The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No.
10739 ~|
N ovem ber 9 , 1994
BANK HOLDING COMPANY APPLICATIONS
Interim Rule on Simplified Procedures
With Request for Comments by December 5
To All Bank Holding Companies, and Others
Concerned, in the Second Federal Reserve District:
F o llo w in g is th e te x t o f a sta te m e n t b y th e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y ste m :
The Federal Reserve Board has issued interim rules implementing changes to the Board’s
application procedures established by the Riegle Community Development and Regulatory Improvement
Act of 1994 (the “CDR Act”) and requested public comment on these rules.
Comment is requested by December 5, 1994.
The CDR Act makes certain revisions to the procedures that bank holding companies must follow
to gain approval of bank and nonbank acquisition proposals under the Bank Holding Company Act.
Specifically, the CDR Act:
• establishes a prior notice procedure to replace the current application process for all proposals
by bank holding companies to engage in nonbanking activities;
• establishes a streamlined notice procedure for the formation of a new bank holding company as
part of a reorganization by the existing shareholders of a bank;
• permits the Board, when it has obtained the consent of the Department of Justice, to shorten from
30 days to 15 days the post-approval waiting period during which the Department may file a court
challenge to a bank acquisition proposal on competitive grounds; and
• eliminates the need for prior Board approval of certain “Oakar” transactions whereby a bank
acquires a thrift or thrift assets.
Because these amendments became effective upon enactment of the CDR Act, the Board has
adopted interim rules implementing these changes to the Board’s application and notice procedures.
In addition to seeking comment on these rules, the Board also seeks comment on any other ways
in which the Board’s application and notice procedures may be further streamlined to reduce the
regulatory burden associated with these procedures.
P r in te d o n th e fo llo w in g p a g e s is th e te x t o f th e in te r im r u le , a s p u b lis h e d in th e
Federal Register
o f N o v e m b e r 2 . C o m m e n ts th e r e o n sh o u ld b e su b m itte d b y D e c e m b e r 5 , 1 9 9 4 , a n d m a y b e sen t
to th e B o a r d o f G o v e r n o r s , as in d ic a te d in th e n o tic e , o r to o u r B a n k in g A p p lic a tio n s D e p a r tm e n t
W il l ia m J. M c D o n o u g h ,
President.
lO T b S
Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations 54801
prohibits bank holding companies from
acquiring or retaining shares of any
company that is not a bank or engaging
SUMMARY: These rules are intended to
in any activity other than managing and
implement the simplified notice
controlling banks, except under certain
procedures recently established under
circumstances. The primary exception
section 346 of the Riegle Community
permits bank holding companies to
Development and Regulatory
conduct activities and acquire
Improvement Act of 1994 for bank
companies engaged solely in activities
holding companies proposing to engage
the Board has determined to be closely
d e n o v o or through an acquisition in
related to banking and a proper incident
nonbanking activities. Because Section
thereto. See 12 U.S.C. 1843(c)(8).
346 implements this procedure
Section 346 of the Riegle Community
immediately, the Board has proposed
Development and Regulatory
the following as an interim rule that w ill Improvement Act of 1994 (Pub. L. No.
take effect immediately and w ill apply
103-325, section 346,108 Stat. 2160,
to all notices filed subsequent to
2239 (1994)(“Section 346”)) amends
enactment of Section 346. The Board
section 4 of the BHC Act to establish a
also is seeking comments on the interim new notice procedure for obtaining
rule, and will amend the rule as needed Board approval under sections 4(a)(2)
to address the comments received. The
and 4(c)(8) of the BHC Act.1 Under
Board is currently developing additional Section 346, a proposal requiring Board
initiatives to reduce the regulatory
approval under section 4(a)(2) or 4(c)(8)
burden associated with its application
may be consummated 60 days after
and notice procedures, and the Board
providing the Board with a complete
invites comment on any suggestions in
written notice of the proposal, unless
furtherance of these initiatives.
the notice period is extended as*
DATES: Interim rule effective on
provided in the statute. Section 346 also
November 2,1994, comments must be
permits proposals to be consummated at
received by December 5,1994.
anytime during this notice period if
ADDRESSES: Comments should refer to
approved by the Board during this
Docket No. R-0852 and may be mailed
period.
The proposed interim rule would
to William W. Wiles, Secretary, Board of
replace the current application
Governors of the Federal Reserve
procedure of section 4(c)(8) of the BHC
System, 20th Street and Constitution
Act with the new notice procedure.12
Avenue, NW, Washington, DC 20551.
The rule would streamline the current
Comments also may be delivered to
procedure for obtaining Board approval
Room B-2222 of the Eccles Building
for nonbanking proposals in several
between 8:45 a.m. and 5:15 p.m.
respects. In particular, the proposed
weekdays, or to the Board’s Security
Control Room inside the Eccles Building revisions would:
courtyard on 20th Street (between
• E s ta b lis h a s im p lif ie d n o t ic e p r o c e d u r e
Constitution Avenue and C Street, NW)
fo r a c t io n o n p r o p o s a ls to e n g a g e d e n o v o or
anytime. Comments may be inspected in th r o u g h a n a c q u is it io n in a lis t e d a c t iv ity
( i.e ., a n a c t iv it y o n th e R e g u la tio n Y lis t o f
room MP-500 of the Martin Building
p e r m is s ib le n o n b a n k in g a c t iv it ie s 3) w it h in
between 9 a.m. and 5 p.m. weekdays,
3 0 d a y s o f r e c e ip t o f t h e n o t ic e b y th e
except as provided in 12 CFR 261.8 of.
R e s e r v e B an k ;
the Board’s rules regarding availability
• E s ta b lis h a n o t ic e p r o c e d u r e for a c tio n
of information.
o n p r o p o s a ls to e n g a g e d e n o v o o r th r o u g h a n
ACTION: Interim rule with request for
comments.
FOR FURTHER INFORMATION CONTACT:
FEDERAL RESERVE SYSTEM
12CFR Part 225
[Regulation Y; Docket No. R -0 85 2 ]
Applications Under Regulation Y
Board of Governors of the
Federal Reserve System.
AGENCY:
Scott G. Alvarez, Associate General
Counsel ( 2 0 2 /4 5 2 - 3 5 8 3 ) , or Terence F.
Browne, Senior Attorney ( 2 0 2 / 4 5 2 37Q7), Legal Division; or Don E. Kline,
Associate Director ( 2 0 2 /4 5 2 - 3 4 2 1 ) ,
Nicholas A. Kalambokidis, Supervisory
Financial Analyst ( 2 0 2 /4 5 2 - 3 8 3 0 ) , or
Larry R. Cunningham, Senior Financial
Analyst ( 2 0 2 /4 5 2 - 2 7 0 1 ) , Division of
Banking Supervision and Regulation of
the Board of Governors of the Federal
Reserve System. For the hearing
impaired o n ly, Telecommunications
Device for the Deaf (TDD), Dorothea
Thompson ( 2 0 2 /4 5 2 - 3 5 4 4 ) .
