[Federal Register Volume 59, Number 234 (Wednesday, December 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30043]


[[Page Unknown]]

[Federal Register: December 7, 1994]


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FEDERAL RESERVE SYSTEM
 

The Industrial Bank of Japan, Limited, Tokyo, Japan; Application 
to Engage in Nonbanking Activities

    The Industrial Bank of Japan, Limited, Tokyo, Japan (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)(3) of the Board's 
Regulation Y (12 CFR 225.23(a)(3)) to purchase Aubrey G. Lanston & Co., 
Inc., New York, New York (Company), from Applicant's subsidiary bank, 
IBJ Schroder Bank & Trust Company, New York, New York, and thereby 
engage in the following activities: 1) executing and clearing, clearing 
without executing, executing without clearing, purchasing and selling 
through the use of omnibus trading accounts, and providing investment 
advisory services to institutional customers with respect to previously 
approved futures and options on futures contracts on financial 
commodities; 2) providing investment advice pursuant to 12 CFR 
225.25(b)(4); 3) underwriting and dealing in securities as permitted by 
12 CFR 225.25(b)(16); 4) trading foreign exchange in the spot market 
for nonhedging purposes; 5) trading over the counter options on U.S. 
Treasury securities for nonhedging purposes; 6) trading options, 
futures, options on futures and forward contracts in accordance with 
225.142 to hedge foreign exchange and securities positions; and 7) 
acting as an agent for affiliates in the purchase and sale of over the 
counter interest rate contracts, including swaps, forwards, options 
(including caps, collars and floors), and any other instrument that 
gives rise to similar credit risks, and providing the above-listed 
futures commission merchant services to affiliates. The activities will 
be conducted on a worldwide basis.
    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. 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 outweigh possible adverse 
effects.
    Applicant states that the Board previously has determined by order 
or regulation that all of the proposed activities are closely related 
to banking. See Northern Trust, 79 Federal Reserve Bulletin 723 (1994) 
and J.P. Morgan & Co. Incorporated, 80 Federal Reserve Bulletin 151 
(1994)(providing investment advisory, execution, clearance, and 
execution and clearance services with respect to futures and options on 
futures); 12 CFR 225.25(b)(4) (providing investment advisory services); 
12 CFR 225.25 (b)(16)(underwriting and dealing in bank-eligible 
securities); Swiss Bank Corporation, 77 Federal Reserve Bulletin 759 
(1991)(trading over the counter options on bank-eligible securities for 
nonhedging purposes); The Bank of Tokyo, 76 Federal Reserve Bulletin 
654 (1990)(trading foreign exchange in the spot market for nonhedging 
purposes); 12 CFR 225.142 and The Long Term Credit Bank, Limited, 79 
Federal Reserve Bulletin 347 (1993)(trading foreign exchange-related 
and bank-eligible securities-related instruments for hedging purposes 
in accordance with Sec.  225.142 of Regulation Y). Applicant has stated 
that Company would conduct the proposed activities in accordance with 
the limitations and conditions imposed by the Board in its orders and 
regulations. Applicant also maintains that the proposed activities that 
it would conduct on behalf of affiliates fall within section 4(c)(1)(C) 
of the BHC Act.
    In order to approve the proposal, the Board 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 would produce public benefits that outweigh any 
potential adverse effects. In particular, Applicant maintains that the 
proposal would produce operational and management efficiencies for 
Applicant's United States operations. In addition, Applicant states 
that the proposed activities would not result in adverse effects such 
as an undue concentration of resources, decreased or unfair 
competition, conflicts of interest, 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 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 
23, 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 New York.

    Board of Governors of the Federal Reserve System, December 1, 
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-30043 Filed 12-6-94; 8:45 am]
BILLING CODE 6210-01-F