[Federal Register Volume 60, Number 227 (Monday, November 27, 1995)]
[Notices]
[Pages 58416-58417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28791]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21506; International Series Release No. 886; File No. 812-
9704]
Banque OBC--Odier Bungener Courvoisier and ABN AMRO Bank N.V.;
Notice of Application
November 17, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Banque OBC--Odier Bungener Courvoisier (``Banque OBC'') and
ABN AMRO Bank N.V. (the ``Bank'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
that would exempt applicants from section 17(f) of the Act.
SUMMARY OF APPLICATION: Applicants request an order to permit Banque
OBC, a subsidiary of the Bank, to act as custodian for investment
company assets in The Netherlands.
FILING DATE: The application was filed on August 3, 1995 and amended on
October 26, 1995.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on December 12,
1995 and should be accompanied by proof of service on the applicants,
in the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street NW., Washington, D.C. 20549.
Applicants, Banque OBC--Odier Bungener Courvoisier, 57 Avenue D'Iena,
75116 Paris, France; ABN AMRO Bank N.V., Foppingadreef 22, 1102 BS
Amsterdam, The Netherlands, c/o Edward G. Eisert, Schulte Roth & Zabel,
900 Third Avenue, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Staff Attorney, at (202) 942-0574, or Alison E. Baur,
Branch Chief, at (202) 942-0564 (Division of Investment Management,
Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch.
Applicants' Representations
1. The Bank is a Netherlands banking organization. ABN AMRO Holding
N.V. (``Holding'') is the parent company of the Bank, and together with
their other domestic and international subsidiaries and affiliates,
they constitute the ``ABN AMRO Group.'' As of December 31, 1994,
Holding held approximately 100% of the share capital of the Bank, and
the Bank accounted for approximately 100% of the total assets of
Holding. Both Holding and the Bank are regulated in The Netherlands by
De Nederlandsche Bank N.V., the Dutch Central Bank, on behalf of The
Netherlands Minister of Finance. At July 31, 1994, Holding ranked 18th
in the world, 6th in Europe and 1st in The Netherlands in terms of
assets among bank holding companies. At December 31, 1994, Holding had
shareholders' equity of approximately U.S. $11.9 billion.
2. Banque OBC, a wholly-owned subsidiary of the Bank, is a French
banking institution providing commercial banking, private banking,
asset management and merchant banking services to a clientele composed
of high net worth individuals, large and medium sized corporations and
foreign institutions. Banque OBC is governed by the French Banking Law
and is authorized to act, and is monitored by, the Minestere de
l'Economie et des Finances, the Banque de France (France's Central
Bank) and the Commission Bancaire (France's banking commission). Banque
OBC does not meet the minimum shareholders' equity requirement of rule
17f-5.
3. Applicants request an order to permit Banque OBC to maintain
custody of securities (``Securities'') of investment companies
registered under the Act other than those registered under section 7(d)
of the Act (``U.S. Investment Companies''). As used herein, the term
``Securities'' does not include securities issued or guaranteed by the
Government of the United States or by any state or any political
subdivision thereof, or any agency thereof, or by any entity organized
under the laws of the United States or any state thereof (other than
certificates of deposit, evidences of indebtedness and other
securities, issued or guaranteed by an entity so organized which have
been issued and sold outside the United States).
4. Banque OBC would accept deposits of Securities in France only in
accordance with a three-party contractual agreement (the
``Agreement''). Each Agreement will be a three-party agreement among
(a) the Bank, (b) Banque OBC, and (c) a U.S. Investment Company or its
custodian. The Agreement would provide that Banque OBC would provide
custodial or sub-custodial services, and the Bank would be liable for
any loss to the same extent as if the Bank had been required to provide
custody services under such Agreement.
Applicants' Legal Analysis
1. Section 17(f) of the Act provides that a registered investment
company may maintain securities and similar assets in the custody of a
bank meeting the requirements of section 26(a) of the Act, a member
firm of a national securities exchange, the investment company itself,
or a system for the central handling of securities established by a
national securities exchange. Section 2(a)(5) of the Act defines
``bank'' to include banking institutions organized under the laws of
the United States, member banks of the
[[Page 58417]]
Federal Reserve System, and certain banking institutions or trust
companies doing business under the laws of any state or of the United
States. Banque OBC does not fall within the definition of ``bank'' as
defined in the Act and, under section 17(f), may not act as custodian
for registered investment companies.
2. Rule 17f-5 under the Act permits certain entities located
outside the United States to serve as custodians for investment company
assets. Rule 17f-5(c)(2)(i) defines the term ``Eligible Foreign
Custodian'' to include a banking institution or trust company,
incorporated or organized under the laws of a country other than the
United States, that is regulated as such by that country's government
or an agency thereof, and that has shareholders' equity in excess of
U.S. $200 million.
3. The Bank qualifies as an eligible foreign custodian under rule
17f-5. Banque OBC, however, does not qualify as an eligible custodian
because it does not meet the minimum shareholders' equity requirement.
Accordingly, Banque OBC is not an eligible foreign custodian and,
absent exemptive relief, could not serve as a custodian for U.S.
Investment Company Securities.
4. Applicants request an order under section 6(c) of the Act that
would exempt them from section 17(f) to the extent necessary for Banque
OBC to maintain custody of U.S. Investment Company Securities.
Applicants believe that the exemption is necessary and appropriate in
the public interest because it would permit U.S. Investment Companies
and their custodians to have direct access to the custody services of
Banque OBC, and is consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act
because the Agreement provides U.S. Investment Companies with the
safety and security of an eligible foreign custodian under section
17(f) and rule 17f-5.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. The foreign custody arrangements with Banque OBC will comply
with the provisions of rule 17f-5 in all respects, except those
provisions relating to the minimum shareholders' equity requirement for
eligible foreign custodians.
2. The Bank satisfies and will continue to satisfy the minimum
shareholders' equity requirement set forth in rule 17f-5(c)(2)(i).
3. A U.S. Investment Company or a custodian for a U.S. Investment
Company will deposit Securities with Banque OBC only in accordance with
an Agreement that will remain in effect at all times during which
Banque OBC fails to meet the requirement of rule 17f-5 relating to
minimum shareholders' equity. Each Agreement will be a three-party
agreement among (a) the Bank, (b) Banque OBC, and (c) a U.S. Investment
Company or the custodian of the Securities of the U.S. Investment
Company. Under the Agreement, Banque OBC will undertake to provide
specified custodial or sub-custodial services. The Agreement will
further provide that the Bank will be liable for any loss, damage,
cost, expense, liability, or claim arising out of or in connection with
the performance by Banque OBC of its responsibilities under the
Agreement to the same extent as if the Bank had been required to
provide custody services under such Agreement. Under the Agreement,
neither Banque OBC nor the Bank would be liable for any losses that
result from political risk (e.g., exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities) and other risks of loss (excluding the
bankruptcy or insolvency of Banque OBC) for which Banque OBC would not
be liable under rule 17f-5 (e.g., despite the exercise of reasonable
care, loss due to acts of God, nuclear incident, and the like).
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-28791 Filed 11-24-95; 8:45 am]
BILLING CODE 8010-01-M