SUPPLEMENTARY INFORMATION: Section 4
of the Bank Holding Company Act of
1 9 5 6 (1 2 U.S.C. 1 8 4 3 ) (BHC Act)
a c q u is it io n in a n u n - lis t e d a c t iv ity o r a n e w
a c t iv it y w it h in 6 0 d a y s o f f ilin g o f a c o m p le te
n o tic e :
• E lim in a te th e c u r r e n t 2 8 d a y p rea c c e p t a n c e p e r io d fo r n o t ic e s in v o lv in g
n o n b a n k in g p r o p o s a ls ;
• R e d u c e fro m 3 0 d a y s to 1 5 d a y s th e
p u b lic c o m m e n t p e r io d for p r o p o s a ls
in v o lv in g lis t e d a c tiv itie s ; a n d
1 Section 346 establishes a n otice procedure for
situations in w h ich prior Board approval is required
under section 4(c)(8) or 4(a)(2) of the BHC Act, and
w as not intended to im pose any n ew approval
requirem ents on transactions that m ay otherw ise be
consum m ated Under section 4 o f the BHC Act
w ithou t Board approval.
2 A ll applications and n otices to engage in
nonbanking activities that w ere filed w ith a Reserve
Bank prior to Septem ber 2 3 ,1 9 9 4 w ill continue to
be processed under the existing rules.
* 1 2 CFR 225.25.
54802 Federal Register / Vol. 59, No. 211 / Wednesday* November 2, 1994 / Rules and Regulations
• Specify In the regulation the core
information that bank holding companies
must provide for a nonbanking proposal.
T h e s e r e v is io n s to th e c u r r e n t
a p p lic a tio n p r o c e d u r e s s h o u ld r e su lt in
a n o v e r a ll r e d u c tio n in th e to ta l p e r io d
o f tim e in v o lv e d in r e v ie w in g
n o n b a n k in g p r o p o s a ls , a n d in a
r e d u c tio n in th e p a p erw o rk b u r d e n
a s s o c ia te d w ith p r o p o s a ls to e n g a g e in
n o n b a n k in g a c tiv itie s . C o m m e n t is
in v it e d o n a ll a s p e c t s o f t h is p r o p o s a l.
N o t i c e P r o c e d u r e U n d e r I n t e r im R u le
To implement these statutory
changes, the Board proposes to amend
Regulation Y to replace the application
procedures for obtaining approval to
engage in nonbanking activities with a
notice procedure. The interim rule
contemplates action by the Reserve
Bank on nonbanking proposals
involving listed activities within 30
days after a notice containing all of the
information required in the rule has
been received by the Reserve Bank, in
cases that quality for Reserve Bank
action, and within 60 days o f that date
in cases involving any previously
approved activity that are subject to
Board action. While the rule also
indicates that the Board w ill seek to act
on notices involving new activities
within 60 days of receipt of the notice
by the Reserve Bank, proposals that
involve activities that have not been
previously approved by the Board often
require substantial information and may
continue to require a greater processing
period.
The interim rule specifies the
different types of information required
for proposals to engage d e n o v o in listed
activities, proposals to acquire a
company engaged in listed activities,
and proposals to engage in activities not
previously Approved by regulation
(“unlisted activities").
L is t e d A c t i v i t i e s
Bank must approve the notice, extend
the notice period for 15 calendar days,
or refer the notice to the Board for
decision because a substantive comment
on the proposal has been received or
action on the notice by the Reserve Bank
is not appropriate. The Reserve Bank
also may, within 15 calendar days of
receipt of the notice, return the notice
if it is informationally incomplete.
Under the interim rule, the return of a
notice by a Reserve Bank under such
circumstances is deemed action on the
notice.
th e B o a r d b y r e g u la tio n o r o r d e r , w h e r e ,
in f o r m a t i o n r e q u e s t s o f t e n m u s t b e
ta ilo r e d to t h e s p e c if ic p r o p o s a l.
W h ile t h e e lim in a t io n o i p r e a c c e p ta n c e p r o c e d u r e s s h o u ld sh o rten
th e r e v ie w p r o c e s s , th e B o a r d r e c o g n iz e s
th e u tility o f a p r e -a c c e p ta n c e p r o c e d u r e
a n d a n tic ip a te s th a t th e r e w i l l b e c e r ta in
p r o p o s a ls th a t c o u ld b e n e fit fr o m s o m e
fo rm o f p r e -a c c e p ta n c e r e v ie w . T h e
B o a rd in v it e s c o m m e n ts a s t o w h e th e r
s o m e fo r m o f p r e -n o tic e r e v ie w
p r o c e d u r e s h o u ld b e r e in s ta te d in th e
f i n a l r e g u la t io n s .
U n lis te d A c tiv itie s
P u b lic N o tic e
As is the practice under the current
rules, proposals to engage in activities
not previously approved by the Board
by regulation or order w ill be published
by the Board in the Federal Register
within 10 business days of acceptance
by the Reserve Bank, unless the Board
determines to extend this 10-day period
for an additional 30 days. Public notice
of proposals to engage in such new
activities shall invite comment for a
period of generally 30 days, or if the
Board determines that the notificant has
not adequately demonstrated that the
proposed activity is so closely related to
banking as to be a proper incident
thereto, the Board may return the notice
and explain the reasons for its
determination.
The interim rule provides that the
Board w ill attempt to act on all cases
referred for Board action w ithin 60 days
of the date the notice is received by the
Reserve Bank. As noted above,
proposals that involve new activities
that have not been previously approved
by the Board are likely to require a
greater processing period. In the event
the Board does not act on the notice
within 60 days of receipt by the Reserve
Bank, the Board w ill notify the bank
holding company, and explain the
reasons for needing additional time as
w ell as provide an anticipated date by
which the Board expects to act on the
notice.
Regulation Y currently provides that
(with the exception of proposals
processed under the abbreviated
procedure for small acquisitions) all
proposals to engage in previously
approved nonbankihg activities must be
published in the Federal Register and
provide for a public comment period of
not more than 30 days. Under the
interim rule, the public comment period
has been shortened from 30 days to 15
days for proposals to engage in activities
previously approved by the Board by
regulation or order. The interim rule
also provides that the Reserve Bank may
not act on a notice before the fifth
business day following the close of the
public comment period unless an
emergency exists requiring expedited or
immediate action.
Section 346'authorizes the Board to
prescribe shorter notice periods by
regulation for particular activities or
transactions. 'Hie Board invites
comment on whether further shortening
of the comment period is appropriate,
particularly for notices to engage in
activities previously approval by the
Board. In particular, the Board requests
comment on a proposal to reduce the
public comment period to 5 calendar
days for proposals that involve listed
activities and/or activities that have
been previously approved by Board
order. This would enable the Reserve
Banks to act on proposals that raise no
substantive issues w ell within the 30day target.
