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Federal R eserve B ank
OF DALLAS
W IL L IA M
H. WALLACE
DALLAS, TEXAS 75222
FIRST V IC E P R E S ID EN T
AND CH IE F O PER ATING O FFIC ER
February 9, 1987
C ir c u la r 87-10
TO:
The Chief Executive O f f i c e r of a l l
member banks, bank holding companies
and other s concerned in the
Eleventh Federal Reserve D i s t r i c t
SUBJECT
Request for public comment on Regulation Y —
and Change in Bank Control
Bank Holding Companies
DETAILS
The Board of Governors of the Federal Reserve System has requested
public comment on a proposed amendment to i t s Regulation Y to implement
c e r t a i n amendments to the Change in Bank Control Act ("CBCA") require d by the
Anti-Drug Abuse Act of 1986.
Comments should be addressed to Mr. William W Wiles, S e cretary ,
.
Board of Governors of the Federal Reserve System, Washington, D.C. 20551. All
correspondence should r e f e r to Docket No. R-0595 and must be received by
March 6, 1987.
ATTACHMENTS
The Board's press r e l e a s e and the m ater ial as published in the
Federal R e g is ter are atta c h e d .
MORE INFORMATION
For f u r t h e r information, please c o n t a c t Basil Asaro a t (214)
698-4345, Gayle Teague a t (214) 651-6481, or David W Dixon of the Legal
.
Department a t (214) 651-6228.
S incerely yours,
For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
.^TEM
FEDERAL RESERVE press release
January 28, 1987
For immediate r e l e a s e
The Federal Reserve Board today requested comment on a proposed
amendment t o Regulation Y implementing amendments t o th e Change in Bank
Control Act required by th e Anti-Drug Abuse Act of 1986.
The Anti-Drug Abuse Act of 1986 amended t h e Change 1n Bank Control
Act (CBCA) t o r e q u i re federa l banking agencies t o publish n o ti c e of any f i l i n g
made under the CBCA t o acquire control of a bank or bank holding company.
The Anti-Drug Abuse Act r e q u i r e s t h e banking agencies t o publish th e
name of each p arty acquiring control of a bank o r bank holding company, as
well as t h e name of the t a r g e t i n s t i t u t i o n , and t o s o l i c i t public comment on
the proposed a c q u i s i t i o n , in p a r t i c u l a r from persons in the r elev an t local
area.
Comments should be received by th e Board on t h i s m atter by
March 6, 1987.
The Board's n o t i c e 1s a t ta c h e d .
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Attachment
0-
FEDERAL RESERVE SYSTEM
12 CPR Part 225
(Regulation Y? Docket No, R-0595)
Bank Holding Companies and Change in Bank Control
Procedures Regarding Publication and Processing of Notices
Filed Under the Change in Bank Control Act
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Notice of Proposed Rulemaking.
SUMMARY:
The Federal Reserve Board
is proposing
to amend
Subpart E of its Regulation Y, section 225 of Title 12, Code of
Federal Regulations,
to implement
certain amendments
to the
Change in Bank Control Act ("CBCA") made by section 1360 of the
Anti-Drug Abuse Act of 1986, Public Law 99-570.
proposal,
publish,
notificants
under
the CBCA would
be
Under this
required
to
in a newspaper of general circulation in communities
where the bank
or bank
holding
company
to be acquired
is
located, an announcement of the proposed acquisition no later
than 10 calendar days after the notice has been accepted by the
appropriate
provides
Federal
Reserve
an exception
Bank.
The
proposed
to the publication
regulation
requirement
where
disclosure would threaten the safety or soundness of the bank
to be acquired.
In addition, publication may be delayed by the
Board for good cause shown.
The proposed regulation also authorizes the Board to
extend the period of time it has to consider a CBCA notice for
up to two additional periods of 45 days each.
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2-
Finally, as required by the Anti-Drug Abuse Act,
proposed regulation states
investigation
of
that
the Board
the competence,
shall
experience,
conduct
integrity,
the
an
and
financial ability of each proposed acquiror and shall make an
independent determination of the accuracy and completeness of
the
information
submitted.
A
written
report
of
the
investigation will be prepared which will become part of the
record.
DATE:
Comments must be received by March 6, 1987.
ADDRESS:
All
No. R-0595,
comments,
which
should
refer
to
Docket
should be mailed to William W. Wiles,
Secretary,
Board of Governors of the Federal Reserve System, Washington,
D.C.
