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FEDERAL RESERVE BANK
OF NEW YORK
[
C ir c u la r N o .
10550 "1
J u ly 8 , 1 9 9 2
CHANGES TO REDUCE REGULATORY BURDEN
— Amendments to Regulation Y, Effective June 29, 1992
— Proposed Regulatory Amendments, For Comment by July 29, 1992
To A ll Bank Holding Companies, and Others
Concerned, in the Second Federal Reserve District:
In order to reduce unnecessary regulatory burdens, the Board of Governors o f the Federal Re
serve System has:
(a) adopted am endm ents, effective June 29, 1992, to its Regulation Y, “Bank Holding
Com panies and Change in Bank C ontrol,” to waive certain m erger application requirem ents
and lessen application requirem ents for certain nonbank company and assets acquisitions; and
(b) invited com m ents, by July 29, 1992, on proposals that would (1) reduce the num ber
o f new spaper notices required when filing applications with the Board, and (2) exempt certain
transactions with affiliates that are related to a m erger or consolidation from the limitations
o f section 23A of the Federal Reserve Act.
Following are the texts of the B oard’s announcements:
Final amendments
The Federal Reserve Board has announced approval of amendments to Regulation Y (Bank Holding
Companies and Change in Bank Control) which streamline certain procedural requirements to reduce
unnecessary regulatory burden.
The amendments, which are effective June 29, 1992, will:
• Increase the size of nonbank companies that can be acquired by bank holding companies under
the 15-day expedited notice procedures;
• Increase the relative size of nonbank assets that can be acquired by bank holding companies in
the ordinary course of business without prior System approval; and
• Describe the criteria for determining when an application pursuant to Section 3 of the Bank Hold
ing Company Act may be waived in connection with certain bank mergers.
Enclosed is a copy of the am endm ents, as published in the Federal Register of June 29. Ad
ditional, single copies may be obtained at the Bank (33 Liberty Street) from the Issues Division
on the first floor, or by calling our Circulars Division (Tel. No. 212-720-5215 or 5216).
Proposed Amendments
The Federal Reserve Board has requested public comment on proposed changes to the Board’s reg
ulations and procedures affecting the applications process in order to reduce the regulatory burden.
Comments should be received by July 29, 1992.
10556
These proposed amendments to the Board’s Rules of Procedure and to Regulation Y (Bank Holding
Companies and Change in Bank Control) would:
• Halve the newspaper publication requirements for a variety of banking structure applications; and
• Exempt mergers of affiliated banks and affiliated thrift institutions from the requirements of Sec
tion 23A of the Federal Reserve Act if the merger is to be acted on by the primary regulator of
the resulting institution pursuant to the Bank Merger Act.
P rinted on the following pages is the text of the B oard’s proposals, as published in the Federal
Register o f June 29. Comments thereon should be subm itted by July 29, 1992, and may be sent to
the B oard, as indicated in the notice, or to our Dom estic Banking Applications Division.
Questions on these matters may be directed to Jay B ernstein, Staff Director, Dom estic Banking
A pplications Division (Tel. No. 212-720-5861).
E.
G
erald
C
o r r ig a n
,
President.
2
FEDERAL RESERVE SYSTEM
12 CFR Parts 225 and 262
[Regulation Y; Docket No. R-0760]
Bank Holding Companies and Change
In Bank Control; Rules of Procedure
AGENCY: Board o f G overnors o f the
Federal R eserve System .
ACTION: Proposed rule.
SUMMARY: Pursuant to the
Adm inistrative Procedure Act, the Board
is requesting public comment on
proposed amendments to the provisions
o f its Rules o f Procedure (Rules) and the
Board's Regulation Y, Bank Holding
Com panies and Change in Bank Control.
Section 262.3(b) o f these Rules require
tw o new spaper publications o f notice o f
applications filed with the Federal
Reserve under section 9 o f the Federal
Reserve A ct (for membership or to
establish branches), the Bank M erger
A ct (if a state member bank is involved),
and the Bank H olding Com pany A c t
The proposed amendments w ould
reduce from twice to once the number o f
times notice must be published in a
new spaper o f general circulation o f the
filing o f an application with the Board.
The amendments w ould have no effect
on public comment periods, which
currently start when the first notice is
published. Alternative sources o f notice
w ill continue to be available, such as the
w eekly list o f pending applications
prepared by the Board and the Reserve
Banks and, in the case o f Bank Holding
Com pany A ct applications, notices
published in the Federal Register.
DATES: Comments on the revised
proposed amendments should be
submitted no later than July 29,1992.
