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federal

R e s e r v e B a n k o f D a lla s

DALLAS, TEXAS

75222
Circular No. 82-135
O ctober 25, 1982

REGULATION Y
BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
A m endm ents in Slip S h e e t Form

TO ALL MEMBER BANKS, BANK HOLDING COMPANIES
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board o f Governors o f the Federal R ese r v e System has issued
a m en dm ents to R egulation Y in slip s h e e t form making the R egulation current
e f f e c t i v e Septem ber 25, 1982. P le a se file the en closed slip s h e e t in Volume II o f
your R egulations Binder and destroy the one dated D e c e m b er 1981.
Two cor re c tio n s should be made to your slip s h e e t before filing.
1. The e f f e c t i v e date o f the am en dm ent to s e c tio n 225.4(a)(13) (page 1)
should read "Decem ber 21, 1981", rather than "D ecem ber 21, 1982".
2. The paragraph im m ed iately before SECTION 225.5—ADMINISTRATION
(page 3) should read " E ffe c tiv e April 5, 1982, s e c tio n 225.5(c)(2) is
am ended...

Q uestions regarding R egulation Y may be d ir ec te d to David W. Dixon,
R egulation A ttorn ey o f this Bank's Holding Company Supervision D epartm ent,
Extension 6182.
Additional cop ies o f this circular and the enclosure will be furnished
upon request to the D epartm ent o f Com m unications, Financial and Com m unity
A ffairs, Extension 6289.
Sincerely yours,

William H. Wallace
First Vice President
Enclosures

Banks and others are encouraged to use the following incoming W ATS numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

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

BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
AMENDMENTS TO REGULATION Y +
A s amended effective September 25, 1982

Effective March 10, 1979 the title to Regulation Y is
revised to read "Part 225— Bank Holding Companies and
Change in Bank Control”, and section 225.1(a) and (b)
are amended; effective October 24. 1979. section
225.1(c) is amended as follows:

SECTION 225.1—AUTHORITY, SCOPE,
AND DEFINITIONS
(a) Authority and scope. This Part is issued by the
Board o f Governors o f the Federal Reserve System under
section 5(b) o f the Bank Holding Company Act o f 1956
(“the Act”) (12 U.S.C. § 1844(b)) and section 7(j)( 13) of
the Federal Deposit Insurance Act, as amended by the
Change in Bank Control Act o f 1978 (“the Control Act”).
(12U .S .C . § I817(j)(13)). Sections225.2 through 225.6
of this Part implement the Act, and section 225.7 o f this
Part implements the Control Act.
(b) Terms used in the Act. As used in this Part, the
terms “bank holding company,” "company,” “bank,”
“subsidiary,” and “Board” have the same meanings as
those given such terms in the Act. As used in section
225.7 of this Part, the term “person” has the meaning
given it in the Control Act.
(c) Federal Reserve Bank. The term “Federal Re­
serve Bank” as used in this Part with respect to action by,
on behalf of, or directed to be taken by a bank holding
company or other organization shall mean either the Fed­
eral Reserve Bank o f the Federal Reserve district in
which the operations o f the bank holding company or
other organization are principally conducted, as mea­
sured by total deposits held or controlled by it in subsid­
iary banks on the date on which it became, or is to
become, a bank holding company, or such Reserve Bank
as the Board may designate. In the case o f a foreign
banking organization that is not a bank holding company
but which has one or more branches, agencies, or com­

mercial lending companies located in any State o f the
United States or the District o f Columbia, "Federal Re­
serve Bank” shall mean, unless otherwise determined by
the Board, the Reserve Bank o f the district in which its
banking assets are the largest as o f the later o f January 1.
1980, or the date that it establishes its first branch, agen­
cy, or commercial lending company. With respect to
notices filed and other actions taken under the Control
Act, the term refers to the Federal Reserve Bank for the
institution to be acquired, as determined by the preceding
sentence in the case o f bank holding companies and by
section 9 of the Federal Reserve Act in the case o f State
member banks.