20551, or delivered to Room B-2223, 20th & Constitution
Avenue, N.W., Washington, D.C., between 8:45 a.m. and 5:15 p.m.
weekdays.
Comments may be inspected
in Room B-1122
between
8:45 a.m. and 5:15 p.m. weekdays.
FOR FURTHER INFORMATION CONTACT:
General
Counsel
Counsel
(202/452-3583),
Assistant
(202/452-3430),
Director
Legal
J. Virgil Mattingly,
Scott
G.
Division;
(202/452-2638),
Alvarez,
or
Senior
Sidney
Division
of
Deputy
Sussan,
Banking
Supervision and Regulation, Board of Governors of the Federal
Reserve
impaired
System,
Washington,
D.C.
only, Telecommunications
20551.
Service
For
for
the hearing
the
Earnestine Hill or Dorothea Thompson (202/452-3544).
Deaf,
-
3-
SUPPLEMENTARY INFORMATION:
Background
Under the CBCA, persons acting either individually or
in concert to acquire control of any insured state member bank
or bank holding company must provide the Board with 60 days
prior written notice describing the proposed acquisition and
containing
certain
information
concerning
the
resources and background of the notificant.
financial
The transaction
may proceed at the end of the 60-day period, unless the Board
disapproves the transaction or extends the notice period.
An
acquisition may proceed prior to the expiration of the 60-day
review period if the Board issues a written statement of its
intent not to disapprove the transaction.
On October 27, 1986, the President signed into law the
Anti-Drug Abuse Act of 1986, Public Law 99-570.
of this Act
amendments
(hereinafter the "1986 Amendment")
to the CBCA
that
necessitate
Section 1360
makes several
a revision
in the
Board's implementing regulations.
Publication and Solicitation of Comments
Prior to the 1986 Amendment, the CBCA did not require
notice to,
or solicitation of comments
from,
the public in
connection with a notice filed under the CBCA.
The Board's
regulation provided that the Board or the appropriate Reserve
Bank
could
solicit
information
or
views
from
including any bank or bank holding company
any
person,
involved in the
-
notice,
and
any
appropriate
governmental authority.
The
4state,
federal
or
foreign
(See 12 C.F.R. § 225.43(d)).
1986 Amendment
provides
that
the
appropriate
Federal agency shall publish the name of the insured bank or
bank holding company proposed to be acquired and the name of
each person identified as a person by whom or for whom such
acquisition is to be made, and solicit public comments on the
proposed
acquisition,
in
particular
geographic area where the bank
from
persons
to be acquired
in
the
is located.
Publication is not required if the agency determines in writing
that such disclosure or solicitation would seriously threaten
the safety or soundness of the bank or bank holding company to
be acquired.
Regulations promulgated by both the Federal Deposit
Insurance Corporation (12 C.F.R. § 303.4(b)) and the Office of
the Comptroller of the Currency (12 C.F.R.
for
the public
disclosure
S 5.50(h)) provide
and solicitation
of
comments
by
requiring the notificant to publish a disclosure statement in a
newspaper serving the community where the head office of the
bank to be acquired is located.
The Board is proposing to amend its regulation in a
similar manner to require the person or persons seeking to
acquire
a
bank
announcement
or
bank
holding
company
of the proposed acquisition
to
publish
an
in a newspaper
of
general circulation in the community in which the head office
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5-
of the state member bank or bank holding company to be acquired
is located and, in the case of a bank holding company, in each
community in which the head office of a bank subsidiary of the
holding company is located.
The newspaper announcement must contain
each
proposed
acquirer,
the
percentage
of
the name of
shares
to
be
acquired, the name of each bank or bank holding company to be
acquired, and, in the case of a bank holding company, the names
of each of its subsidiary banks. The announcement must also
state
that
any person wishing
to comment
on
the proposed
acquisition may do so by submitting written comments to the
appropriate Reserve Bank within 20 calendar days of publication
or such shorter period of time as the Board may prescribe in a
particular case.
As proposed,
the announcement
may be published
no
earlier than 10 calendar days before the CBCA notice is filed
with the appropriate Reserve Bank and no later than 10 calendar
days after the notice has been accepted by the Reserve Bank.