ADDRESSES: Comments should refer to
Docket N o. R-0760 and may be mailed to
the Board o f Governors o f the Federal
Reserve System, 20th Street and
Constitution Avenue, N W ., Washington,
D C 20551, to the attention o f Mr.
W illiam W . W iles, Secretary: or
delivered to the B oard’s M ail Room
betw een 8:45 a.m. and 5:15 p.m., or to the
B oard’s Security Control Room outside
o f those hours. Both the M ail Room and
the Security Control Room are
accessible from the courtyard entrance
on 20th Street between Constitution
A venue and C Street, N W . Comments
may be inspected in room B-1122
betw een 9 a.m. and 5 p.m. weekdays,
except as provided in § 261.8 o f the
Board’s Rules Regarding A vailability o f
Information, 12 CFR 261.8.
FOR FURTHER INFORMATION CONTACT:
John H arry Jorgenson, Senior Attorney
(202/452-3778), or D eborah M. A w a i.
Attorney (202/452-3594), Legal Division:
Sidney M. Sussan, Assistant Director
(202/452-2638), or G ary P. Knoblach,
Senior Financial A nalyst (202/452-3270),
Division o f Banking Supervision and
Regulation, Board o f Governors of the
Federal Reserve System. For the hearing
impaired only, Telecommunication
Device for the D ea f (TD D ), Dorothea
Thompson (202/452-3544): Board of
Governors o f the Federal Reserve
System, 20th and C Streets. N W ..
W ashington, D C 20551.
SUPPLEMENTARY INFORMATION: The
Administrative Procedure Act (5 U.S.C.
552(a)(1)) requires each agency to
publish in the Federal Register
statements that include requirements of
all formal and informal procedures
available and its rules o f procedure. In
order to fulfill this requirement, the
Board has adopted Rules o f Procedure
(12 CFR part 262) (Rules).
Currently, § 262.3(b)(1) o f these Rules
requires an applicant to publish notice
o f the following types o f applications
"o n the same day o f each o f two
consecutive w eek s” in a new spaper of
general circulation:
(i) A pplication by a sta te bank for
m em bership in the Federal R eserve
System ;
(ii) A pplication by a State m em ber
bank to estab lish a dom estic branch;
(iii) A pplication by a S tate m em ber
bank for the relocation o f a d om estic
branch office;
(iv) A pplication by a bank for merger,
consolidation , or acqu isition o f a sse ts or
assum ption o f liab ilities, if the acquiring,
assum ing, or resulting bank is to be a
S tate m em ber bank;
(v) Application by a company to
become a bank holding company; and
(vi) Application by a bank holding
company to acquire ownership or
control o f shares or assets o f a bank, or
to merge o r consolidate with any other
bank holding company.
The Board proposes to amend $
262.3(b)(1) o f its Rules and a related
policy statement regarding notice of
applications (12 CFR 262.25) to reduce
the new spaper publication requirement
from twice to once. These amendments
w ould reduce a regulatory burden
associated with the filing o f applications
by reducing the new spaper publication
costs and paperwork burden associated
with applications that are subject to the
publication requirement. A s part o f this
action, the Board w ould amend
instructions for its application forms to
3
conform to the notice requirements in
the Rules. The Board also proposes to
make parallel amendments to $
225.14(b) and 225 23.(d) o f its Regulation
Y (12 CFR part 225) to conform with the
revised notice requirements. This
proposal w ould not affect the length o f
the public comment period for any
application.
Before adopting these amendments,
the Board w ill consider whether the
action w ould have a serious adverse
effect on actual notice o f applications.
N ew sp ap er notices are only one o f
several means by which notice is
provided to interested parties that the
Board is reviewing a proposed
transaction. For example, the notice
required by § 262.3(b)(1) is in addition to
w eekly lists issued by the Board and the
Reserve Banks identifying applications
filed and acted upon under sections 3
and 4 o f the Bank Holding Com pany A ct
(12 U.S.C. 1842 & 1843) and the Bank
M erger A ct (section 18(c) o f the Federal
Deposit Insurance Act; 12 U.S.C.
1828(c)). This list is provided to any
interested party upon request, including
requests for regular notice o f all filings
o f applications.1 The Board also
S
publishes notice o f all Bank Holding
Com pany A ct applications in the
F ederal Register. In addition, depository
institutions and their holding companies
may provide actual notice o f upcoming
corporate reorganizations to customers
and to persons in their service areas in
the form o f press releases, new s stories,
and direct mail or lobby notices. In
order to assist the Board in addressing
this consideration, the Board specifically
requests comment on the benefits that
reducing the publication burden w ould
have com pared to the reduction in
required n ew spaper notice.