Effective September 25. 1982, Section 225.4(a)(8)(i)
and (ii) is amended; effective September 1, 1981, section
225.4(a)(9)(i) and (ii) is amended; effective December 5,
1979, section 225.4(a)(9)(iii) is amended; effective
April 20, 1982, section 225.4(a)(12) is amended; effec­
tive December 21, 1982, section 225.4(a)(13) is amend­
ed; effective December 31, 1980 new section
224.5(a)( 14) is added; effective January 1, 1979, section
225.4(b)(1) and (2) is amended; and effective January 3,
1981, section 225.4(g) is revised to read as follows:

SECTION 225.4 — NONBANKING
ACTIVITIES
(a) * * *

(8)(i) Providing data processing and data transmis­
sion services, data bases or facilities (including data pro­
cessing and data transmission hardware, software,
documentation and operating personnel) for the internal
operations o f the holding company or its subsidiaries;
(ii)
Providing to others data processing and trans­
mission services, facilities, data bases or access to such

t For this Regulation to be complete as amended September 25, 1982, retain:
1) Primed Regulation pamphlet dated April 5, 1978.
2) This slip sheet. (Destroy slip sheet dated December 1981.)

SEPTEMBER 1982

services, facilities, or data bases by any technologically
feasible means, where:
(a) data to be processed or furnished are finan­
cial, banking or economic, and the services are provided
pursuant to a written agreement so describing and limit­
ing the services;
(b) the facilities are designed, marketed, and
operated for the processing and transmission o f financial,
banking or economic data; and
(c) hardware in connection therewith is of­
fered only in conjunction with software designed and
marketed for the processing and transmission of finan­
cial, banking or economic data, and where the general
purpose hardware does not constitute more than 30 per
cent of the cost of any packaged offering.

(9) ***

(i) Any insurance that (A) is directly related to an
extension o f credit by a bank or bank-related firm of the
kind described in this regulation, or (B) is directly related
to the provision of other financial services by a bank or
such a bank-related firm.
(ii) Any insurance sold by a bank holding com­
pany or a nonbanking subsidiary in a community that has
a population not exceeding 5,000 (as shown by the last
preceding decennial census), provided the principal place
of banking business of the bank holding company is
located in a community having a population not exceed­
ing 5,000.
(iii) Any insurance sold by a bank holding com­
pany or a nonbanking subsidiary in a community that has
a population not exceeding 5,000 (as shown by the last
preceeding decennial census) provided the principal
place of banking business of the bank holding company is
located in a community having a population not exceed­
ing 5,000.

o f its subsidiaries serves as a management official of
the client institution except where such interlocking
relationships are permitted pursuant to an exemption
granted under 12 CFR 212.4(b);
(iii) the advice is rendered on an explicit fee basis
without regard to correspondent balances maintained by
the client institution at any depository institution subsid­
iary of the bank holding company; and
(iv) disclosure is made to each potential client
institution of (A) the names of all depository institutions
which are affiliates o f the consulting company, and (B)
the names o f all existing client institutions located in the
same county(ies) or SMSA(s) as the client institution.1
0
(13) The sale at retail of money orders having a face
value of not more than $1,000 and the sale o f U.S. Sav­
ings Bonds and the issuance and the sale o f travelers
checks.
(14) Performing appraisals o f real estate.