The proposed rule contemplates that
proposals to engage d e n o v o or to
acquire a company engaged in a listed
activity w ill be approved within 30 days v E l i m i n a t i o n o f P r e - A c c e p t a n c e R e v i e w
P e r io d
of the original date of filing of the
As noted above, the interim rule
notice, even if additional Information is
eliminates the pre-acceptance review
subsequently requested by the Reserve
procedure currently contained in
Bank or the Board. Upon receipt of a
Regulation Y for proposals to engage in
notice to engage in or to acquire a
company engaged in a listed activity (or nonbanking activities. This procedure
established a defined period of up to 28
an activity previously approved by
days during which an applicant and the
order), the Reserve Bank shall
Reserve Bank could identify and
immediately notify the Board, and the
address significant issues prior to the
Board w ill publish notice of the
filing of a final application. This
proposal in the Federal Register
inviting public comment for a period of procedure has been particularly
beneficial to the processing of complex
15 days. Within 30 calendar days after
proposals and applications to engage in
receipt by the Reserve Bank of a notice
filed under the interim rule, the Reserve activities not previously approved by
S ta tu to r y P e r io d
The interim rule incorporates the
provisions of Section 346 that establish
the permissible length of the notice
period. Under the interim rule, a notice
is deemed approved by operation of law
60 days after receipt of a complete
notice, unless extended as provided in
Section 346. As provided in the statute,
the interim rule provides that a notice
is deemed complete when it contains all
information required in the interim rule
and all other information requested by
the Board or the Reserve Bank in
ion
Federal Register l Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations 54603
connection with the notice. The Board
may extend the notice period for an
additional 30 days upon notice to the
bank holding company. If the proposal
involves an unlisted activity, the Board
may extend the notice period for a 90day period in addition to the 30-day
extension, provided the Board notifies
the bank holding company and explains
the reasons for this additional
extension. Further extensions are only
permissible in the event the Board
determines to conduct a hearing on the
proposal, or the notificant has
consented to an extension or tolling of
the notice period.
The interim rule adopts the provision
in Section 346 that permits the Board to
request additional information about a
proposal at any time dining the notice
period. The rule also includes the
provision of Section 346 that provides
that the Board may deny any notice if
the notificant neglects, fails, or refuses
to furnish the Board all the information
required by the Board.
that public notice o f the proposal by
means of local newspaper publication is
unduly expensive or impracticable.
Moreover, the streamlined notice
procedure established by the interim
rule would effectively shorten the notice
period for all acquisitions involving
listed activities.
In light of this, the Board invites
comment as to whether the abbreviated
notice procedure for small acquisitions
should be retained, eliminated, or
amended.
Simplified Notice Procedures
The Board believes that these
proposals w ill substantially reduce the
burden associated with the approval
requirement under section 4 of the BHC
Act without resulting in unsafe and
unsound banking practices. Because the
provisions of Section 346 are
implemented immediately, the Board is
proposing to adopt the following
regulation as an interim rule in
connection with nonbanking activities
Abbreviated Notice Procedure for Small conducted pursuant to section 4 of the
Acquisitions
BHC Act. The Board invites comments
The interim rule retains the current
on all aspects of this interim rule, and
abbreviated notice procedure contained w ill amend this rule as needed to reflect
in Regulation Y for small acquisitions of the comments received. The Board also
assets or shares of companies engaged in invites suggestions on other means of
activities previously approved by the
reducing the regulatory burden
Board by regulation.4 Currently, this
associated with ths System’s application
abbreviated notice procedure may be
and notices procedures.
used for acquisitions where neither the
Regulatory Flexibility Act Analysis
book value of the assets to be acquired
nor the gross consideration to be paid
Pursuant to section 605(b) of the
for the securities or assets exceeds the
Regulatory Flexibility Act (5 U.S.C. 601
greater o f (i) $15 million or (ii) 5 percent e t seq .), the Board does not believe that
of the consolidated assets of the
these changes w ill have a significant
acquiring company up to a maximum of adverse economic impact on a
$100 million. The interim rule retains
substantial number of small entities.
this abbreviated notice procedure for
This interim rule w ill reduce the
small acquisitions o f companies
regulatory burden cm bank holding
engaged in laundry list activities, and
companies imposed by the Board’s
increases the size limitation for
procedures, and the Board is inviting
acquisitions that qualify for this
public comment on additional ways to
procedure from a maximum of $100
reduce regulatory burden.
million to a maximum of $300 million.
The primary benefit of the abbreviated Paperwork Reduction Act Analysis
notice procedure for small acquisitions
No collections of information
is the shortened approval process
pursuant to section 3504(h) of the
realized by opting to publish public
Paperwork Reduction Act (44 U.S.C.
notice of the proposal in local
newspapers in the communities affected 3501 e t seq .) are contained in these
changes, and comment is invited on a
by the proposal. Since this provision of
proposal that would reduce the current
Regulation Y was adopted, notificants
information collection requirements
have increasingly opted to publish
notice of the proposed acquisition in the imposed in connection with certain
Federal Register in order to conduct the applications.
nonbanking activity nationwide or
List of Subjects in 12 CFR Part 225
throughout a geographic area so large
Administrative practice and
4 This procedure is only available to bank holding procedure, Banks, Banking, Federal
com panies that m eet the Board's Capital Adequacy
Reserve System, Holding companies,
G uidelines and are proposing to acquire a com pany
Reporting and recordkeeping
engaged in activities for w h ich the bank holding
com pany has previously received System approval.
requirements, Securities.
For the reasons set forth in the
preamble, the Board amends 12 CFR
part 225 as follows:
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
1. The authority citation for part 225
continues to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818,
1831i, 1831p-l, 1843(c)(8), 1844(b), 1972(1),
3106, 3108, 3907, 3909, 3310, and 33313351.
2. Sections 225.23 and 225.24 are
revised to read as follows:
§ 2 2 5 .2 3 P ro c e d u re s fo r n o tic e s to e n g a g e
in n o n b a n k in g a c tiv itie s .
(a) N o tic e re q u ir e d f o r n o n b a n k in g
a c tiv itie s. A notice for the Board's prior
approval under § 225.21(a) to engage in
or acquire a company engaged in a
nonbanking activity shall be filed by a
bank holding company (including a
company seeking to become a bank
holding company) with the appropriate
Reserve Bank in accordance with this
section and the Board’s Rules of
Procedure (12 CFR 262.3).
(1) E n gagin g d e n o v o in lis te d
a c tiv itie s. A hank holding company
seeking to commence or to engage d e
n o v o , either directly or through a
subsidiary, in a nonbanking activity
listed in § 2 2 5 .1 5 shall file a notice
containing the following:
(1) A description of the activities to be
conducted;
(ii) The identity of the company that
w ill conduct the activity; and
(iii) If the notificant proposes to
conduct the activity through an existing
subsidiary, a description of the existing
activities of the subsidiary.
(2) A c q u irin g c o m p a n y e n g a g ed in
lis te d a c tiv itie s. A bank holding
company seeking to acquire or control
voting securities or assets of a company
engaged in a nonbanking activity listed
in § 225.25 shall file a notice containing
the following:
(i) A description of the proposal,
including a description of each
proposed activity, and the effect of the
proposal on competition among entities
engaging in each proposed activity;
(ii) The identity of any entity involved
in the proposal, and if the notificant
proposes to conduct the activity through
an existing subsidiary, a description of
the existing activities of the subsidiary;
(iii) A statement of the public benefits
that can reasonably be expected to result
from the proposal; and
(iv) A description of the terms and
sources of funds for the transaction; a
copy of any pertinent purchase
agreements); balance sheet and income
54804 Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations
statements for the most recent fiscal
to the notificant. In the event notice of
quarter and year-end for any company
a proposal is not published for
to be acquired; parent company only
comment, the Board shall inform the
and consolidated p r o f o r m a balance
notificant of the reasons for the
sheets for the notificant as of the most
decision.