Before adopting these amendments,
the Board also w ill consider whether the
amendments w o u ld have a serious
adverse effect on the opportunity for
public comment. Currently, § 262.3(b)(1)
o f the Rules provides that the First notice
m ay appear no more than ninety
calendar days prior to acceptance o f the
application by the applicant’s Reserve
Bank and that the notices must provide
an opportunity for the public to give
written comment on the application to
the appropriate Federal Reserve Bank
for at least thirty days after the date o f
publication o f the first notice. The
1See fi 282.30) of the Rules and the policy
statement at 12 CFR 262.25 for a more detailed
description of these alternate sources of information
on these applications.
(0950
amendments w ould retain the
requirements that new spaper notice
must appear in a new spaper o f general
circulation no more than ninety calendar
days prior to acceptance of an
application as w ell as the requirement
that the notice provide for a thirty day
comment period. The Board invites
comment on the possible affects on
public notice that reducing the
publication requirement can be
expected to have.
Regulatory Flexibility Act A nalysis
Pursuant to section 605(b) o f the
Regulatory Flexibility A ct (Pub. L. 96354, 5 U.S.C. 601 e t seq.), the Board does
not believe that the proposed
amendments w ould have a significant
adverse economic impact on a
substantial number o f small entities. The
proposed amendments w ould reduce
certain regulatory burdens for all
depository institutions, reduce certain
burdens for small depository
institutions, and have no particular
adverse effect on other small entities.
List o f Subjects
12 CFR Part 225
Adm inistrative practice and
procedure, Banks, banking, Federal
Reserve System, H olding companies,
Reporting and recordkeeping
requirements, Securities.
12 CFR Part 262
Adm inistrative practice and
procedure, Federal Reserve System.
For the reasons set forth in the
preamble, the Board proposes to amend
title 12 o f the Code o f Federal
Regulations, parts 225 and 262, as
follows:
PART 225-— BANK HOLDING
COMPANIES AND CHANGE IN BANK
C O N TR O L
1. The authority citation for part 225
w ould continue to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818,
1831(i), 1843(c)(8), 1844(b), 3106, 3108, 3907,
3909, 3310, and 3331-3351, and sec. 306 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991 (Pub. L No. 102-242,
105 Stat. 2236 (1991)).
Subpart B—Acquisition of Bank Securities
or A ssets
2. Section 225.14 is am ended by
adding a n ew paragraph (b)(3 ) to read as
follows:
§ 225.14 Procedures for applications,
notices, and hearings.
*
*
*
(b )
*
*
*
* * *
(3) N ew sp a p er notice. The applicant
shall cause to be published in a
new spaper o f general circulation in the
affected community, in the form
prescribed by the Board in 12 CFR
262.3(b), at least one notice soliciting
public comment on the proposed
acquisition.
*
*
*
*
*
Subpart C—Nonbanking Activities and
Acquisitions by Bank Holding Companies
3.
Section 225.23 is am ended by
removing the heading to paragraph (d),
by revising the headings to paragraphs
(d)(1) and (d)(2) and by adding a n ew
paragraph (d)(3) to read as follows:
§ 225.23 Procedures for applications,
notices, and hearings.
*
*
§ 262.3
*
*
*
*
*
Federal R egister notice for
liste d a ctivities. * * *
(2) Federal R egister notice for unlisted
activities. * * *
(3) N ew spaper notice. The applicant
(d)(1)
shall cause to be published in a
new spaper o f general circulation in the
affected community, in the form
prescribed by the Board in 12 CFR
262.3(b), at least one notice soliciting
public comment on the proposed
acquisition.
*
*
*
*
*
(b )
*
Applications.
*
*
*
* * * (l ) ( i ) * * *
*
*
*
(ii)
The notice shall be placed in the
classified advertising legal notices
section o f the newspaper, and must
provide an opportunity for the public to
give written comment on the application
to the appropriate Federal Reserve Bank
for at least thirty days after the date of
publication. W ithin 7 days of
publication, the applicant shall submit
its application to the appropriate
Reserve Bank for acceptance along with
a copy o f the notice. If the Reserve Bank
has not accepted the application as
complete within ninety days o f the date
o f publication o f the notice, the
applicant may be required to republish
notice o f the application. * * *
*
*
*
*
*
§ 262.3
[Amended]
3. In § 262.3, paragraph (b)(2 ) w ould
be amended by removing the w ord
“first” in the second sentence.
§ 262.25
[Amended]
4. In | 262.25, paragraph (a)(1) w ould
be amended by removing the w ord
“first" in the first sentence.
