[Federal Register Volume 60, Number 183 (Thursday, September 21, 1995)]
[Notices]
[Pages 48997-48998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23374]
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FEDERAL RESERVE SYSTEM
Stichting Prioriteit ABN AMRO Holding; Notice to Engage in
Certain Nonbanking Activities
Stichting Prioriteit ABN AMRO Holding, Stichting
Administratiekantoor ABN AMRO Holding, ABN AMRO Holding N.V., and ABN
AMRO Bank N.V., all of Amsterdam, The Netherlands (collectively,
Notificants), have provided notice 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
retain their interest in Alfred Berg, Inc., New York, New York (Alfred
Berg), and thereby engage in the following activities:
1. Underwriting and dealing in debt and equity securities, other
than interests in open-end investment companies;
2. Acting as agent in the private placement of securities;
3. Acting as riskless principal in the purchase and sale of all
types of securities on behalf of customers;
4. Providing full service securities brokerage services; and
5. Providing investment advisory services.
Notificants propose that Alfred Berg engage in these activities
throughout the world.
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.
A particular activity may be found to meet the ``closely related to
banking'' test if it is demonstrated that banks generally have 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.
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).
Notificants maintain that the Board previously has determined by
order and regulation that the activities listed in paragraphs 2 through
5 are closely related to banking. See 12 CFR 225.25(b)(4) (investment
advisory services); 12 CFR 225.25(b)(15) and PNC Financial Corp, 75
Federal Reserve Bulletin 396 (1986) (full services securities
brokerage); Bankers Trust New York Corporation, 75 Federal Reserve
Bulletin 829 (1989) (acting as agent in the private placement of
securities and purchasing and selling securities on the order of
investors as a
[[Page 48998]]
riskless principal). Notificants have stated that Alfred Berg would
conduct these proposed activities within the limitations and prudential
guidelines established by the Board.
Notificants also maintain that the Board has determined that
underwriting and dealing, to a limited extent, in debt and equity
securities is closely related to banking. See Canadian Imperial Bank of
Commerce, 76 Federal Reserve Bulletin 158 (1990) (CIBC); J.P. Morgan &
Co. Incorporated, et al., 75 Federal Reserve Bulletin 192 (1989), aff'd
sub nom. Securities Industries Ass'n v. Board of Governors of the
Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); and Citicorp, et
al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities
Industry Ass'n v. Board of Governors of the Federal Reserve System, 839
F.2d 47 (2d Cir.), cert. denied, 486 U.S. 1059 (1988). Notificants have
stated that Alfred Berg would conduct the proposed activities within
the limitations and prudential guidelines established by the Board in
previous orders, with one exception. In particular, Notificants propose
to modify firewall number 19 of CIBC to permit Alfred Berg, in
connection with its market making activities, to purchase from and sell
to its foreign affiliates American Depositary Receipts (ADRs) and the
underlying foreign securities represented by the ADRs in such
quantities that are reasonably related to bona fide indications of
buying and selling interest of unaffiliated customers of Alfred Berg.
Notificants maintain that their proposal is consistent with the Board's
determination in CIBC to permit foreign affiliates of an underwriting
subsidiary, in certain circumstances, to purchase from the underwriting
subsidiary securities being underwritten by such subsidiary.
Notificants also state that the purchases and sales of ADRs and foreign
securities between Alfred Berg and its foreign affiliates would not be
for the purpose of providing liquidity or capital support to Alfred
Berg.
In order to approve the proposal, the Board must determine that the
proposed activities to be conducted by Alfred Berg ``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). Notificants believe
that the proposal would produce public benefits that outweigh any
potential adverse effects. In particular, Notificants maintain that the
proposal would enhance competition and enable Notificants to offer
their customers a broader range of products. Notificants also maintain
that their proposal would not result in any 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 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 October 19, 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 Chicago.
Board of Governors of the Federal Reserve System, September 14,
1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-23374 Filed 9-20-95; 8:45 am]
BILLING CODE 6210-01-F