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FED ER A L R ESERVE BANK
O F N E W YORK

r Circular No. 7 3 0 7 1
L.

December 27, 1973

J

B A N K H O L D IN G C O M P A N IE S
U n d e rw ritin g of D eductible P ortion of Bankers B lanket Bond Insurance

To All Bank Holding Companies, and Others Concerned,
in the Second Federal Reserve District:

Following is the text o f a statement issued December 18 by the Board o f Governors o f the
Federal Reserve System:

The Board of Governors of the Federal Reserve System said today it will consider possible addition of
underwriting the deductible portion of bankers blanket bond insurance to activities permissible to bank holding
companies. Comment will be received through January 24, 1974.
The Board will consider the question in connection with an application from Chase Manhattan Cor­
poration, New York, to acquire the voting shares of Chase Manhattan Captive Insurance Co., Denver.
The application states that the proposed subsidiary would engage in underwriting of insurance against
losses due to criminal acts of various kinds and other insurance of the type afforded to banks by bankers
blanket bond insurance. As in automobile and other insurance, the premium on bankers blanket bond insurance
is lowered when the insured accepts part of the risk in the form of a previously agreed deduction from the
amount of the loss that the insurer is obliged to pay. The proposed subsidiary would insure Chase Manhattan
Corporation, holding company for Chase Manhattan Bank, and certain of its affiliates, against losses arising
from the deductible portion of Chase Manhattan Corporation’s bankers blanket bond insurance.
The Board is publishing notice of receipt of the application in the Federal Register. The Board invited
comment on the question whether the proposed activity is closely related to banking, and on the question
whether it would result in benefits to the public outweighing possible adverse effects. Any views or requests
for a hearing should be addressed to the Secretary of the Board (Washington, D. C. 20551) not later than
January 25, 1974.
Printed on the reverse side is the text of the Board’s Order in this matter. Comments thereon
should be submitted by January 25, 1974, and may be sent to our Bank Applications Department.




A

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H

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President.
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BANK HOLDING COMPANIES
A p p licatio n to Engage in the U n d e rw ritin g of Bankers B lanket Bond Insurance
(D ed u ctib le P ortion O n ly ) ; and Possible R ule M akin g W ith Respect Thereto

The Board of Governors has received the following
application filed pursuant to section 4 (c)(8 ) of the
Bank Holding Company Act (12 U.S.C. 1843(c)(8))
and §225.4 (b )(2) of the Board’s Regulation Y (12
CFR 225.4(b) (2 )) for prior approval to acquire shares
of a company which will engage de novo in under­
writing the deductible portion of bankers blanket bond
insurance:
The Chase Manhattan Corporation, New York, New
York, has applied for permission to acquire voting
shares of Chase Manhattan Captive Insurance Co.,
Denver, Colorado.
Applicant states that the proposed subsidiary would
engage in the activity of underwriting insurance for
itself and certain of its affiliates against risks arising
out of infidelity of employees, burglary, robbery, lar­
ceny or mysterious disappearance of property from
premises or in transit, forgery, alteration or counterfeit
and other insurance of the type afforded by the bankers
blanket bond to major banking institutions in the
United States. Applicant further states that the pro­
posed underwriting activities would be limited to in­
suring the deductible portion of the bankers blanket
bond, i.e., that portion of the risk which is not presently
insured.
The Board has not heretofore considered whether
the proposed activities are closely related to banking.
Applicant is of the opinion that the proposed under­
writing activities are so closely related to banking or
managing or controlling banks as to be a proper inci­
dent thereto and notice of receipt of the application is
being published pursuant to §225.4(a) of the Board’s
Regulation Y.




In connection with this application, the Board will
also consider possible rulemaking to add the proposed
activity to the list of activities the Board has previously
determined to be closely related to banking.
Interested persons are invited to express their views
on the question of whether the underwriting of the
deductible portion of bankers blanket bond insurance
is so closely related to banking or managing or con­
trolling banks as to be a proper incident thereto. Inter­
ested persons are invited to express their views on the
question of whether consummation of the subject pro­
posal can “reasonably be expected to produce benefits
to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh pos­
sible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices.” Any request
for a hearing on this question, or on the issue of
whether the underwriting of the deductible portion of
blanket bond insurance is so closely related to banking
or managing or controlling banks as to be a proper
incident thereto should be accompanied by a statement
summarizing the evidence the person requesting the
hearing proposes to submit or to elicit at the hearing
and a statement of the reasons why this matter should
not be resolved without a hearing.
The application may be inspected at the offices of
the Board of Governors or at the Federal Reserve Bank
of New York.
Any views or requests for hearing should be sub­
mitted in writing and received by the Secretary, Board
of Governors of the Federal Reserve System, Washing­
ton, D. C. 20551, not later than January 25, 1974.