[Federal Register Volume 61, Number 178 (Thursday, September 12, 1996)] [Notices] [Pages 48155-48156] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-23324] ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM Caisse Nationale de Credit Agricole, S.A. and Banque Indosuez; Application to Engage in Nonbanking Activities Caisse Nationale de Credit Agricole, S.A., Paris, France (CNCA), has given 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)(2) of the Board's Regulation Y (12 CFR 225.23(a)(2)) to retain its interest in Daniel Breen & Company, L.P., Houston, Texas (DBC), and thereby engage indirectly in providing investment advisory services pursuant to Sec. 225.25(b)(4) of Regulation Y, and its interest in Indosuez Carr Futures, Inc., Chicago, Illinois (ICF), and thereby engage indirectly in acting as a futures commission merchant (FCM) and providing related investment advisory services for financial futures contracts and options on futures contracts pursuant to Sec. 225.25(b)(18) and (19) of Regulation Y. CNCA and Banque Indosuez, Paris, France (BI) (together, Notificants) also have given notice pursuant to section 4(c)(8) of the BHC Act and Sec. 225.23(a)(2) of Regulation Y to acquire 100 percent of the voting shares of Breen Trust Company, Houston, Texas (BTC) and thereby engage indirectly in providing trust services pursuant to Sec. 225.25(b)(3) of Regulation Y, and pursuant to section 4(c)(8) and Sec. 225.23(a)(3) of Regulation Y to engage indirectly through ICF in acting as a FCM and providing related investment advisory services for non-financial futures contracts and options on non-financial futures contracts. Notificants propose to conduct the activities of DBC and BTC on a nationwide basis and the activities of ICF on a worldwide basis. Section 4(c)(8) of the BHC Act provides that a bank holding company may, with Board approval, engage in any activity that 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 service, that banks generally provide services that are operationally or functionally similar to the proposed service so as to equip them particularly well to provide the proposed service, or that banks generally provide services that are so integrally related to the proposed service 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 (1984). Notificants maintain that the Board previously has determined by regulation that several of the proposed activities, when conducted within limitations established by the Board, are closely related to banking for purposes of section 4(c)(8) of the BHC Act. See 12 CFR 225.25(b)(3) (performing certain functions or activities of a trust company); 12 CFR 225.25(b)(4) (providing investment and financial advice); 12 CFR 225.25(b)(18) (providing FCM services on a discount and full-service basis); and 12 CFR 225.25(b)(19) (providing investment advice on financial futures contracts and options on financial futures contracts). See also The Bessemer Group, Incorporated, 82 Fed. Res. Bull. 569 (1996); Meridian Bancorp, Inc., 80 Fed. Res. Bull. 736 (1994) (serving as general partner of and investing in an unregistered limited partnership). [[Page 48156]] Notificants assert that the Board has determined by order that the remaining proposed activity of ICF (acting as a FCM and providing related investment advisory services for non-financial futures contracts and options on financial futures contracts), when conducted within limitations established by the Board in previous orders, also is closely related to banking. See J.P. Morgan & Company Incorporated, 80 Fed. Res. Bull. 151 (1994); Bank of Montreal, 79 Fed. Res. Bull. 1049 (1993). Notificants have stated that they would engage in these activities in accordance with the limitations and conditions established by the Board in prior cases. In order to approve the proposal, the Board must determine that the proposed activities ``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 state that the proposal will produce public benefits that outweigh any potential adverse effects. In particular, Notificants maintain that the proposal will enhance competition and enable it to offer its customers a broader range of services. In addition, Notificants state that the proposed activities will not result in adverse effects such as an undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. 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 notice 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 to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, not later than September 19, 1996. Any request for a hearing on this notice 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 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 notice may be inspected at the offices of the Board of Governors or the Federal Reserve Bank of Chicago. Board of Governors of the Federal Reserve System, September 6, 1996. Jennifer J. Johnson, Deputy Secretary of the Board. [FR Doc. 96-23324 Filed 9-11-96; 8:45 am] BILLING CODE 6210-01-F