Full text of District Notices (Federal Reserve Bank of Dallas) : Amendment to Rules Regarding Delegation of Authority, Circular No. 72-254

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F ed er a l R eser ve Ba n k o f Dallas
DALLAS, TE X A S

75222

Circular No. 72-25^November 7 5 1972

AMENDMENT TO
RULES REGARDING DELEGATION OF AUTHORITY

To All Member Banks in the
Eleventh Federal Reserve District:
The Board of Governors has amended section 265.2 (f)(22)
of its "Rules Regarding Delegation of Authority" in order to clarify
its intention with respect to the delegation to the Reserve Banks
of authority to approve applications for the formation of one-bank
holding companies.

The amendment is effective with respect to

applications received by the Reserve Banks after October 30 5 1972.
A copy of the amendment is enclosed for insertion in the
ring binder containing the Regulations of the Board of Governors
and the Bulletins of this Bank.

Also enclosed is a copy of the

Board’s press release.
Yours very truly,
P. E. Coldwell
President
Enclosures (2)

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

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

RULES REGARDING DELEGATION OF AUTHORITY
A M E N D M E N T S R E G A R D IN G B A N K A C Q U IS IT IO N S BY H O L D IN G C O M P A N IE S
(v)
in the event any debt is incurred by the
holding com pany to purchase shares of the bank:
(a) the am ount of the loan does not exceed 75
per cent of the purchase price of the shares of
the proposed subsidiary bank; (b) an agreed plan
for am ortization of the debt within a reasonable
SE C T IO N 265.2 — S P E C IF IC F U N C T IO N S
time exists, such period normally no t exceeding 12
D E L E G A T E D TO B O A RD E M P L O Y E E S
years; (c) the interest rate on any loan to purchase
A N D F E D E R A L R E S E R V E BANKS.
the bank shares will be com parable with other
stock collateral loans by the lender to persons of
* * * * *
com parable credit standing; (d) no compensating
balances, specifically attributable to the loan, will
be deposited in the lending institution and the
am ount of any correspondent account which the
(f)
Each Federal Restrve Bank is authorized, as proposed subsidiary bank will m aintain with the
lending institution should no t exceed the am ount
to m em ber banks or other indicated organizations
necessary to com pensate the lending bank for cor­
headquartered in its district:
respondent services rendered by it to the proposed
subsidiary bank; (e) the Reserve B ank determines
* * * * *
that the managerial and financial resources includ­
ing the equity capital accounts3 of the proposed
(22) U n der the provisions of section 3(a)(1) of
subsidiary bank are adequate, o r will be adequate
the Bank H olding Com pany A ct (12 U.S.C. 1842),
within a reasonable period of time after the bank
is acquired, and any debt service requirem ents to
to approve the acquisition by a com pany of a
which the proposed holding com pany m ay be sub­
controlling interest in the voting shares of one
ject are such as to enable it to m aintain the capital
bank, if all of the following conditions are met:
adequacy of the proposed subsidiary bank in the
foreseeable future.4
(i) no objection to the proposed acquisition has
been m ade by the bank ’s supervisory authority,

Effective with respect to applications received
by the Federal Reserve Banks after O ctober 30,
1972, § 265.2(f) (22) is am ended to read as
follows:

$

(ii) no significant policy issue is raised by the
proposal as to which the Board has not expressed
its views,
(iii) neither the holding com pany no r any of its
subsidiaries or affiliates is engaged in any activities
other than those specifically permissible for bank
holding companies by either the A ct or P art 225
of this chapter (Regulation Y),
(iv) any offer to acquire shares of the bank will
be extended to all shareholders of the same class
on a substantially equal basis,2

4:

sfe

j*
c

2 Less than all of the outstanding shares of the bank may be
acquired provided that where a greater number of shares are
tendered than are proposed to be purchased, the offeror will
purchase the shares tendered on a pro rata basis (except for
fractional interests) according to the number of shares tendered
by each shareholder. Where an offer is not identical to all
shareholders, the burden is on the applicant to demonstrate the
substantial equivalence of the offers extended.
3 The term “equity capital accounts” means capital stock,
surplus, undivided profits, and reserves for contingencies, and
other capital reserves.
4 This delegation includes authority to approve (a) a merger
transaction under the provisions of section 18(c) of the Fed­
eral Deposit Insurance Act (12 U.S.C. 1828(c)) and (b) an
application, under section 9 of the Federal Reserve Act (12
U.S.C. 321), for membership in the Federal Reserve System
that are incidental to an application to become a one-bank
holding company.

FEDERAL RESERVE

i

|

press

release

For immediate release

October 30, 1972

The Board of Governors of the Federal Reserve System
today announced a revised procedure designed to expedite the
handling of applications to form one-bank holding companies.
The Board issued revised guidelines for the use of
the Federal Reserve Banks under delegated authority in pro­
cessing applications to form holding companies controlling
one bank.

Applications which meet the standards set forth

in the guidelines may be approved by the Reserve Banks.
Applications that do not meet the guideline standards must
be forwarded to the Board for action.

The Board retains

exclusive authority to deny applications of this type*
Effective September 1, 1971, the Board delegated
to the Reserve Banks certain authority to approve formations
of one-bank holding companies and issued guidelines for the
Reserve Banks to follow in processing applications of this
type.

The revised guidelines now issued take the place of

the previous guidelines.

The Board held an oral presentation

in this matter on June 20, 1971.
After considering all material submitted, the Board
authorized the attached new guidelines for the use of Reserve
Banks in approving the formation of one-bank holding companies.

Attachment