By order of the Board of Governors of the
Federal Reserve System, June 23,1992.
William W. Wiles,
Secretary o f the Board.
(FR Doc. 92-15135 Filed 6-26-92: 8:45 am]
PART 262— RULES OF PROCEDURE
1. The authority citation for part 262
w ould continue to read as follows:
Authority: 5 U.S.C. 552.
2. In § 262.3, by redesignating
paragraphs (b)(1 ) introductory text,
(b )(l )(i ) through (vi), and the flush text
beginning “the applicant" and ending
with “the B oard” as paragraphs (b )(l )(i )
introductory text, (b ) (l ) (i ) (A ) through
(F), and (b )(l )(i ) concluding text,
respectively: by removing the w ord s "on
the same day o f each o f two consecutive
w eek s” from the new ly designated
paragraph (b )(l )(i ) concluding text; by
designating the text, following new ly
designated paragraph (b )(l)(i )
concluding text, which begins with the
sentence ‘T h e notice shall be placed in
the classified” as paragraph (b )(l)(ii);
and by revising the first, second and
third sentences o f new ly designated
paragraph (b )(l)(i i) to read as follows:
4
BILLING CODE 6 2 1 0 -0 1 -F
12 CFR Part 250
[Docket No. R-0762]
Transactions with Affiliates
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Notice o f proposed rulemaking.
SUMMARY: The Board is proposing to
exempt from the limitations o f section
23A o f the Federal Reserve A ct the
transfer o f assets and liabilities between
affiliated insured depository institutions
w hen the transfer is part o f the merger
or consolidation o f the affiliated
institutions. The proposed exemption
w o u ld be available only for transactions
that must be approved by the resulting
insured depository institution's primary
regulator under the Bank M erger Act.
The exemption w ould be available by
regulation, and transactions that meet
l053>
that are consistent with safe and sound
banking practices.
Section 23A provides an exemption
for several types o f transactions. In
addition, section 23A provides the Board
with general authority to act by order or
regulation to grant exemptions from the
provisions o f section 23A for any
transaction w here the Board determines
that an exemption is consistent with the
purposes o f the section.
Savings associations becam e subject
to section 23A in 1989 as part o f the
Financial Institutions Reform, Recovery,
and Enforcement A ct o f 1989 (FIRREA),
and thus, transactions betw een
affiliated savings associations are
subject to the quantitative, collateral
and qualitative restrictions o f section
23A . 1 The legislative history o f FIRREA
indicates that Congress intended the
Board's general exemptive authority to
extend to transactions involving savings
associations w here an exemption is
consistent with the purposes o f section
23A and with prior Board exemptions.*2
FOR FURTHER INFORMATION CONTACT:
A number o f insured depository
Pam ela G. Nardolilli, Senior Attorney
institutions recently have sought advice
(202/452-3289), or Christopher Bellini,
from the Board regarding whether the
Attorney (202/452-3269), Legal Division,
provisions o f section 23A apply to
Board o f Governors o f the Federal
transactions in which one institution
Reserve System. For the hearing
acquires the assets o f an affiliated
im paired on ly , Telecommunications
institution through a merger or
D evice for the D e a f (TD D ), Dorothea
consolidation o f the two institutions.
Thom pson (202/452-3544). Board o f
M erger transactions involving affiliated
Governors o f the Federal Reserve
banks generally have not been subjected
System, 20th and C Streets, N W .,
to the provisions o f section 23A where
W ashington, D C 20551.
these transactions have been approved
SUPPLEMENTARY INFORMATION: Section
by a federal banking agency pursuant to
23A o f the Federal Reserve Act, 12
the Bank M erger A c t R eview o f the
U.S.C. 371c. regulates certain
transaction under the Bank M erger Act
transactions betw een depository
includes review o f the financial impact
institutions and their affiliates, including o f the transaction and the quality and
transactions betw een affiliated
soundness o f the assets transferred in
depository institutions. Section 23A is
the transaction. By its terms, the
designed to protect insured depository
restrictions imposed by section 23A do
institutions from abuses that may result
not apply to mergers involving
from lending and asset purchase
unaffiliated depository institutions.
transactions with their affiliates. In
The Board proposes to act by
general, section 23A prohibits an
regulation to grant an exemption from
insured depository institution from
the section 23A limits for transactions
engaging in covered transactions (which
involving the merger o f affiliated insured
include extensions o f credit and
depository institutions w here the
purchases o f assets) with any single
transaction is approved under the Bank
affiliate in excess o f 10 percent o f the
M erger Act.3 The Board requests public
institution’s capital and surplus. A 20
comment on this proposal.
percent aggregate limit is imposed on
the total amount o f covered transactions
* 12 U.S.C. 1468.
b y a bank with all affiliates. U nder
• See 135 Cong. Rec. S10200 (daily ed. August 4.
