The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
CORRECTED COPY FEDERAL RESERVE BANK OF NEW YORK [ Circular No. 10777 April 12, 1995 "1 BANK H O LD IN G COM PANIES Proposed Amendment to Regulation Y To All Bank Holding Companies and Branches and Agencies of Foreign Banks in the Second Federal Reserve District, and Others Concerned: The Board of Governors of the Federal Reserve System has issued a proposed amendment to its Regulation Y, “Bank Holding Companies and Change in Bank Control,” in order to eliminate the requirement for a “no control” determination in connection with certain divestitures. Printed below is the text of the Board’s proposal, which has been published in the Federal Register. Comments should be submitted by April 28, and may be sent to the Board of Governors, as specified in the notice, or to our Banking Applications Department. W il l ia m J. M cD onough, President. FEDERAL RESERVE SYSTEM the requirement for a determination of control for these types of divestitures 12CFR Part 225 will reduce the regulatory burden on bank holding companies without [Regulation Y; Docket No. R -0 87 2 ] undermining the purposes of the Bank Bank Holding Companies and Change Holding Company Act. This proposal in B a n k C o n tro l has been identified in connection with the Board’s continuing effort to AGENCY: Board of Governors of the eliminate obsolete or unnecessary Federal Reserve System. regulations or applications. ACTION: Proposed rule. provided in 12 CFR 261.8 of the Board’s rules regarding availability of information. FOR FURTHER INFORMATION CONTACT: Pamela G. Nardolilli, Senior Attorney (202/452-3289), Legal Division, Board of Governors of the Federal Reserve System. For the hearing impaired only, Telecommunication Device for the Deaf (TDD), Dorothea Thompson (202/4523544), Board of Governors of the Federa DATES: Comments must be submitted or Reserve System, 20th and C Streets or before April 28,1995 SUMMARY: The Board is proposing to NW., Washington, D.C. 20551. amend its Regulation Y to eliminate the ADDRESSES: Comments should refer to need for a bank holding company to file Docket No. R-0872 and may be mailed SUPPLEMENTARY INFORMATION: Under a request with the Board for a to William W. Wiles, Secretary, Board o section 2(g)(3) of the Bank Holding determination under section 2(g)(3) of Governors of the Federal Reserve Company Act (12 U.S.C. 1841(g)), shares the Bank Holding Company Act that it System, 20th Street and Constitution transferred by a bank holding company no longer controls shares or assets that Avenue NW., Washington, DC 20551 to any transferee where the transferee is it has sold to a third party with indebted to the transferor or has one or Comments also may be delivered to financing if: The purchaser is not an more officers, directors, trustees, or Room B— 2222 of the Eccles Building affiliate or principal shareholder of the between 8:45 a.m. and 5:15 p.m. beneficiaries in common with the divesting holding company, or a weekdays, or to the guard station in the transferor, are deemed to be controlled company controlled by the principal Eccles Building courtyard on 20th Street by the transferor unless the Board, after shareholder; and there are no officers, NW. (between Constitution Avenue and an opportunity for a hearing, determines directors, trustees or beneficiaries of the C Street NW.) at any time. Comments that the transferor is not capable of controlling the transferee. The Board acquiror in common with or subject to may be inspected in Room MP-500 of control by the divesting company. The the Martin Building between 9:00 a.m. proposes to amend § 225.32 of the Board believes that the elimination of and 5:00 p.m. weekdays, except as (OVER) Board’s Regulation Y (12 CFR 225.32) to exempt from the presumption of control those divestitures where a bank holding company is financing the sale of assets or shares that it acquired so long as (i) the property is not sold to an affiliate or principal shareholder of the divesting holding company, or a company controlled by such a principal shareholder; and (ii) there are no officers, directors, trustees, or beneficiaries of the acquiror in common with or subject to control by the divesting company. A review of the 2(g)(3) determinations over the past ten years indicates that almost all control determinations tinder that section have arisen from bank holding companies selling property they acquired in satisfaction of a debt previously contracted (“dpc property”) whore the bank holding company was trying to recoup its losses on a loan from the sale of the collateral. In these cases, the record indicates that the divestitures and financing arrangements have been conducted on an arm’s-length basis, and there is no evidence of divesting companies exercising control of the assets after the sale. In other cases where a bank holding company sold an asset or subsidiary that it had acquired in the normal course of business and financed the sale of the asset or subsidiary, the assets were sold because, in most cases, the bank holding company was no longer interested in engaging in that business. The elimination of the requirement to obtain a control determination will reduce the regulatory burden on bank holding companies without eliminating the Board’s ability to supervise any attempt to control the divested asset in the future. Although the Board would no longer require a bank holding company to obtain a control determination, the Board, through the examination process, can review the authority under which a bank holding company controls the asset in question, and take appropriate supervisory action if any unlawful control is found to persist. In addition, the Board would continue to require a divesting company to obtain a 2(g)(3) determination if: (i) The asset were transferred to an affiliate or principal shareholder of the divesting holding company, or a company controlled by the principal shareholder; or (ii) an interlock existed between the divesting company and the acquiring person. In these cases, staff believes that there is a greater potential for continued control by the bank holding company that should be reviewed. The General Counsel will continue to review these divestitures on a case by case basis to determine if a control determination is appropriate. procedure, Banks, banking, Federal Reserve System, Holding companies, Reporting and recordkeeping requirements, Securities. For the reasons set forth in the preamble, the Board proposes to amend 12 CFR part 225 as set forth below: PART 225— BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y) 1. The authority citation for 12 CFR part 225 continues to read as follows: Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p— 1843(c)(8), 1844(b), 1972(1), 1, 3106,3108, 3310,3331-3351, 3907, and 3909. 2. In § 225.32, paragraph (a)(2) is redesignated as paragraph (a)(3) and a new paragraph (a)(2) is added to read as follows: § 2 2 5.3 2 Divestiture proceedings. (a) * * * (2) The presumption of control in Regulatory Flexibility Act Analysis paragraph (a)(l)(i) of this section shall Pursuant to section 605(b) of the not apply to the sale or divestiture of Regulatory Flexibility Act (5 U.S.C. 601 assets or voting securities by a divesting et seq.), the Board certifies that the company if: proposed amendment will not have a (i) The acquiring person is not an significant adverse economic impact on affiliate or a principal shareholder of the a substantial number of small entities divesting company, or a company and that any impact on those entities controlled by such a principal should be positive. The amendments shareholder; and would reduce regulatory burdens (ii) The acquiring person does not imposed by Regulation Y, and the have any officer, director, trustee, or amendment would have no particular beneficiary in common with or subject adverse effect on other entities. to control by the divesting company. * * * * * Paperwork Reduction Act Analysis No collection of information pursuant By order of the Board of Governors of the to section 3504(h) of the Paperwork Federal Reseive System, March 22,1995. Reduction Act (44 U.S.C. 3501, et seq.) William W. Wiles, is contained in these changes. Secretary of the Board. List of Subjects in 12 CFR Part 225 (FR Doc. 95-7518 Filed 3-27-95; 8:45 am) BILLING CODE 6210-01-P Administrative practice and
@FedFRASER