(d)
A c tio n on n o tic e s —(1) R eserve
recent fiscal quarter; and calculations of
p r o f o r m a consolidated risk-based
B a n k a c tio n . —(i) In g en era l. Within 30
capital ratios and leverage ratio for the
calendar days after receipt by the
notificant as of the most recent fiscal
Reserve Bank of a notice filed pursuant
quarter.
to paragraphs (a)(1) or (a)(2) of this
(3)
E ngagin g in o r a cq u irin g c o m p a n ysection, the Reserve Bank shall:
to en g a g e in u n liste d a c tiv itie s. A bank
(A) Approve the notice; or
(B) Refer the notice to the Board for
holding company seeking to commence
decision because substantive adverse
or to engage d e n o vo , or to acquire or
control voting securities or assets of a
comment has been received or because
company engaged in, any activity not
action under delegated authority is not
listed in § 225.25 shall file a notice
appropriate.
(ii) R etu rn o f in c o m p le te n o tice .
containing the following:
(1) Evidence that the proposed activity Within 15 calendar days of receipt, the
is so closely related to banking or
Reserve Bank may return any notice as
managing or controlling banks as to be
informationally incomplete that does
a proper incident thereto;
not contain all of the information
(ii) A commitment to comply with all required by this subpart. The return of
conditions and limitations that have
such a notice shall be deemed action on
been established by the Board governing the notice.
the proposed activity; and
(iii) E x ten sio n o f p e r io d f o r action.
(iii) The information required in
The Reserve Bank may, within the 30paragraph (a)(2) of this section, as
day period provided in this paragraph
appropriate.
for action on a notice, extend such 30(b) N o tic e p r o v id e d to B oard. The
day period for an additional 15 calendar
Reserve Bank shall immediately send to days.
the Board a copy of any notice received
(iv) N o tic e o f a ctio n . The Reserve
under paragraphs (a)(2) or (a)(3) of this
Bank shall promptly notify the bank
section.
holding company of any action, referral
(c) N o tic e to p u b lic — (1) L iste d
or extension under this paragraph.
a c tiv itie s a n d a c tiv itie s a p p r o v e d b y
(v) C lo se o f p u b lic c o m m e n t p erio d .
order. A Reserve Bank that receives a
The Reserve Bank shall not approve any
notice involving an activity listed in
notice under this paragraph prior to the
§ 225.25 or previously approved by the
fifth business day after the close of the
Board by order shall immediately send
public comment period, unless an
notice of receipt of the proposal to the
emergency exists that requires
Board for publication in the Federal
expedited or immediate action.
Register. The Federal Register notice
(2) B o a rd a ctio n — { i) In tern a l
shall invite public comment on the
s c h e d u le . The Board seeks to act on
proposal for a period of 15 days.
every notice referred to it for decision
(2) N e w a c tiv itie s —(i) In gen era l. In
within 60 days of the date that the
the case of a notice under this section
notice is filed with the Reserve Bank. If
involving an activity that is not listed in the Board is unable to act within this
§ 225.25 and that has not been
period, the Board w ill notify the
previously approved by the Board by
notificant and explain the reasons and
order, the Board shall send notice of the the date by which the Board expects to
proposal to the Federal Register for
act.
publication, unless the Board
(ii) R e q u ire d tim e lim it f o r B o a rd
determines that the notificant has not
a ctio n . The Board shall act on any
demonstrated that the activity is so
notice under this section that is referred
closely related to banking or to
to it for decision within 60 calendar
managing or controlling banks as to be
days after the submission of ^complete
a proper incident thereto. The Federal
notice.
(iii) E x ten sio n o f re q u ir e d p e r io d fo r
Register notice shall invite public
a ctio n —(A) In gen era l. The Board may
comment on the proposal for a
extend the 60-day period required for
reasonable period of time, generally for
Board action under paragraph (d)(2)(ii)
30 days.
(ii) T im e f o r p u b lic a tio n . The Board
of this section for an additional 30 days
shall send the notice required under this upon notice to the notificant.
(B) U n liste d a c tiv itie s. If a notice
paragraph to the Federal Register
involves a proposal to engage in an
within 10 business days of acceptance
activity that is not listed in § 225.25, the
by the Reserve Bank. The Board may
Board may extend the period required
extend the 10-day period for an
additional 30 calendar days upon notice for Board action under paragraph
(d)(2)(ii) of this section for an additional
90 days. This 90-day extension is in
addition to the 30-day extension period
provided in paragraph (d)(2)(iii)(A) of
this section. The Board shall notify the
notificant that the notice period has
been extended and explain the reasons
for the extension.
(3) R e q u e sts f o r a d d itio n a l
in fo rm a tio n . The Board or the Reserve
Bank may at any time request any
additional information that either
believes is needed for a decision on any
notice under this subpart.
(4) T o llin g o f p e r io d . The Board or the
Reserve Bank, as the case may be, may
at any time extend or toll the time
period for action on a notice for any
period with the consent of the
notificant.
(5) A p p r o v a l th rough fa ilu re to act. A
notice under this subpart shall be
deemed to be approved at the
conclusion of the period that begins on
the date the complete notice is received
by the Reserve Bank or the Board and
that ends 60 calendar days plus any
applicable extension and tolling period
thereafter.
(6) C o m p le te n o tice . A notice shall be
deemed to be complete for purposes of
this subpart at such time as it contains
all information required by this subpart
and all other information requested by
the Board or the Reserve Bank in
connection with the particular notice.
(e)
E x p e d ite d p ro c e d u re f o r sm a ll
a c q u isitio n s —(1) F iling n o tice . As an
alternative to the notice procedure of
paragraph (a)(2) of this section, a bank
holding company may satisfy the notice
requirement of this section in
connection with the acquisition of
voting securities or assets of a company
engaged in an activity listed in § 225.25
by:
(1) Providing the appropriate Reserve
Bank with a description of the
transaction; and either
(ii) Submitting a copy of a newspaper
notice in the form prescribed by the
Board; or
(iii) Requesting the Board to publish
notice of die proposal in the Federal
Register as provided in paragraph (c)(1)
of this section.
(2) C o n te n ts o f p u b lic a tio n . A
newspaper notice under this subsection
shall be published in a newspaper of
general circulation in the areas to be
served as a result of the acquisition and
shall provide an opportunity for
interested persons to comment on the
notice for a period of at least 10
calendar days.
(3) C riteria f o r u se o f e x p e d ite d
p ro c e d u re . The procedure in this
paragraph is available only if:
lO lV }
Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations 54605
(i) Neither the book value o f the assets
to be acquired nor the gross
consideration to be paid for the
securities or assets exceeds the greater
of:
(AJ $15 million; or
(B) Five percent of the consolidated
assets of the acquiring company up to a
maximum of $300 million;
(ii) The bank holding company has
previously received Board approval to
engage in the activity involved in the
acquisition; and
(lii) The bank holding company meets
the Board’s Capital Adequacy
Guidelines (Appendix A of subparts A
through E of this part).