1989) (statements of Senators Gam, Riegle and
section 23A, all extensions o f credit
Sanford), and 135 Cong. Rec. H4997 (daily ed.
betw een a bank and its affiliate must
August 3,1989) (statements of Representatives
meet certain collateral requirements.
Gonzalez and Carper).
Section 23A also prohibits an insured
3 Under the Bank Merger Act, before an insured
depository institution from purchasing
institution merges with, or acquires the branches of,
any low -quality assets from an affiliate,
another institution, it is required to file an
and requires that all transactions with
application with its primary regulator, even if the
institutions already are commonly owned.
an affiliate must be conducted on terms
the proposed criteria w ill not require
additional Board review under section
23A.
DATES: Comments must be submitted on
or before July 29,1992.
a d d r e s s e s : Comments, which should
refer to Docket No. R-0762 may be
mailed to the Board o f Governors o f the
Federal Reserve System, 20th Street and
Constitution Avenue, N W „ W ashington,
D C 20551, to the attention o f Mr.
W illiam W . W iles, Secretary. Comments
addressed to the attention o f M r. W ile s
m ay be delivered to the B oard's mail
room betw een 8:40 a.m. and 5:15 p.m.,
and to the security control room outside
o f those hours. Both the mail room and
the security control room are accessible
from the courtyard entrance on 20th
Street betw een Constitution A venu e and
C Street, N W . Comments may be
inspected in room B-1122 betw een 9 a.m.
and 5 p.m.. except as provided in S 261.8
o f the B oard's Rules Regarding the
A vailability o f Information, 12 CFR
261.8.
5
Regulatory Flexibility A ct A nalysis
Pursuant to section 605(b) o f the
Regulatory Flexibility A ct (Pub. L. 96354. 5 U.S.C. 601 e t aeq.), the Board does
not believe that the interpretation w ould
have a significant adverse economic
impact on a substantial number o f small
entities. The interpretation w ould
reduce regulatory burdens imposed by
section 23A and have no particular
adverse effect on other entities.
List o f Subjects in 12 C FR Part 250
Federal Reserve System.
For the reasons set forth in the
preamble, the Board proposes to am end
title 12 o f the C ode o f Federal
Regulations, part 250, as follow s:
PART 250— MISCELLANEOUS
INTERPRETATIONS
1.
The authority citation for part 250
w ould continue to read as follows:
Authority: 12 U.S.C. 248(i).
2.12
follows:
CFR 250.241 is added to read as
§ 250.241 Exemption from section 23A of
the Federal Reserve Act for merger
transactions between certain affiliated
Insured depository institutions.
(a ) Grant o f exem ption. A n exemption
from the provisions o f section 23A o f the
Federal Reserve A ct is granted for the
purchase by one insured depository
institution o f the assets o f another
insured depository institution if—
(1) The transaction represents the
purchase by the insured depository
institution o f all or substantially ail o f
the assets o f the other institution or the
merger or consolidation o f the insured
depository institution with the other
institution, in a transaction in which
only one o f the insured depository
institutions continues to operate; and
(2) The transaction has been approved
by the appropriate federal banking
agency for the surviving insured
depository institution pursuant to the
Bank M erger Act.
(b ) Definitions. For purposes o f this
section, the terms "appropriate federal
banking agency" and "insured
depository institution" are defined as
those terms are defined in section 3 o f
the Federal Deposit Insurance Act.
By order of the Board of Governors of the
Federal Reserve System. June 23,1992.
William W. Wil8S,
Secretary o f the Bocrd.
[FR Doc. 92-15130 Filed 6-26-92; 8:45 am]
BILLIN' CODE 6 2 1 0 -0 1 -f
M onday
June 29, 1992
Vol. 57, No. 125
Pp. 28777-28779
Am endm ents to R egulation Y
Docket No. R-0761
Changes in Application Requirements
Effective June 29, 1992
FEDERAL RESERVE SYSTEM
12 CFR Part 225
[Regulation Y; Docket No. R-0761]
Bank Holding Companies and Changes
in Bank Control
AGENCY: Board of Governors of the
Federal Reserve System.
a c t io n : Final rule.
s u m m a r y : The Board has revised part
225 (Regulation Y ) by streamlining
certain procedural requirements in that
rule to reduce unnecessary regulatory
burden.
