[Federal Register Volume 61, Number 16 (Wednesday, January 24, 1996)]
[Notices]
[Page 1936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-906]



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FEDERAL RESERVE SYSTEM

HSBC Holdings plc; Notice to Engage in Certain Nonbanking 
Activities;

    HSBC Holdings plc, London, England, and HSBC Holdings BV, 
Amsterdam, The Netherlands (together, 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 engage de novo through their 
wholly owned subsidiary, HSBC Securities, Inc., New York, New York 
(HSI), in underwriting and dealing in debt and equity securities, other 
than interests in open-end investment companies; trading futures, 
options on futures, and options on instruments eligible for investment 
by national banks, interest rates and non-U.S. sovereign debt 
securities; and acting as agent in the syndication of loans. 
Notificants propose to 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 (January 5, 1984).
    Notificants maintain that the Board previously has determined by 
order and regulation that the proposed activities are closely related 
to banking. See 12 CFR 225.25(b)(1); Swiss Bank Corporation, 81 Fed. 
Res. Bull. 185 (1995); Canadian Imperial Bank of Commerce, 76 Fed. Res. 
Bull. 158 (1990); 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,, 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). 
Notificants have stated that HSI would conduct these proposed 
activities within the limitations and prudential guidelines established 
by the Board. Notificants also have stated that HSI would not derive 
more than 10 percent of its total gross revenue from underwriting and 
dealing in bank-ineligible securities over any two-year period.
    In order to approve the proposal, the Board must determine that the 
proposed activities to be conducted by HSI ``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 February 7, 1996. 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 New York.

    Board of Governors of the Federal Reserve System, January 18, 
1996.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 96-906 Filed 1-23-96; 8:45 am]
BILLING CODE 6210-01-F