[Federal Register Volume 60, Number 232 (Monday, December 4, 1995)]
[Notices]
[Pages 62093-62095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29392]
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FEDERAL RESERVE SYSTEM
Dresdner Bank AG; Notice to Engage in Certain Nonbanking
Activities
Dresdner Bank AG, Frankfurt, Germany (Dresdner), has provided
notice, pursuant to section 4(c)(8) of the Bank Holding Company Act (12
U.S.C. 1843(c)(8)) (BHC Act) and section
[[Page 62094]]
225.23(a)(3) of the Board's Regulation Y (12 CFR 225.23(a)(3)), to
retain its interest in the United States operations of the Kleinwort
Benson Group, plc, London, England. These operations include engaging
in leasing activities, pursuant to 12 CFR 225.25(b)(5) through Parc
Tec, Inc, and engaging in investment advisory activities, pursuant to
12 CFR 225.25(b)(4) through Kleinwort Benson Investment Management
Americas, Inc., KB-LPL Holdings, Inc., and Kleinwort Benson U.S. Asset
Managers, LLC, all of New York, New York. Dresdner also proposes to
retain Kleinwort Benson (USA), Inc. (KB USA) and Kleinwort Benson North
America, Inc. (KB NA), both of New York, New York, and to establish a
section 20 subsidiary, Dresdner Kleinwort Benson, New York, New York
(DKB), through the combination of KB NA, KB USA, and Dresdner
Securities (USA), Inc., New York, New York (DSI), a wholly owned
subsidiary of Dresdner that currently operates, pursuant to section
8(c) of the International Banking Act of 1978 (IBA). DKB would 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 all types 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.
Dresdner proposes to engage in these activities throughout the
world.
Dresdner - NY, Incorporated, New York, New York (DNY), a subsidiary
of DSI that engages in certain securities dealing activities, would
continue to operate as a subsidiary of Dresdner, pursuant to section
8(c) of the IBA. Dresdner has stated that DNY and the U.S. operations
of Dresdner engaged in pursuant to section 4 of the BHC Act will remain
completely separate and will not engage in any business with, or on
behalf of, each other in the United States.
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 794, 806 (January 5, 1984).
Dresdner maintains that the Board previously has determined by
regulation that several of the proposed activities are closely related
to banking. See 12 CFR 225.25(b)(4), (b)(5), and (b)(15); and PNC
Financial Corp., 75 Fed. Res. Bull. 396 (1989) (PNC). Dresdner has
stated that it would engage in these activities in accordance with the
limitations and conditions established by the Board, except that
Dresdner has proposed that DKB not be subject to one of the disclosure
requirements relied on by the Board in PNC in authorizing a section 20
subsidiary to engage in full service brokerage activities. In
particular, Dresdner proposes that DKB not be required to disclose at
the time any brokerage order is taken whether DKB is acting as agent or
principal with respect to the security.
Dresdner also states that the other proposed activities have been
approved by Board order. See Bankers Trust New York Corporation, 75
Fed. Res. Bull. 829 (1989) (acting as agent in the private placement of
securities and purchasing and selling securities on the order of
investors as a riskless principal); Canadian Imperial Bank of Commerce,
76 Fed. Res. Bull. 158 (1990) (CIBC); J.P. Morgan & Co. Incorporated,
et al., 75 Fed. Res. Bull. 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 Fed. Res. Bull.
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).
In light of the fact that it has acquired a going concern, Dresdner
has requested authority to calculate DKB's compliance with the revenue
limitation imposed on section 20 companies on an annualized basis
during the first year after consummation of the acquisition and
thereafter on a rolling quarterly basis. See Dauphin Deposit
Corporation, 77 Fed. Res. Bull. 672 (1991). Dresdner has stated that
DKB would engage in the proposed activities in accordance with the
limitations and prudential guidelines established by the Board in
previous orders.
In order to approve the proposal, the Board must determine that the
proposed activities to be conducted by Dresdner ``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). Dresdner believes
that the proposal would produce public benefits that outweigh any
potential adverse effects. In particular, Dresdner maintains that the
proposal would not materially reduce competition in the relevant
markets and would enable Dresdner to offer its customers a broader
range of products.
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 December 29, 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.
[[Page 62095]]
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, November 28,
1995.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 95-29392 Filed 12-1-95; 8:45 am]
BILLING CODE 6210-01-F