The revisions include: the publication
o f criteria to determine whether an
application under the Bank H olding
Com pany A ct (B H C A ct) may be w aiv ed
for transactions involving certain bank
mergers; an increase in the size of
nonbank companies that can be
acquired b y a bank holding company
under the B oard’s 15-day expedited
notice procedures; and an increase in
the relative size o f nonbank assets that
can be acquired b y a bank holding
com pany in the ordinary course o f
business without prior Federal Reserve
System (System ) approval.
EFFECTIVE d a t e : The amendments to
part 225 o f the B oard’s Rules are
effective June 29,1992.
FOR FURTHER INFORMATION CONTACT:
Scott G. A lvarez, A ssociate General
Counsel (202/452-3583), or D eborah M.
A w a i, Attorney (202/452-3594), Legal
Division; Sidney M . Sussan, Assistant
Director (202/452-2638), or G ary P.
Knoblach, Senior Financial A nalyst
(202/452-3270), Division o f Banking
Supervision and Regulation, Board of
Governors o f the Federal Reserve
System. For the hearing impaired on ly ,
Telecommunication Device for the D e a f
(T D D ), Dorothea Thom pson (202/4523544), Board o f Governors o f the Federal
Reserve System, 20th apd C Streets,
N W ., W ashington, D C 20551.
SUPPLEMENTARY INFORMATION: The
Board has revised several provisions o f
the B oard’s Regulation Y (part 225) to
streamline certain procedures to reduce
unnecessary regulatory burden. The
adoption o f these procedures w ould not
jeopardize important public policy
objectives, particularly maintaining the
safety and soundness o f the banking
system, or the B oard's ability to fulfill
statutory objectives. The revisions
include:
(1)
The publication of criteria to
determine whether an application under
the Bank Holding Company Act may be
waived for transactions involving
certain bank mergers;
(2) A n increase in the size o f nonbank
companies that may be acquired by a
bank holding company under the
Board’s 15-day expedited notice
procedures; and
(3) A n increase in the relative size of
nonbank assets that may be acquired by
a bank holding company in the ordinary
course o f business without prior System
approval.
I. W a iv e r o f Bank M erger Act
Applications
Section 225.12 o f Regulation Y
provides that a bank holding company is
not required to obtain prior Board
approval for a transaction that involves
the merger or consolidation o f a
subsidiary bank o f the holding company
with another bank if the transaction
requires the prior approval o f a federal
supervisory agency under the Bank
M erger A c t.*1 This exception does not by
its terms apply to transactions in which
the bank holding company acquires the
voting shares o f another bank prior to
merging the bank into an existing
subsidiary. This exception also does not
apply if the bank holding company
acquires shares o f a bank holding
company that is immediately dissolved
or merged as part o f the underlying bank
merger.
The System has, on a case-by-case
basis, determined that an application is
not required in situations where the
essence o f the transaction is a bank
merger that is review ed by a federal
banking agency under the Bank M erger
Act, the merger occurs simultaneously
with the bank or bank holding company
acquisition and the bank is not operated
by the acquiring bank holding company
as a separate entity, and the transaction
does not raise any significant issue that
is uniquely within the Board’s area o f
review under the B H C A ct.2 The Board
believes that formally publishing these
conditions w ould eliminate applicant
burden and make the applications
process more efficient.
Accordingly, the Board has amended
§ 225.12 o f Regulation Y to w aive the
application requirement under the B H C
A ct and $ 225.11 o f Regulation Y in the
case of a transaction involving the
* This exception is not available for transactions
that involve the merger of a nonsubsidiary bank and
a nonoperating subsidiary bank formed by a
company for the purpose of acquiring the
nonsubsidiary bank or any transaction requiring the
Board's prior approval under { 225.11(e).
1 For example, where the bank holding company
is to acquire a bank as a subsidiary for a moment in
time and then merge the bank into an existing
subsidiary bank.
2
acquisition by a bank holding company
if the transaction involves primarily the
merger o f a bank into an existing
operating subsidiary bank o f the
acquiring bank holding company in a
transaction that is review ed by a federal
banking supervisor under the Bank
M erger Act. In order to qualify for this
regulatory w aiver, the following other
criteria must also be met:
(1) The bank merger, consolidation, or
asset purchase must occur
simultaneously with the acquisition o f
the shares o f the bank or bank holding
company, and the bank must not be
operated by the acquiring bank holding
company as a separate entity other than
as the survivor o f the merger or
consolidation;
(2) The transaction may not involve
the acquisition o f any nonbank company
that w ould require prior approval under
section 4 o f the B H C A ct (12 U.S.C.