(b)(1) De novo entry. A bank holding company may
engage de novo (or continue to engage in an activity
earlier commenced de novo ), directly or indirectly, sole­
ly in activities described in paragraph (a) o f this section,
45 days after the company has furnished its Reserve Bank
a notice of the proposal (in substantially the same form as
F.R. Y-4A), unless the company is notified to the con­
trary within that time or unless it is permitted to consum­
mate the transaction at an earlier date on the basis of
exigent circumstances of a particular case. The Board
will publish in the Federal Register notice o f any such
proposal and will give interested persons an opportunity
to express their views on the proposal to the Reserve
Bank. If adverse comments of a substantive nature are
received within the time specified in the notice," or if it
otherwise appears appropriate in a particular case, the
* * * * *
Reserve Bank may inform the company that (i) the pro­
posal shall not be consummated until specifically autho­
(12)
providing management consulting advice’ rized by the Reserve Bank or by the Board or (ii) the
to
proposal should be processed in accordance with the pro­
nonaffiliated bank and nonbank depository institutions,
cedures of subparagraph (2) o f this paragraph. With re­
including commercial banks, savings and loan associ­
spect to activities to be engaged in outside the United
ations, mutual savings banks, credit unions, industrial
States, the procedures o f this subparagraph apply solely
banks, Morris Plan banks, cooperative banks, and indus­
to activities to be engaged in directly by a domestic bank
trial loan companies, Provided that,
(i) neither the bank holding company nor any of holding company or by domestic nonbank subsidiaries of
any bank holding company. Paragraphs ( 0 and (g) o f this
its subsidiaries own or control, directly or indirectly, any
equity securities in the client institution;
(ii) no management official, as defined in
10 A bank holding com pany that has received the B o ard 's p rior approval
12 CFR 212.2(h), o f the bank holding company or any
to engage in offering m anagem ent consulting ad vice to nonaffiliated
com mercial banks as o f April 20, 1982. may o ffer such advice to nonbank
depository institutions pursuant to this paragraph w ithou t filing an appli­
cation under section 4(c)(8) o f the Bank H olding C om p any Act for prior
9
In perform ing this activity, bank holding com panies are not autho­
approval to engage in the activity, provided that it does not acquire a
rized to perform tasks or operations or provide services lo client institu­
going concern to provide such advice.
tions either on a daily or continuing basis, except as shall be n ecessary to
instm ct the client institution on how lo perform such serv ices for itself.
1 If a Reserve Bank decides that adverse co m m en ts are not o f a
1
See also the Board’s interpretation o f bank m anagem ent consulting ad­
substantive nature, the person subm itting the com m ents may request
vice (12 CFR 225.131). This interpretation shall apply to th e perform ance
review by the Board o f that decision in accordance w ith the provisions of
o f managem ent consulting services for nonbank d epository institutions as
§ 265.3 o fth e B oard's Rules Regarding D elegation o f Authority (12 CFR
well as for com mercial banks.
265.3) by filing a petition for review with the S ecretary o f the Board.

