored value cards for nonfinancial 
institutions. Banc One Corporation, 79 Federal Reserve Bulletin 1158 
(1993). Applicant further maintains that the data embossed on the type 
of cards that are the subject of this application are banking, 
economic, or financial data that permit the cardholder to initiate or 
consummate a banking or financial transaction, and that the identity of 
the customer does not change the financial nature of the information 
being encoded and processed.

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).
    Applicant believes that the proposal will produce public benefits 
that outweigh any potential adverse effects. In particular, Applicant 
maintains that the proposal will enhance customer convenience and 
efficiency. In addition, Applicant states 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 December 
5, 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 Atlanta, or the Federal Reserve 
Bank of Richmond.

    Board of Governors of the Federal Reserve System, November 7, 
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-27989 Filed 11-10-94; 8:45 am]
BILLING CODE 6210-01-F