1843);
(3) Both before and after the
transaction, the bank holding company
must meet the B oard’s Capital
A dequ acy Guidelines (appendices A
and B );3 and
(4) The acquiring bank holding
company has provided written notice o f
the transaction to the Reserve Bank at
least 30 days prior to consummation of
the transaction, and the Reserve Bank
has not informed the bank holding
company that an application under §
225.11 is required.
Notice o f a transaction under this
revision w o u ld be sufficient if it
contains a description o f the
transaction, the names o f the parties,
and a copy o f the Bank M erger A ct
application filed with the prim ary
regulator o f the surviving bank. The
System retains the authority to require
an application under the B H C A ct and $
225.11 o f Regulation Y if the System
determines that the transaction has a
significantly adverse impact on the
financial condition o f the acquiring bank
holding company (e.g., the level o f debt
o f the acquiring bank holding company
w ould increase significantly, the ability
to meet cash flo w needs w o u ld be
significantly impacted, or other financial
or m anagerial issues are raised), or the
transaction raises other issues regarding
factors which the System has prim ary or
3 Banking organizations anticipating significant
growth are expected to maintain capital, including
tangible capital positions, well above the minimum
levels. For example, most such organizations
generally must operate at capital levels ranging at
least 100 to 200 basis points above the stated
minimums.
(fiS S ®
exclusive jurisdiction under the B H C
Act.
III. N on bank Assets A cquired in the
Ordinary Course o f Business
II. Criteria for U se o f 15-Day Expedited
Procedure
Pursuant to $ 225.22(c)(7) o f
Regulation Y, a bank holding company
may, under certain circumstances,
acquire nonbank assets in the ordinary
course o f business without filing an
application if the assets to be acquired
relate to activities that the bank holding
company has previously received
approval to conduct. The Board has
interpreted the exception for
transactions conducted in the ordinary
course o f business to permit the
acquisition o f less than substantially all
o f the assets o f a company, division, or
department o f another company. 12 CFR
225.132. This interpretation also requires
that the book value o f the assets to be
acquired not exceed 20 percent o f the
book value o f the assets o f the applicant
in the sam e line o f activity.
The Board has established, in §
225.23(f) o f Regulation Y, an expedited
procedure for reviewing proposals by
bank holding companies to make small
acquisitions o f nonbanking companies.
U nder this existing procedure, a bank
holding company may, in lieu of
submitting a formal application, file an
abbreviated notice that includes a copy
o f a new spaper notice or request that
the System publish notice o f the
application in the Federal Register, and
may consummate the transaction
generally after five days following the
close o f the public comment period for
the proposal. The expedited procedure
is available only if:
(1) The company to be acquired is
engaged only in activities listed in $
225.25 o f Regulation Y;
(2) Neither the book value o f the
assets to be acquired nor the gross
consideration to be paid for the
securities or assets exceeds $15 million:
(3) The bank holding company has
previously received Board approval to
engage in the activity involved in the
acquisition; and
(4) The bank holding company meets
the B o ard ’s capital adequacy guidelines.
The Board adopted this procedure in
its amendments to Regulation Y in 1983.
The Board’s experience in reviewing
small acquisitions since that time has
been that fe w supervisory or other
issues are raised by these proposals.
W h ere a proposal presents material
issues that require Board consideration,
the Board has reserved the right to
require the acquiring bank holding
company to file a full application.
The Board has determined, based on
its experience with transactions that do
not qualify for the exception because the
transaction exceeds 20 percent o f the
acquiring com pany’s assets, to expand
from 20 percent to 50 percent the
relative size criteria in the Board's
interpretation at § 225.132 o f Regulation
Y. The Board believes that such an
expansion o f the criteria w ould not
materially affect the ability o f the
System to supervise the acquisition o f
nonbank assets by bank holding
companies, and it w ould place banking
organizations on a more com parable
footing with nonbanking competitors in
making acquisitions.
Regulatory Flexibility A ct Analysis
Pursuant to section 605(b) o f the
Regulatory Flexibility Act (Pub. L. 96354, 5 U.S.C. 601 et seq.), the Board does
In light o f this experience, the Board
not believe that the amendments w ould
has determined to raise the limit on the
have a significant adverse economic
size o f an acquisition that w ould qualify
impact on a substantial number o f small
for the expedited procedures. This
entities. The amendments w ould reduce
revision permits bank holding
regulatory burdens imposed by the
companies (subject to the other criteria)
Board’s procedures on bank holding
to acquire nonbank companies where
companies, and have no particular
neither the book value o f the assets to
adverse effect on other entities. These
be acquired nor the gross consideration
amendments are expected to have a
paid for the assets exceeds the lesser of
particular benefit to small bank holding
$100 million or five percent o f the
companies, which are the companies
applicant's consolidated assets.4
that are primarily affected by the limits
that have been raised or removed by
these amendments.
