[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