In addition to requiring newspaper publication by the
notificant,
made
the Board proposes to publish notice of filings
under the CBCA in the Federal Register, including the
names of persons who propose to acquire control of a bank or
bank holding company, the amount of shares to be acquired, and
the names of all banks to be acquired.
the Federal Register notice permit
The Board proposes that
a minimum period
of 15
calendar days for public comment, unless the Board determines
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6-
that the public interest requires shortening or waiving this
comment period.
The Federal Register notice will be published
upon submission to the Reserve Bank of the CBCA
The
Board
may
dispense
with
public
notice.
notice
if it
determines in writing that such publication and solicitation of
comment
bank
would seriously threaten the safety or soundness of the
or bank holding company to be acquired.
proposed
regulation
will
provide
that
the
Finally, the
publication
requirement does not give any person standing to intervene in
proceedings
on the CBCA
notice or to
appeal
or
otherwise
contest the Board's action regarding a notice.
Tender Offers
The Board notes that the FDIC and the OCC regulations
provide that publication of a filing under
the CBCA may be
delayed for up to 34 days after the filing in the case of a
proposed tender offer that requires notice under the CBCA and
is simultaneously subject to the requirements of the Williams
Act (15 U.S.C. 78m and 78n).-^
1/
The tender offer regulations applicable to bank holding
companies and to state
memberbanks, 17 C.F.R. 240.14(d) and 12
C.F.R. 206.8, require that an offer remain open for at least 20
business days from the date the tender offer is first
published, sent or given to security holders.
Shares tendered
or deposited pursuant
to the offer may be withdrawn by a
depositing shareholder
at anytime within the first 15 business
days of the offering. (17 C.F.R. 240.14(d)(7)? 12 C.F.R.
206.8(g)).
Under the CBCA, a bidder may not purchase shares
deposited in response to a tender offer in amounts exceeding
the CBCA limits until the expiration of the review period
unless notified by the Board at an earlier time that the
acquisition may commence.
-
7-
The Board's proposed rule would permit the Board,
in
its discretion, to postpone, but not eliminate, the publication
requirement under the CBCA for such period as the Board deems
appropriate where an acquiring party requests such delay and
confidential treatment of a CBCA notice.
Extension of Time For Disapproving Transactions
Prior to the 1986 Amendment,
the CBCA authorized the
appropriate federal agency to extend for up to 30 days the
statutory period
disapproved.
in which
a proposed
acquisition
could
be
The 1986 Amendment provides that, in addition to
this 30-day extension, the appropriate agency may authorize two
additional extensions of not more than 45 days each.
In order
to utilize this authority, the agency must determine that:
an
acquiring
required
party
under
§ 1817(j)(6));
substantially
has
section
(ii)
not
furnished
7(j)(6)
material
inaccurate;
of
all
the
CBCA
information
(iii)
an
the
(i)
information
(12
U.S.C.
submitted
investigation
of
is
an
acquiring party has not been completed because of inadequate
cooperation or delay by the acquiring party; or (iv) additional
time is needed to investigate and determine that no acquiring
party has a record of failing to comply with
transaction reporting requirements of the Bank
the currency
Secrecy Act,
subchapter II of chapter 53 of title 31, United States Code.
The Board is proposing to amend section 225.43(c)
its regulations to reflect this change in the CBCA.
Board acts under this authority to extend the time for
of
If the
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8-
disapproval beyond the initial 30-day extension,
the proposed
regulation requires the Board to notify the acquiring party of
the reasons for such extension,
including a statement of any
information that is determined by the Board to be incomplete,
inadequate, or inaccurate.
Investigation and Report
The 1986 Amendment requires the appropriate agency to
conduct
an
integrity,
investigation
of
the
competence,
experience,
and financial ability of each person named
in a
notice of a proposed acquisition as a person by or for whom
such acquisition is to be made,
determination
information
agency.
of
the
required
accuracy
by
The agency is
the
then
and to make an independent
and
CBCA
completeness
to be
of
submitted
required to prepare
the
to
the
a written
report of such investigation, which is to become part of the
record.
The Board is proposing to amend section 225.43(d)
of
its regulation to reflect this change in the law.
Interim Applicability
Because
the
amendments
to
the
CBCA
made
Anti-Drug Abuse Act of 1986 are already effective,
by
the
the Board
will follow the procedures set out in the proposed regulation
pending final action on the regulation.
