The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Federal R eserve Bank
OF DALLAS
W ILL IA M
H. W ALLACE
DALLAS, TEXAS 75222
FIRST V IC E PR E S ID E N T
AND C H IE F O PER ATING O FFICER
April 25, 1989
Circular 89-29
TO:
The Chief Executive Officer of all
member banks and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Transactions Between T h r ift In s titu tio n Subsidiaries o f Bank Holding
Companies and Other Holding Company Subsidiaries (Docket Number R-0663)
DETAILS
The Federal Reserve Board has requested public comment on whether
certain conditions restricting transactions between thrift insitutions
acquired by bank holding companies and other holding company subsidiaries,
commonly referred to as the "tandem operations restrictions," should be
retained, modified, or removed.
Comment is requested by May 19, 1989.
The Board has, since 1982, imposed these conditions by order on the
acquisition and operation of thrift institutions by bank holding companies.
The Board recently received a request for relief from the tandem operations
restrictions from Citicorp, a bank holding company which operates several
thrift institution subsidiaries.
Comments should be addressed to William W. Wiles, Secretary, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551. All
correspondence should refer to Docket No. R-0663 and must be received by May
19, 1989.
ATTACHMENTS
The Board's notice is attached.
MORE INFORMATION
For further information regarding this circular, please contact Dean
Pankonien at (214) 651-6228. For additional copies of this circular, please
contact the Public Affairs Department at (214) 651-6289.
Sincerely yours,
For additional copies of any c ircula r please c on tact the Public A ffa irs Department at (214) 651-6289. Banks and others are
encouraged to use the fo llow ing incom ing WATS numbers in con ta c tin g th is 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)
FEDERAL RESERVE SYSTEM
CITICORP
New York, New York
Notice Requesting Relief from Conditions Imposed on the
Acquisition of Thrift Institutions by Bank Holding Companies
C itic orp,
notice
B oard
requ es ti ng
by order,
Company
A ct
t r a n s ac ti on s
and
their
c o m m o nl y
pr ov id e
U.S.C.
of
22 5. 23 (a )( 3) ),
relief
pursuant
(12
225 .23 (a) (3)
N e w York,
the
on
among,
h ol d i n g
referred
N ew York
from
r e s t r i c ti o ns
to s ec t io n 4(c)(8)
§ 1843(c)(8))
B oa r d ' s
joint
of
imposed
(12
o p er a t i o n s
filed
by
a
the
the Bank H ol di ng
Act")
Y
has
and
sect io n
C.F.R.
between,
and
ins ti t ut i on s u b s i d i a r i e s of C i t i c o r p
c om pa ny
as
("BHC
Regulation
marketing
thrift
to
the
("Citicorp"),
the
a f fi li at es .
"tandem
T hese
o p e r at i on s
conditions,
r es tr ic t io n s, "
that:
(1)
the t hrift i n st i tu t io n s would be o pe ra te d as
separate,
independent,
profit-oriented
corp or at e
e n t i ti es and would not be o pe r at e d in t an de m with any
other s ub si d i a r y of the bank h ol di ng company.
In
order to c arry out this condition, the bank h ol ding
c o mp a n y and thrift ins ti tu t io n s would l imit their
o p e r a t i o n s so that:
(a)
no b anking or other s u bs i d i a r y of the bank
ho ld in g co mp an y would link its d e p o s i t - t a k i n g
a c t i v i t i e s to a ccoun ts at the thrift inst it ut io ns
in a s weeping a r r a n g e m e n t or similar arrangement;
and,
(b)
the thrift ins ti tu t io n s would not d i r e c t l y or
i n d i re ct ly so li c it d e p o s i t s or loans for any other
s u b s i d i a r y of the bank h ol d in g c o mp a n y and the bank
h o ld i n g co mp an y and its s u b s i d ia r ie s would not
s o li c i t d e p o si ts or loans for the thrift
i nstitutions; and,
(2)
to the e xt en t n e c e ss a ry to insure i n de pe nd en t
o p e r a t i o n of the thrift i n s ti t ut i on and p r ev e n t the
improper d i v e r s i o n of funds, the thrift ins ti tu ti on s
would not engage in any t r an s ac t io n s with the bank
h o ld in g c om p a n y or its other s u bs i d i a r i e s w it h ou t
prior approval of the a pp ro p ri a te F e de ra l R es er ve Bank.
Citicorp
normal
and
lawful
c on te nd s
b usiness
that
these
behavior,
c o n d it i on s
impose
p ro h ib i t
unnecessary
costs
and
burdensome
fr us tr at e
efforts
i n s t i tu ti on s
the
tandem
deterrent
a
time
to
to
to
thrift
bank
provisions
of
bank
and
the
restrictions
23B of
on
area,
it
believes
appropriate
or
significant
public
participation
development
of
conditions.
p ub li c
the
comment
modified
or
on
No.
Governors
be
m ai le d
no
delivered
later
the
N.W.,
D.C.,
Citicorp's
r equest
of
Boari
12,
this
be
than
its h ol d in g
23A
r eq ui re d
a c ti o n
and
by law.
in this
in light of
surrounded
"C"
b et w e e n
for
the B oa rd
of
notice,
rec ei ve d
at
May
1989.
System,
courtyard
between
W as hi n g t o n ,
April
must
Reserve
to
the o f f i c e s
w i th o u t
s e ct i o n s
comment,
restrictions
the
authorize
t hrift and
Accordingly,
19,
to W i l l i a m W. Wiles,
Federal
Street,
r eg a r d i n g
R-0663,
of
the
the
that
and
to
institutions
in c o n s i d e r i n g
the
Reform,
w ould
under
at
the
the
original
B oard
should
be
the
s ee ks
retained,
removed.
Comments
Docket
w he t h e r
the
public
f ul fill
p oi nt s
as o t h e r w i s e
that,
to seek
to
f in a nc i al
w hi ch
that
c o mp an ie s,
Institutions
thri ft
req ui r ed
R es er ve Act,
B oard
is
as
help
Citicorp
between
thrift
as a s i g n i f i c a n t
outside
1989,
ac q ui r e
except
the F e d e r a l
The
to
of
transactions
affiliates
for
and
also argues
h o ld i n g
could
Financial
Act
failing
work ed
bank
additi on ,
proposed
to cons um er s,
Citicorp
by
need
In
companies
or
have
companies
Enforcement
h ol d i n g
c o mp a n y
restrictions
critical
r esources .
Recovery
failed
acquisitions
managerial
s er v ic e s
v i a bi l it y .
ho ld in g
i n d u s t r y ’s
limit
restore
fin an ci al
operations
when
t hrift
i n e ff ic ie nc ie s,
w hich
the o f f i c e s
Secre ta ry ,
All
S tr ee t
8:45
relief
the Board
should
20551,
B u il di ng ,
and C o n s t i t u t i o n A ve nue,
a.m.
is
and
5:15
available
to
of G o v e r n o r s
D.C.
E c cl e s
of
refer
comments
B o a rd
Washington,
e ntra nc e,
s hould
p.m.
for
or
20th
N.W.,
w ee kd a ys .
i ns pe c ti o n
at
of G o v e r n o r s .
Governors
of
the
Federal
R es er ve
1989.
(sianed)
Jennifer J. Johnson
J e n n i f e r J. J o h n s o n
A s s o c i a t e S e c r e t a r y of the B o a r d
of
System,
@FedFRASER