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FED ER A L RESERVE BANK O F NEW YORK Circular No. 6947 _ May 30. 1972 Oral Presentation on Guidelines for Approving Form ations of O ne-B ank Holding Companies To All Hank Holding Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a statem ent issued May 26 by the Board ot Governors of the Federal Reserve System: The Board o f Governors o f the Federal Reserve System announced today that an Oral Presentation will he conducted June 28 on the guidelines used by the Federal Reserve Banks when approving form ations ol one-bank holding com panies. Effective last Septem ber 1, the Board delegated to the Reserve Banks certain authority to approve such form ations but did not delegate the authority to deny such applications. At the sam e tim e, the Board issued a series o f guidelines for the Reserve Banks to follow in processing this type ot application. The presentation will be conducted before available m em bers ot the Board beginning at 10 a.m . in the Board Room o f the Federal Reserve Building in W ashington. The guidelines which will be the subject o f the proceeding provide in pertinent part: (i) It any offer to acquire shares is extended to shareholders ot the bank, the offer is extended to all shareholders o f the sam e class on an equal basis; (ii) The am ount borrowed by the holding com pany to purchase the voting shares o f the bank d o esn ’t exceed either 50 per cent o f the purchase price o f the shares o f the bank or 50 per cent o f the equity capital o f the holding com pany, the loan will be repaid within a reasonable period o f tim e (not to exceed 10 years), the interest rate on the loan is com parable with other stock collateral loans by the lender to persons o f com parable credit standing, and the loan is not conditioned upon m aintenance o f a correspondent bank balance with the lender that exceeds the usual needs o f the bank w hose shares are being purchased; and (iii) Interest on and am ortization o f the holding com p any’s indebtedness will not exceed, in any year, 50 per cent o f the holding com pany's proportionate share o f the bank's anticipated net incom e (after taxes) for that year, unless a higher percentage is specifically approved by the Reserve Bank at the tim e o f the form ation o f the holding com pany. Additional copies of this circular will be furnished upon request. Alfred Hayes, President.
@FedFRASER