Regulatory Flexibility Act
This proposal to provide for publication of notices
filed under the CBCA implements specific statutory requirements
recently imposed by the Anti-Drug Abuse Act of 1986.
The CBCA
generally requires persons seeking to acquire control of a bank
or bank holding company to provide prior written notice to the
appropriate federal banking agency, but imposes no requirements
on
the
target
bank
or
bank
holding
company
itself.
The
proposal to publish notice of a proposed acquisition subject to
the CBCA would likewise not impose any regulatory burden on
banks or bank
holding
companies
of any size that
targets of a proposed change in control.
have the benefit,
however,
are
the
The proposal would
of providing such banks or bank
holding companies notice of a proposed change of control and
permitting
an
opportunity
for
such
banks,
bank
holding
companies, and other interested persons to provide comment and
information regarding the proposal
to the Board.
Thus,
the
proposal is not expected to have a significant economic impact
on a substantial number of small business entities within the
meaning
of the Regulatory Flexibility Act
(5 U.S.C.
S 601
et seg.).
Paperwork Reduction Act
The
proposal
would
require
persons
proposing
to
acquire a bank or bank holding company in a transaction subject
to the CBCA to publish notice of the proposed transaction in a
newspaper of general circulation in communities served by the
target bank or bank holding company and to provide the Board
with verification of such publication.
No additional reporting
requirements or modification to existing reporting requirements
are proposed.
—
10o
List of Subjects in 12 C.F.R, Part 225
Banks,
banking,
Federal
Reserve
System,
Holding
Companies, Reporting and recordkeeping requirements.
For the reasons set out in this notice, and pursuant
to the Board's authority under section 13 of the Change in Bank
Control Act
(12 U.S.C.
§ 1817(j)(13)),
the Board proposes to
amend 12 C.F.R. Part 225 as follows:
1. The authority citation for Part 225 continues to read as
follows:
Authority:
12 U.S.C.
1817(j)(13),
1818,
1843(c)(8),
1844(b), 3106, 3108, 3907 and 3909
2. The Board proposes to amend section 225.43(a)
to read as
follows:
SECTION 225.43 —
Procedures for Filing, Processing,
Publishing, and Acting on Notices
(a)(1) Filing notice.
A notice required under
this
subpart shall be filed with the appropriate Reserve Bank and
shall contain the information required by paragraph 6 of the
Change
in
prescribed
Bank
Control
Act
in the designated
(12
U.S.C.
Board
1817(j)(6)),
form.
With
or
respect
to
personal financial statements required by paragraph 6(B) of the
Change
in Bank
Control
Act,
an
individual
may
include
a
statement of assets and liabilities as of a date within 90 days
of filing the notice, a brief income summary, and a description
of any subsequent material changes, subject to the authority of
the Reserve Bank or the Board to require additional information.
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11-
(2) Acceptance of notice.
The 60-day notice period
specified in section 225.41 of this subpart shall commence on
the
date
all
required
information
is
appropriate Reserve Bank or the Board.
received
by
the
The Reserve Bank shall
notify the person or persons submitting a notice under this
subpart of the date all such required information is received
and the notice is accepted for processing.
(3) Publication.
(i)
Newspaper
announcement.
A
person(s) filing a notice under this subpart shall publish, in
a form prescribed by the Board,
an announcement
public comment on the proposed acquisition.
soliciting
The announcement
shall be published in a newspaper of general circulation in the
community in which the head office of the state member bank to
be
acquired
is
located
or,
in
the
case
acquisition of a bank holding company,
of
a
proposed
in the community in
which its head office is located and in the community in which
the head office of each of its subsidiary banks is located.
The announcement shall be published no earlier than 10 calendar
days prior to the filing of the notice with the appropriate
Reserve
Bank
and
no
later
than
10 calendar
acceptance of the notice by the Reserve Bank.
days
after
A copy of the
announcement and the publisher's affidavit of publication shall
be provided to the appropriate Reserve Bank.
(ii)
newspaper announcement shall state:
Contents of newspaper
announcement.
-
12-
(A) the name of each person identified in the
notice as a proposed acquiror of the bank or bank
holding
company and the percentage of shares proposed to be acquired;
(B)
the name of the bank
company to be acquired,
including,
or bank
holding
in the case of a bank
holding company, the name of each of its subsidiary banks; and
(C) a statement that interested persons may
submit comments on the notice to the Board or the appropriate
Reserve Bank for a period of 20 days or such shorter period as
may be provided pursuant to subparagraph (v).
