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F ederal R eserve Ban k o f D allas

DALLAS, TEXAS

75222
Circular No. 72-11^+
June 15 5 1972

NOTICE OF ORAL PRESENTATION REGARDING
GUIDELINES USED IN APPROVING FORMATION
OF ONE-BANK HOLDING COMPANIES

To All Member Banks and Others Concerned in the Eleventh
Federal Reserve District:

The Board of Governors of the Federal Reserve System
announced May 26, 1972, that an Oral Presentation will be con­
ducted on June 28, 1972 on the guidelines used by the Federal
Reserve Banks when approving formations of one-bank holding
companies.
The presentation will be held in the Federal Reserve
Building in Washington, D. C. Interested persons are invited
to participate through presenting material orally at the pro­
ceeding or through the submission of written comments. Persons
interested in participating by presenting material orally should
inform the Secretary of the Board in writing not later than
June 21, 1972. Otherwise, comments on this matter should be
submitted to the Secretary, Board of Governors of the Federal
Reserve System, Washington, D. C. 20551? to be received not
later than July 12, 1972.
Notice of the Oral Presentation is printed on the
following pages.

Very truly yours,
P. E. Coldwell,
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE SYSTEM
[12 CFR Part 225]
[Reg. Y]
BANK HOLDING COMPANIES
Notice of Oral Presentation Regarding Guidelines Used by
Federal Reserve Banks in Approving Formation of One-bank
Holding Companies Under Delegated Authority

On August 20, 1971, effective September 1, 1971,

the Board

delegated to the individual Federal Reserve Banks certain of its
authority to approve the formation of one-bank holding companies
pursuant to section 3(a)(1) of the Bank Holding Company Act.
(12 CFR 265.2(f)(22))

Simultaneously,

the Board provided those

Banks with certain general guidelines to aid them in the exercise
of that delegated authority.

Those guidelines provide in pertinent

part:
. . . The Board expects that the Reserve Banks
will use their influence in exercising their author­
ity to approve the formation of one-bank holding
companies to assure that:
(i)
if any offer to acquire shares is extended
to shareholders of the bank, the offer is extended
to all shareholders of the same class on an equal
basis;
(ii)
the amount borrowed by the holding company
to purchase the voting shares of the bank does not
exceed either 50 per cent of the purchase price of
the shares of the bank or 50 per cent of the equity
capital of the holding company, the loan will be
repaid within a reasonable period of time (not to
exceed 10 years), the interest rate on the loan is
comparable with other stock collateral loans by the

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lender to persons of comparable credit standing, and the
loan is not conditioned upon maintenance of a correspondent
bank balance with the lender that exceeds the usual needs
of the bank whose shares are being purchased; and
(iii)
interest on and amortization of the holding company's
indebtedness will not exceed, in any year, 50 per cent of the
holding company's proportionate share of the bank's anticipated
net income (after taxes) for that year, unless a higher per­
centage is specifically approved by the Reserve Bank at the
time of the formation of the holding company.
The Board has received comments to the effect that these
guidelines have been applied in a more restrictive manner than is
desirable and that the guidelines result in undue adverse effects
upon the transferability of bank stock.

One such commenting party

has requested the opportunity to present its views to the Board
orally.
The Board has decided to explore these questions at an
Oral Presentation before available members of the Board in the
Board Room of the Federal Reserve Building at 20th Street and Con­
stitution Avenue, N. W . , Washington, D. C., on June 28,
commencing at 10:00 a.m.

1972,

Interested persons are invited to parti­

cipate through presenting material orally at the proceeding or
through the submission of written comments.
Persons interested in participating in the proceeding by
presenting material orslly should inform the Secretary of the Board
in writing not later than June 21, 1972.
be submitted by July 12, 1972.

Written material should

All material submitted will be made

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available for inspection and copying, upon request, except as pro­
vided in § 261.6(a) of the Board’s Rules Regarding Availability of
Information.
By order of the Board of Governors, effective May 26, 1972,

Michael A. Greenspan
Assistant Secretary


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102