[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