Full text of Federal Reserve Bank of New York Circulars : 6881. Authority of Federal Reserve Banks to Handle Bank Holding Company Applications Expanded

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FEDERAL RESERVE BANK
O F N E W YO RK

r Circular No. 6 8 8 1 ~|
L January 20, 1972 «•

Authority of Federal Reserve Banks To Handle
Bank Holding Company Applications Expanded

To A ll Member Banks, and Others Concerned,
in the Second Federal Reserve District:

The following statement was made public yesterday by the Board of Governors of the Federal
Reserve System:
The Board of Governors of the Federal Reserve System today announced further steps— in the form
of expanded authority to the Federal Reserve Banks— to expedite the handling of applications received
under the Bank Holding Company Act.
Under the expanded authority, which is effective for applications received after January 21, the Federal
Reserve Banks may approve:
1. The acquisition by a bank holding company of additional shares in a subsidiary bank that are
to be acquired through the exercise of rights received by the bank’s shareholders.
2. Merger and Federal Reserve membership applications that are incident to one-bank holding com­
pany formations. The authority to approve the formation of one-bank holding companies was delegated
to the Federal Reserve Banks last August.
3. The acquisition by a registered bank holding company of a controlling interest in a new (de novo)
bank if no objection to the proposed acquisition is made by the bank’s supervisory authority, no new
significant policy issue is raised by the proposal and the Reserve Bank determines that:
(a )

the general condition of the holding company and its bank subsidiaries is satisfactory;

(b ) the holding company has either a proven record of furnishing needed special services, man­
agement, capital funds and general guidance to its subsidiary banks, or has the potential to provide
these services in the case of a relatively new holding company;
(c ) bank subsidiaries of the holding company do not hold more than 20 per cent of the total
commercial bank deposits in the relevant market area and the holding company is not one of the domi­
nant banking organizations in the State.

Enclosed is a copy of the amendments to the Board’s Rules Regarding Delegation of
Authority. Additional copies of this circular and its enclosure will be furnished upon request.




A

lfred

H

ayes,

President.

Board of Governors of the Federal Reserve System
RULES REGARDING DELEGATION OF AUTHORITY

AM ENDM ENTS
Effective January 21, 1972, §265.2(f) (22)
is amended, and §265.2 (f) (23) and (24) are
added, to read as follows:
SECTIO N 265.2— SPECIFIC FU N C TIO N S
DELE G A TE D T O BOARD E M PLO Y E E S
AN D FE D E R A L R E SE R V E BAN K S
♦

*

*

(f)
Each Federal Reserve Bank is autho­
rized, as to member banks or other indicated
organizations headquartered in its district:
*

*

*

(22)
Under the provisions of section
3 ( a ) ( 1 ) of the Bank Holding Company Act
(12 U.S.C. 1842), to approve the acquisition
by a company of a controlling interest in the
voting shares of one bank, if (i) no objection
to the proposed acquisition has been made by
the bank’s supervisory authority, (ii) no sig­
nificant policy issue is raised by the proposal
as to which the Board has not expressed its
views, and (iii) neither the holding company
nor any of its subsidiaries or affiliates is
engaged in any activities other than those
specifically permissible for bank holding com­
panies by either the Act or Part 225 of this
chapter (Regulation Y ) . 2

3 This delegation includes authority to approve (a ) a mer­
ger transaction under the provisions of section 1 8(c) of the
Federal Deposit Insurance A ct (12 U .S .C . 1 8 2 8 (c)) and (b )
an application, under section 9 of the Federal Reserve A ct
(12 U .S.C . 321), for membership in the Federal Reserve
System that are incidental to an application to become a
one-bank holding company.




(23) Under the provisions of section
3 ( a ) ( 3 ) of the Bank Holding Company Act
(12 U.S.C. 1842), to approve the acquisition
by a bank holding company of additional shares
in a subsidiary bank that are to be acquired
through exercise of rights received, on a pro
rata basis, by the bank’s shareholders.
(24) Under the provisions of section
3 ( a ) ( 3 ) of the Bank Holding Company Act
(12 U.S.C. 1842), to approve the acquisition
of a controlling interest in the shares of a
newly-formed bank, if (i) no objection to the
proposed acquisition has been made by the
bank’s supervisory authority, (ii) no signifi­
cant policy issue is raised by the proposal as
to which the Board has not expressed its views,
and (iii) the Reserve Bank determines that:
(a) the general condition of the holding
company and its bank subsidiaries is satis­
factory ;
(b ) the holding company has either ( i ) a
proven record of furnishing to its subsidiary
banks, when needed, special services, manage­
ment, capital funds, or general guidance, or ( 2 )
in the case of a relatively new holding company,
the Reserve Bank is satisfied that the com­
pany has the potential to provide such services;
(c ) ( 1 ) bank subsidiaries of the holding
company do not hold in the aggregate more
than 20 per cent of the commercial bank de­
posits in the relevant market area and ( 2 ) the
holding company is not one of the dominant
banking organizations in the State.

PR IN T E D IN N E W YO RK