[Federal Register Volume 60, Number 36 (Thursday, February 23, 1995)]
[Notices]
[Pages 10084-10085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4348]
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FEDERAL RESERVE SYSTEM
Swiss Bank Corporation, Basel, Switzerland; Application to Engage
in Nonbanking Activities
Swiss Bank Corporation, Basel, Switzerland (Applicant) has applied,
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C.
Sec. 1843(c)(8)) (BHC Act) and 225.23(a)(3) of the Board's Regulation
Y (12 CFR 225.23(a)(3)), to acquire and retain indirect ownership,
control and power to vote up to 100 percent of the voting shares of
Brinson Partners, Inc. (Brinson Partners) and Brinson Trust Company
(Brinson Trust) and to thereby to engage in the following nonbanking
activities: (1) providing investment and financial advisory services;
(2) providing investment advice to nonaffiliated persons with respect
to (A) the purchase and sale of financial futures contracts and options
on such futures contracts as set forth in 12 CFR 225.25(b)(19), and (B)
the purchase and sale of those futures contracts and options on futures
contracts based on bonds, interest rates and stock and bond indexes
that the Board has approved previously; and (3) providing trust company
services. Applicant proposes to provide investment advice to clients
directly and through limited partnerships, for which Brinson Partners
would act as investment advisor and in some cases as general partner.
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, determines 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
standard 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.
A particular activity may be found to meet the ``closely related to
banking'' test if it is demonstrated that banks have generally provided
the proposed activity; that banks generally provide services that are
operationally or functionally similar to the proposed activity so as to
equip them particularly well to provide the proposed activity; or that
banks generally provide services that are so integrally related to the
proposed activity as to require their provision in a specialized form.
[[Page 10085]] National Courier Ass'n v. Board of Governors, 516 F.2d
1229, 1237 (D.C. Cir. 1975). 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 (1984).
The Board has previously approved, by regulation, providing
investment and financial advisory services, 12 CFR 225.25(b)(4)(i)-(v)
and (vi)(A)(1) and (2), providing investment advice to non-affiliated
persons with respect to the purchase and sale of financial futures
contracts and options on such futures contracts, 12 CFR 225.25(b)(19)
and trust services, 12 CFR 225.25(b)(3). Applicant has stated that it
would conduct these proposed activities subject to the requirements and
limitations of the Board's Regulation Y.
The Board also has previously determined by order that the
provision of investment advisory services with respect to financial
futures and options on futures contracts on bonds, interest rates and
stock and bond indexes is a permissible activity pursuant to Section
4(c)(8) of the BHC Act. See SR 93-27; National Westminster Bank PLC, 78
Federal Reserve Bulletin 953 (1992); Manufacturers Hanover Corporation,
76 Federal Reserve Bulletin 774 (1990); and The HongKong and Shanghai
Banking Corporation, 76 Federal Reserve Bulletin 770 (1990). The Board
has also approved the providing of investment advice through limited
partnerships. See Meridian Bancorporation, 80 Federal Reserve Bulletin
736 (1994). Applicant proposes to comply with commitments similar to
those relied on by the Board in Meridian, but seeks, in the
alternative, a determination that Brinson Partners does not control the
limited partnerships for purposes of the Bank Holding Company Act, or,
if it is deemed to control the partnerships, ``grandfather'' treatment
for four existing limited partnerships that Brinson Partners serves as
general partner.
In order to satisfy the proper incident to banking test, section
4(c)(8) of the BHC Act requires the Board to find that the performance
of the activities 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 interest, or unsound banking practices.
Applicant believes that the proposed activities will benefit the public
by providing access by customers of Applicant to the institutional
asset management experience and expertise of Brinson Partners and by
permitting Applicant to draw on such experience and expertise to
enhance its investment advisory products and services. Applicant
believes that competition will be fostered by enhancing the ability of
Applicant to compete in the asset management arena with sophisticated
competitors as a result of the combination of Applicant's existing
institutional asset management business with that of Brinson Partners
and Brinson Trust. Applicant further believes that the proposal will
not result in adverse effects.
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 March 8,
1995. 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, February 16,
1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-4348 Filed 2-22-95; 8:45 am]
BILLING CODE 6210-01-F