(4)
A c tio n on n o tic e . Within 5
business days after the close of the
comment period specified in the
Federal Register notice or w ithin 15
calendar days after receipt by the
Reserve Bank of the newspaper notice,
the Reserve Bank shall either approve
the proposal or refer it to the Board for
decision if action under delegated
authority is not appropriate. The Board
shall act in accordance with paragraph
(d)(2) of this section on a notice under
this paragraph that is referred to it for
decision. The Reserve Bank, upon
written notice to the notificant, may
extend the time period for approval
under this paragraph for a reasonable
period of time not to exceed 30 days.
(f) H earings —(1) P ro ce d u re to re q u e st
h earing. Any request for a hearing on a
notice under this section shall comply
with the provisions of 12 CFR 262.3(e).
(2) D ete rm in a tio n to h o ld h earin g.
The Board may order a formal or
informal hearing or other proceeding on
a notice as provided in 12 CFR
262.3(i)(2). The Board shall order a
hearing only if there are disputed issues
of material fact that cannot be resolved
in some other manner.
(3) E xten sion o f p e r io d f o r h earin g.
The Board may extend the time for
action on any notice for such time as is
reasonably necessary to conduct a
hearing and evaluate the hearing record.
Such extension shall not exceed 91
calender days after the date of
submission to the Board of the complete
record on the notice. The procedures for
computation of the 91-day rule as set
forth in § 225.14(g) apply to notices
under this subpart that involve hearings.
(g) N o tic e to e x p a n d o r a lte r
n on b a n k in g a c tiv itie s —(1) D e n o v o
ex p a n sio n . A notice under paragraph
(a)(1) of this section is required to open
a new office or to form a subsidiary to
engage in, or to relocate an existing
office engaged in, a nonbanking activity
that the Board has previously approved
for the bank holding company under
this regulation, only if:
(1) The Board’s prior approval was
limited geographically;.
(ii) The activity is to be conducted in
a country outside of,the United States
and the bank holding company has not
previously received prior Board
approval under this regulation to engage
in the activity in that country; or
(iii) The Board or appropriate Reserve
Bank has notified the company that a
notice under paragraph (a)(1) of this
section is required.
(2) A c tiv itie s o u ts id e U n ite d S ta te s.
With respect to activities to be engaged
in outside the United States that require
approval under this subpart, the
procedures of this section apply only to
activities to be engaged in directly by a
bank holding company that is not a
qualifying foreign banking organization
or by a nonbank subsidiary of a bank
holding company approved under this
subpart. Regulation K (12 GFR part 211)
governs other international operations
of bank holding companies.
(3 )
Alteration of nonbanking activity.
A notice under paragraph (a)(1) of this
section is required to after a nonhanking
activity in any material respect from
that considered by the Board in acting
on the application or notice to engage in
the activity.
(h)
Emergency thrift institution
acquisitions. In the case of a notice to
acquire a thrift institution, the Board
may modify or dispense with the public
notice and hearing requirements of this
section if the Board finds that an
emergency exists that requires the Board
to act immediately and the primary
Federal regulator of the institution
concurs.
§ 225.24 Factors considered in acting on
nonbanking proposals.
(a) In g en era l. In evaluating a notice
under § 225.23, the Board shall consider
whether the performance by the
notificant of the activities can
reasonably be expected to produce
benefits to the public (such as greater
convenience, increased competition,
and gains in efficiency) that outweigh
ppssible adverse effects (such as undue
concentration of resources, decreased or
unfair competition, conflicts of interest,
and unsound banking practices).
(b) F in a n cia l a n d m a n a g eria l
resou rces. Consideration of the factors
in paragraph (a) of this section includes
an evaluation of the financial and
managerial resources of the notificant,
including its subsidiaries, and any
company to be acquired, and the effect
of the proposed transaction on those
resources.
(c) C o m p e titiv e effec t o f d e n o v o
p ro p o sa ls. Unless the record
demonstrates otherwise, the
commencement or expansion of a
nonbanking activity a e n o v o is
presumed to result ip benefits tp the
public through increased competition.
(d)
D en ia l f o r Jack o f in fo rm a tio n . The
Board may deny any notice submitted
under this subpart if the notificant
neglects, fails, or refuses to furnish all
information required by the Board.
By order of the Board of Governors of the
Federal Reserve System, effective October 26,
1994.
W illia m W . W iles,
Secretary o f the Board.
[FR Doc. 94-27057 Filed 11-1-94; 8:45 ami
BILLING CODE 6210-01-P
12 CFR Parts 225 and 292
[Regulation Y; Docket No. R -0 85 3 ]
Applications Under Regulation Y
Board of Governors of the
Federal Reserve System.
ACTION: Interim rule with request for
comments.
AGENCY:
SUMMARY: These rules implement the
streamlined notice procedure recently
enacted in Section 319 of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(“Riegle Act”) for the formation of a
new bank bolding company that results
from a corporate reorganization of a
bank by the current shareholders of the
bank. These rules also implement
section 321 of the Riegle Act, which
amends the Bank Holding Company Act
and the Bank Merger Act to authorize
the Board to shorten the post-approval
waiting period for bank acquisitions and
mergers (during which time the United
States Attorney General may review the
competitive effects of a proposal
approved by the Board) from 30 to 15
days with the consent of the United
States Attorney General. Because the
procedures prescribed by section 319
and section 321 are effective
immediately, the Board has proposed
the following as an interim rule that w ill
take effect immediately. The Board is
seeking comments on this interim rule,
and w ill amend the rule as needed to
address the comments received. The
Board also is currently developing
additional initiatives to reduce the
regulatory burden associated with its
application and notice procedures, and
invites comment on any suggestions in
furtherance of these initiatives.
DATES: Interim Rule effective on
November 2,1994; comments must be
received by December 5,1994.
ADDRESSES: Comments should refer to
Docket No. R-0853 and may be mailed
54806 Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 f runes and Regulations
to William W. Wiles, Secretary, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue, NW, Washington, DC 20551.
Comments also may be delivered to
Room B-2222 of the Eccles Building
between 8:45 a.m. and 5:15 p.m.
weekdays, or to the Board’s Security
Control Room inside the Eccles Building
courtyard on 20th Street (between
Constitution Avenue and C Street, NW)
anytime. Comments may be inspected in
room M P-500 of the Martin Building
between 9 a.m. and 5 p.m. weekdays,
except as provided in 12 CFR 261.8'of
the Board’s rules regardingavailability
of information.
FOR FURTHER INFORMATION CONTACT:
Scott G. Alvarez, Associate General
Counsel (202/452-3583), or Terence F.
Browne, Senior Attorney (202/4523707), Legal Division; or Don E. Kline,
Associate Director (202/452-3421),
Nicholas A. Kalambokldis, Supervisory
Financial Analyst (202/452-3830), or
Larry R. Cunningham, Senior Financial
Analyst (202/452-2701), Division of
Banking Supervision and Regulation of
the Board of Governors of the Federal
Reserve System. For the hearing
impaired o n ly, Telecommunications
Device for the Deaf (TDD), Dorothea
Thompson (202/452-3544).
