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F ederal
reserve
bank
DALLAS, TEX A S
of
Dallas
75222
Circular No. 73-1*+
January 15, 1973
To All Member Banks and Others Concerned
in the Eleventh Federal Reserve District:
The Board of Governors of the Federal Reserve System announced
on December 26, 1972, its findings with respect to grandfather privileges
of 30 companies — each with $60 million or more in bank assets — thus
far reviewed under the 1970 amendments to the Bank Holding Company Act.
The Board found that none of the 30 companies is entitled to
grandfather privileges. In most of the cases, the companies were engaged
only in banking activities as of the grandfather date — June 30, 1968.
In 12 cases, the Board found that none of the companies was engaged in
nonbanking activities other than activities that appear to be permitted
under provisions of the Act — such as bank premises corporations and
safe deposit businesses.
In certain circumstances, the 1970 amendments to the Bank
Holding Company Act permit one-bank holding companies — and other com
panies that became subject to the Act by virtue of those amendments —
to continue to engage in nonbanking activities that they acquired on or
before June 30, 1968. The Board may determine whether such companies
should divest any grandfathered activities, as ’’necessary to prevent
undue concentration of resources, decreased or unfair competition, con
flicts of interest, or unsound banking practices...."
As directed by the statute, the Board has undertaken a review
of 66 companies that became subject to the Act by virtue of the 1970
amendments and controlled a bank with assets in excess of $60 million on
December 31? 1970. Additional findings in this review will be announced
later.
Copies of the Board’s notices relating to these matters are
attached.
Yours very truly,
P. E. Coldwell,
President
Attachment
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL RESERVE SYSTEM
BANK HOLDING COMPANIES
"Grandfather Privileges"
Section 4 of the Bank Holding Company Act (12 U.S.C. 1843)
provides certain privileges ("grandfather privileges") with respect to
nonbanking activities of a company that, by virtue of the 1970 Amendments
to the Bank Holding Company Company Act, became subject to the Bank Holding
Company Act.
Pursuant to § 4(a)(2) of the Act, a "company covered in
1970" may continue to engage, either directly or through a subsidiary,
in nonbanking activities that such a company was lawfully engaged in on
June 30, 1968 (or on a date subsequent to June 30, 1968, in the case of
activities carried on as a result of the acquisition by such company or
subsidiary, pursuant to a binding written contract entered into on or
before June 30, 1968, of another company engaged in such activities at
the time of the acquisition), and has been continuously engaged in since
June 30, 1968 (or such subsequent date).
Section 4(a)(2) of the Act provides, inter a l ia , that the Board
of Governors of the Federal Reserve System may terminate such grandfather
privileges if, having due regard to the purposes of the Act, the Board
determines that such action is necessary to prevent undue concentration
of resources, decreased or unfair competition, conflicts of interests,
or unsound banking practices.
With respect to a company that controls a
bank with assets in excess of $60 million on or after December 31, 1970,
the Board is required to make such a determination within a two year period.
-2 -
Notice of the Board's review of nonbank activities and
grandfather privileges of the companies listed below and opportunity
for interested persons to submit comments and views or request a
hearing, has been given.
Frank P. Doyle Trust, Article IX, Santa Rosa, Calif. (37 F.R. 21382)
Potomac Securities Corp., Silver Spring, Md. (37 F.R. 21382)
International Equities, Inc., New York, N. Y. (37 F.R. 21382)
Alexandria Shares Corp., Alexandria, Va. (37 F.R. 21382)
Virginia Bankshares, Inc., Richmond, Va. (37 F.R. 21382)
Marine Bancorporation, Seattle, Washington (37 F.R. 21382)
The Hong Kong and Shanghai Banking Corporation,
Hong Kong (37 F.R. 22414)
First Bancorporation, Reno, Nevada (37 F.R. 22414)
Amalgamated Associates Company, Chicago, 111. (37 F.R. 22414)
Amalgamated Investments Company, Chicago, 111.
(37 F.R. 22414)
First Highland Corp., Highland Park, 111. (37
F.R. 22414)
Financial Network Corp., Milwaukee, Wise. (37
F.R. 22414)
The time
for filing comments and views and requests has
those received have been considered by the Board in
expired and all
the
light of the
factors set forth in § 4(a)(2) of the Act.
On the basis of the evidence before it, the Board finds that
none of the companies named hereinabove, directly or indirectly, engaged
on or before June 30, 1968, in nonbanking activities within the meaning
of § 4 of the Bank Holding Company Act, other than nonbanking activities
that appear to be exempt under the provisions of § 4(c) of the Act.
On this basis, no grandfather privileges under the proviso in § 4(a)(2)
of the Act accrue to any of these companies.
Board of Governors of the Federal Reserve System, December 26,1972.
(signed)
Tynan Smith
Tynan Smith
Secretary of the Board
[SEAL]
@FedFRASER