4 The revision retains the existing provision for
bank holding companies with less than $300 million List o f Subjects in 12 C FR Part 225
in total consolidated assets that otherwise meets
Administrative practice and
the criteria set forth in this subsection. These bank
holding companies would continue to be able to use procedure, Banks, banking, Federal
the expedited procedure if neither the book value of Reserve System, Holding companies.
the assets to be acquired nor the gross
Reporting and recordkeeping
consideration to be paid for the securities or assets
requirements, Securities.
exceeds $15 million.
3
For the reasons set forth in the
preamble, the Board amends title 12 of
the C ode o f Federal Regulations, part
225, to read as follows:
P A R T 225— B A N K H O L D IN G
C O M P A N IE S A N D C H A N G E IN B A N K
C O N TR O L
1. The authority citation for part 225
continues to read as follows:
Authority: 12 U.S.C. 1817(j){13), 1818,
1831(f), 1843(c)(8), 1844(b), 3106, 3108, 3907,
3909. 3310, and 3331-3351, and sec. 306 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991 (Pub. L No. 102-242.
105 Stat. 2236 (1991)).
2. Section 225.12 is am ended by
redesignating paragraphs (d) heading
and introductory text, (d)(1), and (d)(2)
as paragraphs (d)(1) heading and
introductory text, (d )(l)(i), and (d)(1)(H),
respectively, and by adding a new
paragraph (d)(2) to read as follows:
§225.12 Transactions not requiring Board
approval.
♦
*
*
*
*
(d)(1) * * *
Certain acquisitions subject to the
Bank M erger A ct. The acquisition by a
(2)
bank holding company of shares o f a
bank or company controlling a bank as
part o f the merger or consolidation of
the bank with a subsidiary bank (other
than a nonoperating subsidiary bank) of
the acquiring bank holding company, or
the purchase o f substantially all of the
assets o f the ban k b y a subsidiary bank
(other than a nonoperating subsidiary
bank) o f die acquiring bank holding
company, if—
(i) The bank merger, consolidation, or
asset purchase occurs simultaneously
with the acquisition o f the shares o f the
bank or bank holding company, and the
bank is not operated b y the acquiring
bank holding company as a separate
entity other than as the survivor o f the
merger, consolidation or asset purchase;
(ii) The transaction requires the prior
approval o f a Federal supervisory
agency under the Bank M erger A ct (12
U.S.C. 1828(c));
(iii) The transaction does not involve
the acquisition o f any nonbank com pany
that w o u ld require prior approval under
section 4 o f the Bank H olding Com pany
A ct (12 U.S.C. 1843);
(iv) Both before and after the
transaction, the acquiring bank holding
company meets the Board’s Capital
Adequacy Guidelines (appendices A
and B); and
(v) The acquiring bank holding
company has provided written notice o f
the transaction to the Reserve Bank at
least 30 days prior to the transaction,
(ObSo
and during that period, the Reserve
Bank has not informed the bank holding
company that an application under §
225.11 is required.
4
4
4
4
4
3.
Section 225.23 is am ended by
revising paragraph (f)(2)(i), and by
republishing paragraph (f)(2)
introductory text, to read as follows:
§225.23 Procedures for applications,
notices, and hearings.
4
*
*
*
*
(f) E xpedited procedure fo r sm all
acquisitions — * * *
*
4
4
4
#
Criteria fo r use o f e x p ed ited
procedure. The procedure in this
(2)
(2)
* * * For purposes o f this
paragraph is available only if:
interpretation, an acquisition w ould
(i)
Neither the book value o f the assets
generally be presumed to be significant
to be acquired nor the gross
consideration to be paid for the
if the book value o f the nonbank assets
securities or assets exceeds the greater
being acquired exceeds 50 percent o f the
of:
book value o f the n o n bin k assets o f the
(A ) $15 million; or
holding company or nonbank subsidiary
(B) 5 percent o f the consolidated
comprising the same line o f activity.
assets o f the acquiring company up to a
*
*
*
*
*
maximum o f $100 million;
4
4
4
4
4
4.
Section 225.132 is am ended by
revising the second sentence in
paragraph (c)(2) to read as follows:
§225.132
4
4
Acquisition of assets.
4
4
4
By order of the Board of Governors of the
Federal Reserve System, June 23,1992.
William W. Wiles,
Secretary o f the Board.
(FR Doc. 92-15182 Filed 8-26-92; 8:45 amj
BILLING CODE 6210-01-F
(c)***
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