SUPPLEMENTARY INFORMATION: Section
3(a) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1842(a)) (“BHC Act”)
requires Federal Reserve Board approval
prior to consummating certain
transactions resulting in the formation
of a bank holding company, or in the
acquisition by a bank holding company
of shares or control of a bank, subject to
certain exceptions. Section 319 of the
Riegle Community Development and
Regulatory Improvement Act of 1994
(Pub. L. No. 103-325, section 319,108
Stat. 2160, 2224 (1994)(”Section 319”))
amends section 3 of the BHC Act to
establish a notice procedure for the
formation of a new bank holding
company resulting from a corporate
reorganization that involves
substantially the same shareholders.1 In
connection with section 319, section
320 of the Riegle Act provides an
exemption from the registration
1 S e c tio n 3 1 9 a ls o a m e n d s s e c tio n 5(d )(3) o f th e
F ed eral D e p o sit In su ra n ce A ct (12 U .S.C .
1 8 1 5 (d )(3 ))— c o m m o n ly referred to as th e “O akar
A m e n d m e n t" — to e lim in a te th e req u irem en t for
p rior B oard a p p r o v a l o f tr a n sa ctio n s b y b ank s
o w n e d b y h o ld in g c o m p a n ie s to m erge w ith th rift
in s titu tio n s . U n d e r th e R iegle A ct, O akar
tra n sa ctio n s c o n tin u e to req u ire th e prior a p p roval
o f th e a p p r o p r ia te F ed era l b a n k in g a g en cy for th e
a cq u irin g in s titu tio n , a n d a ll O akar tra n sa ctio n s
m u st c o m p ly w ith s e c tio n 3(d ) o f th e BHC A ct, th e
" D o u g la s A m e n d m e n t" N o a m e n d m e n ts to th e
B oard 's re g u la tio n s are n e e d e d to im p le m e n t th ese
a m e n d m e n ts to s e c tio n 5(d )(3).
requirements of the Securities Act of
1933 for securities issued by a bank
holding company pursuant to such a
reorganisation.
In addition, section 321 of the Riegle
Act (Pub. L. No. 103-325, section 321,
108 Stat. 2160, 2226 (1994)(“Section
321”) permits the Board, with the
consent of the U.S. Attorney General, to
shorten the post-approval waiting
period for bank acquisitions and
mergers from 30 days to 15 days. The
interim rule implement the provisions
enacted in sections 319 and 321 of the
Riegle Act. Comment is invited on all
aspects of these proposals.
holding company (notwithstanding a
change in the percentage of shares
controlled by the shareholder) if the
shareholder interest increases, on a p r o
ra ta basis, as a result of either the
redemption by the bank or bank holding
company of shares from dissenting
shareholders, or as a result of the
acquisition of shares of dissenting
shareholders by the remaining
shareholders.
However, this notice procedure would
not be available in cases in which any
shareholder or group of shareholders
acting in concert would, following the
reorganization, own or control 10
percent or more of any class of voting
Formation o f a New Bank Holding
shares o f the bank holding company
Company Under Section 319
unless that shareholder or group of
By its terms, the notice procedure
shareholders was authorized, after
added by section 319 2 applies only if
review under the Change in Bank
certain conditions are met. Specifically, Control Act of 1978 (12 U.S.C. 1817(j))
the formation of a new bank holding
by the appropriate Federal banking
company may be consummated 30 days agency for the bank, to own or control
after providing written notice to the
10 percent or more of any class of voting
appropriate Federal Reserve Bank if: (1)
shares of the bank. Similarly, this
The shareholders of the bank w ill
procedure is not available in cases in
acquire, as a result of the reorganization, which the exercise of dissenting
the shares of the newly formed bank
shareholders’ rights would cause a
holding company in substantially the
company that is not a bank holding
same proportional interest as they held
company (other than the company in
in the bank; (2) the bank holding
formation) to be required to register as
company would meet, and its resulting
ti bank holding company. This
subsidiary bank would meet, certain
procedure also is not available for the
financial and capital standards; (3) the
formation of a bank holding company
bank holding company would not, as a
organized in mutual form.
result of the reorganization, acquire
The Board seeks comment on other
other banking or nonbanking interests;
alternative formulations consistent with
and (4) during the 30-day notice period, the statutory mandate that the
the Reserve Bank or the Board does not
reorganization involve substantially the
object to the proposal.
same shareholders.
Substantially the Same Shareholders
Financial Standards
Under the interim rule, the
Section 319 also establishes certain
requirement that shareholders of the
financial thresholds that must be
bank acquire “substantially the same
satisfied to qualify for the abbreviated
share interest” in the newly formed
notice procedure. In particular, the bank
bank holding company would be met by to be reorganized must, at the time the
proposals in which the shareholder or
notice is filed, be “adequately
shareholders who lawfully control at
capitalized,” as this term is defined in
least 80 percent of the shares of the bank section 38 of the Federal Deposit
at the time the notice is filed would
Insurance Act. See 12 U.S.C. 1831o. In
acquire, immediately after the
addition, Section 319 requires that the
reorganization, at least 80 percent of the bank holding company resulting from
shares of the holding company in
the reorganization meet any “capital
substantially the same proportion.
and other financial standards”
By the terms of Section 319,
established by the Board.
allowance is made for changes in
In the interim rule, the Board has
shareholders’ interests resulting from
established three requirements designed
the exercise of dissenting shareholders’ to identify reorganization proposals that
rights under State or Federal law.
do not raise financial or supervisory
Accordingly, under the interim rule, a
concerns that would benefit from review
shareholder of the bank w ill be
and explanation through an application
considered to have substantially the
process rather than an abbreviated
same proportional interest in the
notice procedure. Under the interim
rule, a proposal to form a new one-bank
2 A n y a p p lic a tio n to o rg a n iz e a bank h o ld in g
holding company would qualify for the
c o m p a n y th at w a s file d w ith a R eserv e B ank prior
abbreviated notice procedures
to S ep tem b er 2 3 ,1 9 9 4 w ill c o n tin u e to b e p r o c e sse d
established in Section 319 if: (1) The
u n d er th e e x is tin g ru les.
Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations 54807
contains a similar provision applying
post-approval waiting period to bank
merger proposals. See 12 U.S.C.
1828(c)(6).
Because Section 319 creates an
exception from the application and
approval process established by section
3 of the BHC Act, a notificant who has
met the criteria of Section 319 and the
interim rule does not appear to be
subject to the post-approval waiting
period established under section 11 of
the BHC Act.
With regard to other acquisitions
under section 3 of the BHC Act or under
the Bank Merger Act, section 321 of the
Riegle Act (“Section 321") authorizes
the Board to shorten the post-approval
waiting period in any case to a period
of not less than 15 days, provided the
Objections to Notices
Board has received no adverse comment
Within 7 calendar days of receipt of
from the Attorney General relating to
a notice containing all the information
competitive factors and the Attorney
Contents of Notice
required under this interim regulation,
General concurs with the Board’s
the appropriate Reserve Bank w ill
decision to shorten the waiting period.
