[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