(iii)
Federal Register announcement. The Board
will, upon the filing of a notice under this subpart, publish
announcement in the Federal Register of receipt of the notice.
The Federal Register announcement will contain the information
required under subparagraph
(ii)(A ) and
that interested persons may submit
(B)
and a statement
comments on the proposed
acquisition for a period of 15 days or such shorter period as
may be provided pursuant to subparagraph
waive
publication
in
the
Federal
(v).
Register
The Board may
if
the
Board
determines that such action is appropriate.
(iv)
Delay
of
publication.
The
Board
may
permit delay in the publication required under this paragraph
if the Board determines, for good cause shown, that it is in
the public interest to grant such a delay.
of publication may be submitted
Reserve Bank.
Requests for delay
to the appropriate Federal
-
13-
(v)
Shortening
circumstances requiring prompt action,
or
waiving
notice.
the Board may shorten
the public comment period required under this paragraph.
The
Board may also waive the newspaper publication and solicitation
of public comment requirements of this paragraph, or it may act
on a notice before the expiration of a public comment period,
if it certifies in writing that such disclosure of the notice
m-
or solicitation of public comment would seriously threaten the
safety or soundness of the bank or bank holding company to be
acquired.
(4)
upon
a notice
Consideration of public comments.
filed
under
this
consider all public comments
period
specified
announcement.
in
the
subpart,
received
newspaper
At the Board's option,
In acting
the Board
shall
in writing within the
or
Federal
Register
comments received after
this period may, but need not, be considered.
(5)
Standing.
No person (other than the acquiring
person) who submits comments or information on a notice filed
under
this
subpart
shall
thereby
become
a
party
to
the
proceeding or acquire any standing or right to participate in
the
Board's
consideration
of
the
notice
or
to
appeal
or
otherwise contest the notice or the Board's action regarding
the notice.
In
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14-
3. The Board proposes to amend section 225.43(c)(2) to read as
follows:
(2) Extensions of time period.
extend the 60-day period in paragraph
(i) The Board may
(1) of this subsection
for an additional 30 days by notifying the acquiring person(s).
(ii) The Board may further
extend
during which it may disapprove a notice for
the period
two additional
periods of not more than 45 days each if the Board determines
that:
(A)
any acquiring person has not furnished
all the information required under subsection (a);
(B)
any
material
information
submitted
is
substantially inaccurate;
(C)
investigation
it
is
unable
to
of an acquiring person
complete
because of
the
inadequate
cooperation or delay by that person; or
(D) additional time is needed to investigate
and determine that no acquiring person has a record of failing
to comply with
the
requirements
of
the
Bank
Secrecy Act,
subchapter II of Chapter 53 of Title 31, United States Code.
(iii)
under this paragraph,
If
the Board extends
the time
period
it shall notify the acquiring person(s)
of the reasons therefor and shall include a statement of the
information, if any, deemed incomplete or inaccurate.
-
4.
15-
The Board proposes to amend section 225.43(d)
to read as
follows:
(d) Investigation and report.
(1) After receiving a notice under this
the Board or the appropriate Reserve Bank
investigation
of
the competence,
subpart,
shall conduct an
experience,
integrity,
and
financial ability of each person by and for whom an acquisition
is to be made.
determination
information
subsection
The Board
of
the
required
(a).
shall
accuracy
to
be
also make
and
ani independent
completeness
contained
in
of
any
a notice
In investigating any notice
under
accepted
under
this subpart, the Board or Reserve Bank may solicit information
or views from any person,
company involved
federal,
including any bank or bank holding
in the notice,
and
any appropriate
state,
or foreign governmental authority.
(2) The Board or the appropriate Reserve Bank shall
prepare a written
contain,
at
report
a minimum,
of
its
investigation,
a summary
of
the
which
results
of
shall
the
investigation.
Board of Governors
of
the Federal Reserve
System,
January 28, 1987.
(signed) William W. Wiles
William W. Wiles
FEDERAL RESERVE BANK OF DALLAS
STATION K
DALLAS, TEXAS 7 5 2 2 2
BULK RATE
U.S. POSTAGE
PAID
RETURN POSTAGE GUARANTEED
DALLAS, TEXAS
Permit No. 151