To begin the notice period under the
provide a written acknowledgement of
Section 321 does not affect processing of
interim rule, the notificant organization
receipt of the notice indicating that the
must submit to the appropriate Reserve
applications involving probable bank
transaction may be consummated
failures or emergencies. The interim
Bank a written notice that includes: (1)
following the 30th calendar day after the rule incorporates these revisions to the
Certification that the requirements of
date the notice was received by the
Section 319 and the Board’s
Board’s Regulation Y. The Board is
Reserve Bank unless the Reserve Bank
currently discussing with the U.S.
implementing rule are met by the
Department of Justice the types of cases
proposal; (2) a list of the shareholders of or the Board objects to the proposal
the bank prior to the reorganization and during that time. The Reserve Bank may that may qualify for this shortened postprovide written notice of approval of the approval waiting period, and invites
of the holding company following the
reorganization at an earlier time during
public comment on the types of cases
reorganization, identifying the
the notice period.
where this would be appropriate.
percentage of shares held by each
If during the notice period the Board
As described above, tne Board has
shareholder in the bank and proposed to
adopted the following interim rule
be held in the new holding company; (3) or the Reserve Bank objects to the
proposal, the bank holding company
which shall be effective immediately,
a description of the resulting
must file an application under section 3 and invites public comment on all
management of the proposed bank
of the BHC Act.4 In this case, the
aspects of this interim rule. The Board
holding company and its subsidiary
notificant w ill immediately be notified
also invites suggestions on other means
bank, including (i) biographical
of the reason for the objection, and of
of reducing the regulatory burden
information regarding any officers,
associated with its application and
directors or shareholders of the resulting any additional information that may be
needed to complete an application.
notices procedures.
bank holding company who were n o t
senior officers or directors of the bank
Shortening of Post-Approval Waiting
Regulatory Flexibility Act Analysis
prior to the reorganization, and (ii) a
Period Under Section 321
Pursuant to section 605(b) of the
detailed history of the involvement of
Currently, section 11(b)(1) of the BHC Regulatory Flexibility Act (5 U.S.C. 601
any officer, director or shareholder of
Act (12 U.S.C. 1849(b)(1)) prohibits a
e t seq .), the Board does not believe that
the resulting bank holding company in
bank holding company that has received these changes w ill have a significant
any administrative or criminal
approval for a transaction under section adverse economic impact on a
proceeding; (4) p ro fo r m a financial
3 of the BHC Act (other than
substantial number of small entities.
statements for the bank holding
transactions involving a probable bank
This interim rule w ill reduce the
company, and a description of the
failure or an emergency) from
regulatory burden imposed by the
amount, source and terms of debt, if
consummating the transaction prior to
Board’s procedures on small bank
any, that the bank holding company
the
thirtieth
day
following
Board
holding
companies in formation, and
proposes to incur, and information
approval of the proposal in order to
the Board is inviting public comment on
regarding the sources and timing for
provide the United States Attorney
additional ways to reduce regulatory'
debt service and retirement; and (5)
General time to review the transaction
burden.
verification that notice of the proposal
for any adverse effects on competition
has been published in a newspaper of
Paperwork Reduction Act Analysis
in banking or the concentration of
No collections of information
banking
resources.
The
Bank
Merger
Act
3 For a b an k in g o rg a n iza tio n w ith c o n s o lid a te d
pursuant to section 3504(h) of the
a sse ts, on a p r o f o r m a b a sis, o f le s s than S 1 5 0
« See 12 CFR 2 2 5 .1 4 . If th e R eserv e B ank or B oard
Paperwork Reduction Act (44 U.S.C.
m illio n (oth er th an a b an k in g o r g a n iz a tio n that
b e lie v e s that is s u e s m ig h t re a d ily b e re so lv ed
w o u ld co n tro l a d e n o v o b ank ), th is req u irem en t
3501 e t seq.) are contained in these
w ith in th e n o tic e p erio d w ith o u t h a v in g to is s u e a
w o u ld be s a tisfied if th e p ro p o sa l w o u ld c o m p ly
changes, and comment is invited on a
form al o b jectio n , th e R eserv e B an k or Board m ay
w ith th e B oard ’s p o lic y sta te m e n t o n sm a ll o n eproposal that would reduce the current
requ est a d d itio n a l in fo rm a tio n d u r in g th e n o tice
bank h o ld in g co m p a n y fo r m a tio n s (12 CFR part
p eriod to s u p p le m e n t th e n o tic e .
information collection requirements
2 2 5 , a p p e n d ix C).
bank has received at least a composite
“satisfactory” rating at its most recent
examination, in the event that the bank
has been subject to examination; (2) the
amount of debt that the bank holding
company would assume at the time of
the reorganization, and the proposed
means of retiring this debt, would not
place undue burden on the holding
company or its subsidiary on a p ro
fo rm a basis;3 and (3) at the time of the
reorganization, neither the bank nor any
of its officers, directors or shareholders
is involved in any unresolved
supervisory or enforcement matters with
any appropriate Federal banking agency.
Section 319 provides that this
abbreviated notice procedure is only
available to a bank holding company
that would not acquire any additional
banks or any nonbanking'interests as
part of the reorganization.
general circulation in the community in
which the bank is located that provides
an opportunity for interested persons to
comment on the notice for a period of
at least 15 calendar days.
As indicated above, the interim rule
requires that the applicant publish
notice of the proposed reorganization
and invite public comment for a period
of at least 15 days. This request for
public comment is consistent with the
Board’s practice of publishing notice of
all bank holding company formations
and bank expansion proposals so that
the public may comment in particular
on the bank’s record of serving the
convenience and needs of the
community under the Community
Reinvestment Act.
54308 Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations
imposed in connection with certain
applications.
List o f Subjects
12 CFR P art 2 2 5
Administrative practice and
procedure, Banks, banking, Federal
Reserve System, Holding companies.
Reporting and recordkeeping
requirements, Securities.
12 CFR P art 2 6 2
Administrative practice and
procedure, Banks, banking. Federal
Reserve System.
For the reasons set forth in the
preamble, the Board amends 12 CFR
parts 225 and 262 as follows:
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
1. The authority citation for part 225
continues to read as follows:
Authority: 12 U.S.C. 1817(j)(l3), 1818,
1831i, 1831p-l, 1843(c)(8), 1844(b), 1972(1),
3106, 3108, 3907, 3909, 3310, and 33313351.
2. In § 225.11, the introductory text is
revised to read as follows:
§ 225.11 T ransactions requiring Board
approval.
The following transactions require an
application for the Board’s prior
approval under section 3 of the Bank
Holding Company Act except as
exempted under § 225.12 or as
otherwise covered by § 225.15 of this
part:
*
*
*
*
*
3. In § 225.14, paragraph (i) is revised
to read as follows:
§ 225.14 Procedures for applications,
notices, and hearings.
*
*
it
it
it
(i)
W aitin g p e r io d . A transaction
approved under this subpart, other than
a transaction approved under § 225.15,
shall not be consummated until 30 days
after the date of approval of the
application, except that a transaction
may be consummated:
(1) Immediately upon approval, in the
event that the Board has determined
under paragraph (h) of this section that
the application involves a probable bank
failure:
(2) On or after the fifth calendar day
following the date of approval, in the
event that the Board has determined
under paragraph (h) of this section that
an emergency exists requiring
expeditious action; or,
(3) On or after the fifteenth calendar
day following the date of approval, in
Ihe event that the Board has not
received any adverse comments from
the United States Attorney General
relating to the competitive factors and
the Attorney General has consented to
such shorter waiting period.
