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FEDERAL RESERVE BANK
OF NEW YORK
[
C ir c u la r N o .
10296 ~|
A p r il 1 9 , 1 9 8 9
TANDEM OPERATIONS RESTRICTIONS
Comment Invited by May 19 on Certain Conditions
on Acquisition of Thrift Institutions
To All Bank Holding Companies, and Others Concerned,
in the Second Federal Reserve District:
Following is the text of a statement issued by the Board of Governors of the
Federal Reserve System:
The Federal Reserve Board has requested public comment on whether certain
conditions restricting transactions between thrift institutions acquired by bank holding
companies and other holding company subsidiaries, commonly referred to as the “tan
dem operations restrictions,” should be retained, modified, or removed.
Comment should be received by the Board no later than 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 has recently received a request for relief from the tandem operations
restrictions from Citicorp, a bank holding company which operates several thrift in
stitution subsidiaries.
Enclosed is the text of the Board’s official notice on this matter. Comments
thereon may be sent to the Board of Governors, as specified in the notice, or to our
Domestic Banking Applications Division, by May 19.
E. G erald C orrigan ,
P resid en t.
FEDERAL RESERVE SYSTEM
CITICORP
New York, New York
Notice Requesting Relief from Conditions Imposed on the
Acquisition of Thrift Institutions by Bank Holding Companies
Citicorp, New York, New York
notice
("Citicorp”), has filed a
requesting relief from the restrictions
Board by order,
Company Act
pursuant to section 4(c)(8) of the Bank Holding
(12 U.S.C.
225.23(a)(3)
of
225.23(a)(3)),
the
on
§ 1843 (c)(8))
Board's
joint
thrift
and
company
commonly
holding
referred
("BHC Act")
Regulation
marketing
transactions among,
their
imposed by the
Y
(12
operations
and section
C.F.R.
between,
and
institution subsidiaries of Citicorp
to as the
affiliates.
These
"tandem operations
conditions,
restrictions,"
provide that:
(1)
the thrift institutions would be operated as
separate,
independent,
profit-oriented
corporate
entities and would not be operated in tandem with any
other subsidiary of the bank holding company.
In
order to carry out this condition, the bank holding
company and thrift institutions would limit their
operations so that:
(a)
no banking or other subsidiary of the bank
holding company would link its deposit-taking
activities to accounts at the thrift institutions
in a sweeping arrangement or similar arrangement;
and,
(b)
the thrift institutions would not directly or
indirectly solicit deposits or loans for any other
subsidiary of the bank holding company and the bank
holding company and its subsidiaries would not
solicit deposits or loans for the thrift
institutions; and,
(2)
to the extent necessary to insure independent
operation of the thrift institution and prevent the
improper diversion of funds, the thrift institutions
would not engage in any transactions with the bank
holding company or its other subsidiaries without
prior approval of the appropriate Federal Reserve Bank.
Citicorp
normal
C ir. N o . 1 0 2 9 6 ]
and
contends
that
these
lawful business behavior,
conditions
prohibit
impose unnecessary costs
(O V E R )
and burdensome
frustrate
efforts
institutions
the
inefficiencies,
to
when bank
thrift
industry's
provisions
of
and
the
Citicorp also argues that
Act
of
except
financial
Citicorp
1989,
to acquire
help to fulfill
outside
Financial
transactions
affiliates
for
addition,
proposed
companies
restrictions on
thrift
by bank holding companies,
need
In
Enforcement
holding
failing
and
restrictions have worked as a significant
critical
resources.
company
or
holding companies could
managerial
bank
failed
to thrift acquisitions
a time
Recovery
restore
to financial viability.
tandem operations
deterrent
limit services to consumers,
points
Institutions
which
thrift
would
to
at
the
and
the
Reform,
authorize
institutions
without
be tween the thrift and its holding
as
required
under
sections
23A and
23B of the Federal Reserve Act, or as otherwise required by law.
The Board
area,
believes
that,
in considering action in this
it is appropriate to seek public comment,
significant
public
participation
development
of
conditions.
the
public comment on whether
the
in light of the
that surrounded
Accordingly,
restrictions
the original
the Board
seeks
should be retained,
modified or removed.
Comments
Docket No.
R-0663,
of Governors
be mailed
the
this
than May
19,
to William W. Wiles,
delivered
Reserve
to
the
N.W.,
System,
courtyard
between
Washington,
D.C.,
Citicorp's
request
notice,
which
should
refer to
must be received at the offices of the Board
no later
Federal
Street,
regarding
All comments should
Secretary, Board of Governors of
Washington,
entrance,
D.C.
Eccles
20551,
Building,
or
20th
"C" Street and Constitution Avenue, N.W.,
between
for
1989.
8:45
relief
a.m.
and
5:15
is available
p.m.
for
weekdays.
inspection at
the offices of the Board of Governors.
Board
of
Governors
of
the
Federal
Reserve
April 12, 1989.
(sianed)
Jennifer J. Johnson
Jennifer J. Johnson
Associate Secretary of the Board
System,
@FedFRASER