securities o f a bank holding company or State member
bank, unless exempted, require prior notice to the Board.
In addition, a purchase, assignment, transfer, pledge, or
other disposition of voting stock through which any per­
(2) Acquisition o f going concern. A bank holding
son will acquire ownership, control, or the pow er to vote
company may apply to the Board to acquire or retain the
ten per cent or more of a class o f voting securities of a
assets o f or shares in a company engaged solely in activi­
bank holding company or State member bank will be
ties described in paragraph (a) of this section by filing an
deemed to be an acquisition by such person o f the power
application with its Reserve Bank (Form F.R . Y-4). The
Board will publish in the Federal Register a notice o f any
to direct that institution’s management or policies if:
such application and will give interested persons an op­
(1) the institution has issued any class o f securities
subject to registration under section 12 o f the Securities
portunity to express their views (including, where appro­
priate, by means of a hearing) on the question whether
Exchange Act of 1934 (15 U .S.C . § 781); or
performance of the activity proposed by the holding com­
(2) immediately after the transaction no other person
pany can reasonably be expected to produce benefits to
will own a greater proportion of that class of voting
the public, such as greater convenience, increased com­
securities.
petition or gains in efficiency, that outweigh possible
Other transactions resulting in a person’s control of
less than 25 per cent of a class of voting shares of a bank
adverse effects, such as undue concentration of re­
sources, decreased or unfair competition, conflicts o f in­
holding company or State member bank would not result
terests, or unsound banking practices.
in control for purposes o f the Act. An acquiring person
may request an opportunity to contest the presumption
* * * * *
established by this paragraph with respect to a proposed
(g) Foreign banking organizations. In addition to transaction. The Board will afford the person an opportu­
the exemptions afforded by this Part, a foreign banking
nity to present views in writing or. where appropriate,
organization (as defined in 12 CFR § 211.23) may en­ orally before its designated representatives either at in­
gage in activities and make investments under Part 211
formal conference discussions or at informal presenta­
(Regulation K).
tions of evidence.
(b) Notices. Section 265.3 of the B oard’s Rules of
Procedure governs the submission of notices required by
Effective September 25, 1982, section 225.4(c)(2) is the Control Act, except that notices should be sent to the
amended to read as follows, and effective January 7,
Federal Reserve Bank of the district in which the affected
1981, section 225.5(c)(4) is amended by removing it in bank or bank holding company is located. Notice shall
its entirety:
not be considered given unless information provided is
responsive to every item specified in paragraph 6 of the
SECTIO N 2 2 5 .5 — A D M IN IS T R A T IO N
Control Act (12 U .S.C. § 1817(j)(6)). or every item
prescribed in the appropriate Board forms. With respect
( q) * * *
to personal financial statements required by paragraph
(2) If the information contained in Form TA-1 be­
6(B) of the Control Act, an individual acquirer may in­
comes inaccurate, misleading or incomplete for any rea­
clude a current statement of assets and liabilities, as o f a
son, the bank holding company or its nonbank subsidiary
date within 90 days of the notice, a brief income sum­
shall, within sixty calendar days thereafter, file an mary, and a statement o f material changes since the date
amendment to Form TA-1 correcting the inaccurate, mis­
thereof, subject to the authority of the Federal Reserve
leading or incomplete information.
Bank or the Board to require additional information.
(c) Exempt transactions. The following transactions
* * * * *
are not subject to the prior notice requirements of the
Effective March 10, 1979, new section 225.7 is added
Control Act:
as follows:
(1) the acquisition of additional shares o f a bank
holding company or State member bank by a person who
SECTIO N 2 2 5 .7 — C H A N G E IN B A N K
continuously since March 9, 1979, held pow er to vote 25
C O N TR O L
percent or more of the voting shares o f that institution, or
by a person who has acquired and maintained control of
(a)
Acquisitions e f Control." Under the Control Act, that institution after complying with the Control A ct’s
acquisitions by a person or persons acting in concert of
procedures;
the power to vote 25 per cent or more of a class of voting
(2) the acquisition o f additional shares o f a bank
holding company or State m em ber bank by a person
14 Control is defined in the Control Act as the p o w er, directly or
who under paragraph (a) o f this section would be
indirectly, to direct the m anagem ent or policies, or to vote 25 p e r cent o r
deemed to have controlled that institution continuously
more of any class o f voting securities, o f an institution. 12 U .S .C .
§ 1817(j)(8)(B).
since March 9, 1979, if:
section govern other international operations of bank
holding companies.

(4) a transaction subject to approval under section 3
(i) the transaction will not result in that person’s
direct or indirect ownership or power to vote 25 per cent o f the Bank Holding Company Act or section 18 o f the
or more o f any class of voting securities of the institution; Federal Deposit Insurance Act;
or
(5) a transaction described in sections 2(a)(5) or
(ii) in other cases, the Board determines that the 3(a)(A) or (B) o f the Bank Holding Company Act by a
person has controlled the institution continuously since person there described;
(6) a customary one-time proxy solicitation and re­
March 9, 1979;
ceipt o f pro-rate stock dividends; and
(3)
the acquisition o f shares in satisfaction o f a debt
(7) the acquisition of shares of a foreign bank holding
previously contracted in good faith or through testate or
company, as defined in section 225.4(g) of this Part, pro­
intestate succession or bona fide gift, provided the ac­
vided this exemption does not extend to the reports and
quirer advises the Federal Reserve Bank within thirty
information required under paragraphs 9. 10. and 12 of the
days after the acquisition and provides any information
Control Act (12 U.S.C. § 1817(j)(9). (10). and (12)).
specified in paragraph 6 o f the Control Act that the Re­
serve Bank requests;