4.
A new § 225.15 is added under
Subpart B to read as follows:
§ 225.15 Notice Procedure fo r O ne-Bank
Holding Com pany Formations.
(a) T ra n sa ctio n s w h ich q u a lify u n d e r
th is se c tio n . An acquisition by a
company of control of a bank may be
consummated 30 days after providing
notice to the appropriate Reserve Bank
in accordance with paragraph (b) o f this
section, provided that all of the
following conditions are met:
(1) The shareholder or shareholders
who control at least 80 percent of the
shares of the bank would control,
immediately after the reorganization, at
least 80 percent of the shares of the
holding company in substantially the
same proportion, except for changes in
shareholders’ interests resulting from
the exercise of dissenting shareholders’
rights under State or Federal law;5
(2) No shareholder or group of
shareholders acting in concert would,
following the reorganization, own or
control 10 percent or more of any class
of voting shares of the bank holding
company unless that shareholder or
group of shareholders was authorized,
after review under the Change in Bank
Control Act of 1978 (12 U.S.C. 1817(j))
by the appropriate Federal banking
agency for the bank, to own or control
10 percent or more of any class of voting
shares of the bank;6
(3) The bank is adequately capitalized
(as defined in section 38 of the Federal
Deposit Insurance Act (12 U.S.C.
1831o));
(4) The bank has received at least a
composite “satisfactory” rating at its
most recent examination, in the event
that the bank has been subject to an
examination;
(5) At the time of the reorganization,
neither the bank nor any of its officers,
directors or shareholders is involved in
any unresolved supervisory or
5 A sh a r e h o ld e r o f a b a n k in reo rg a n iza tio n w ill
be c o n s id e r e d to h a v e th e sa m e p ro p o rtio n a l
in terest in th e h o ld in g co m p a n y if th e sh a r eh o ld er
in terest in c r e a se s, o n a p r o ra ta b a sis, as a re su lt
o f eith e r th e r e d e m p tio n o f sh a res from d is se n tin g
sh a r eh o ld ers b y th e b ank or bank h o ld in g co m p a n y
or th e a c q u is itio n o f sh a res o f d is se n tin g
sh a r eh o ld ers b y th e re m a in in g sh a r eh o ld ers.
6 T h is p ro ce d u re is n o t a v a ila b le in ca s e s in
w h ic h th e e x e r c is e o f d is se n tin g s h a r e h o ld e r s ’
righ ts w o u ld ca u s e a c o m p a n v that is n o t a bank
h o ld in g c o m p a n y (o th er th a n th e co m p a n y in
fo rm ation ) to b e req u ired to register as a bank
h o ld in g c o m p a n y . T h is p ro ce d u re a ls o is n ot
a v a ila b le for th e fo rm a tio n o f a b a n k h o ld in g
co m p a n y o rg a n iz ed in m u tu a l form .
enforcement matters with any
appropriate Federal banking agency;
(6) The company demonstrates that
any debt that it would incur at the time
of the reorganization, and the proposed
means of retiring this debt, would not
place undue burden on the holding
company or its subsidiary on a p ro
fo rm a basis;7
(7) The holding company would not,
as a result of the reorganization, acquire
control of any additional bank or engage
in any activities other than those of
managing and controlling banks; and
(8) During this period, neither the
appropriate Reserve Bank nor the Board
has objected to the proposal or required
the filing of an application under
§ 225.14 of this subpart.
(b) C o n te n ts o f n o tice . A notice filed
under this subsection must include:
(1) Certification by the notificant’s
board of directors that the requirements
of 12 U.S.C. 1842(a)(C) and this section
are met by the proposal;
(2) A list identifying the shareholders
of the bank prior to the reorganization
and of the holding company following
the reorganization, and specifying the
percentage of shares held by each
shareholder in the bank and proposed to
be held in the new holding company;
(3) A description of the resulting
management of the proposed bank
holding company and its subsidiary
bank, including:
(i) Biographical information regarding
any senior officers and directors of the
resulting bank holding company who
were n o t senior officers or directors of
the bank prior to the reorganization;
and,
(ii) A detailed history of the
involvement of any officer, director or
shareholder of the resulting bank
holding company in any administrative
or criminal proceeding;
(4) Pro fo rm a financial statements for
the holding company, and a description
of the amount, source and terms of debt,
if any, that the bank holding company
proposes to incur, and information
regarding the sources and timing for
debt service and retirement; and,
(5) Verification that notice of the
proposal has been published in a
newspaper of general circulation in the
community in which the bank is located
that provides an opportunity for
interested persons to comment on the
notice for a period of at least 15
calendar days.
7
For a b a n k in g o rg a n iz a tio n w ith c o n s o lid a te d
a sse ts, o n a p r o fo r m a b a sis, o f le ss th an $ 1 5 0
m illio n (oth er th a n a b a n k in g o rg a n iza tio n that
w o u ld co n tro l a d e n o v o bank), th is req u irem en t
w o u ld b e s a tis fie d i f t h e p ro p o sa l w o u ld c o m p ly
w ith th e B o a rd ’s p o lic y sta tem en t o n s m a ll o n ebank h o ld in g c o m p a n y fo rm a tio n s (12 CFR Part
2 2 5 , A p p e n d ix C).
\oiisq
Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 / Rules and Regulations 54809
(c) A c k n o w le d g e m e n t o f n otice.
Within 7 calendar days following
receipt of a notice under this section,
the Reserve Bank shall provide the
notificant with a written
acknowledgement of receipt of the
notice. This written acknowledgment
shall indicate that the transaction
described in the notice may be
consummated on the 30th calendar day
after the date of receipt of the notice if
the Reserve Bank or the Board has not
objected to the proposal during that
time.
(d) A p p lic a tio n r e q u ir e d u pon
ob jectio n . The Reserve Bank or the
Board may object to a proposal during
the notice period by providing the bank
holding company with a written
explanation of the reasons for the
objection. In such case, the bank
holding company may file an
application for prior approval of the
proposal pursuant to section 225.14 of
this subpart.
PART 262— RULES OF PROCEDURE
1. The authority citation for part 262
continues to read as follows:
Authority: 5 U.S.C. 552, 12 U.S.C. 321,
1828(c), and 1842.
2. In §262.3, paragraph (b)(l)(i)(D) is
revised to read as follows:
§ 2 6 2 .3
*
*
Applications.
*
*
*
(b) * * *
(l)(i) * * *
(D)
To become a bank holding
company (except as provided in 12 CFR
225.15), and
*
it
*
*
*
By order of the Board of Governors of the
Federal Reserve System , effective October 26,
1994.
William W. Wiles,
S e c r e ta r y o f th e B o a rd .
(FR Doc. 94-2 7 0 5 8 Filed 1 1 -0 1 -9 4 ; 8:45 am]
BILLING CODE 6210-01-4*
@FedFRASER