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For immediate release March 28, 1997 The Federal Reserve Board today announced the issuance of an Order against The International Commercial Bank of China, Taipei, Taiwan. The International Commercial Bank of China, without admitting to any allegations, consented to the issuance of the Order in connection with allegations that it failed to file a complete application when it acquired the Chinese American Bank, New York, N.Y., and that it failed to fully and correctly file accurate reports with the Federal Reserve. The Order requires The International Commercial Bank of China to submit a plan to sell its interests in the Chinese American Bank. The Order also requires The International Commercial Bank of China to pay a civil money penalty in the amount of $5 million and its profit of $17,320,000 from its acquisition and control of the Chinese American Bank. The issuance of the Order by the Board does not relate in any manner to the condition or activities of the Chinese American Bank, and the divestiture of the bank by The International Commercial Bank of China should not affect the bank's operations. A copy of the Order is attached. Attachment UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. Docket Nos. 95-025-B-FB 95-025-CMP-FB In the Matter of Order Issued Upon Consent Pursuant to the Federal Deposit Insurance Act, as Amended, and the Bank Holding Company Act of 1956, as Amended The International Commercial Bank of China Taipei, Taiwan WHEREAS, as of the date of this Order, The International Commercial Bank of China, Taipei, Taiwan is a foreign bank subject to the jurisdiction Governors of the Federal Reserve System (l'ICBCn), of the Board of (the "Board of Governors") under the Bank Holding Company Act of 1956, as amended (12 U.S.C. § 1841 et seq.) (the "BHC Act") and section 8 of the Federal Deposit Insurance Act, as amended 8 1818) (12 U.S.C. (the "FDI Act"); WHEREAS, ICBC owns and controls the Chinese American bank Bank, New York, New York, a state-chartered, non-member (the "Bank"); WHEREAS, the Board of Governors issues this Order pursuant to section 8 of the BHC Act sections 8(b) and 8(i) of the'FDI Act and (12 U.S.C. 5 1847) and (12 U.S.C. 55 1818(b) (i)) in settlement of certain proceedings ICBC's alleged violations relating to of the BHC Act as a result of its failure to file a complete application when it acquired the Bank, -2 - and its failure to fully and correctly file accurate reports with the Federal Reserve; and WHEREAS, on /9 &!L& directors of ICBC%adonted a resolution directing , 1997, the board of (1) authorizing and to enter into this Order and consenting to compliance with eachUand every provision pf this Order by ICBC and its institution-affiliated parties, as such term is defined in sections 3(u) and.8(b) (4) of the FDI Act (12 U.S.C. §§ 1813(u) and 1818(b) (4)); and (2) waiving, on behalf of ICBC, any and all rights that ICBC might have pursuant to 12 U.S.C. 55 1818 and 1847 and 12 C.F.R. Part 263 or otherwise (a) to the issuance of a notice of charges and of hearing and a notice of assessment of a civil money penalty, (b) to a hearing for the purpose of taking evidence on any matter implied or set forth in this Order, (c) to obtain judicial review of this Order or any provision thereof, land (d) to challenge or contest in any manner the basis, issuance, validity, terms, effectiveness, collectibility or enforceability of this Order or any provision thereof. NOW, THEREFORE, before the taking of any testimony or adjudication of or finding on any issue of fact or law herein, . and without this Order constituting an admission of any allegation made or implied by the Board of Governors in connection with this proceeding and solely for the purpose of - 3 - settlement of this proceeding without protracted or extended hearings or testimony: IT IS HEREBY ORDERED, pursuant to section 8 of the BHC Act and sections 8(b) and 8(i) of the FDI Act, that ICBC shall directly and through its institution-affiliated their capacities as such, take affirmative parties, in action and pay an assessed civil penalty as follows: 1. (a) Within 30 days of\this Order, ICBC shall submit to the Federal Reserve Bank of New York (the "Reserve Bank") an acceptable written plan to divest itself of the Bank within 300 days of this Order. The written plan shall, at a minimum, ensure full compliance with the provisions of the BHC Act and all other applicable federal and state laws by ICBC, the Bank, and their subsidiaries. (b) During the term of this Order, ICBC shall comply fully with the plan and shall not amend or rescind it without the prior written approval of the Reserve Bank. 2. ICBC shall furnish the Reserve Bank with written progress reports every 60 days from the date of this Order until ICBC has completed its divestiture of the Bank. Such reports shall detail, at a minimum, the efforts ICBC has made to sell the . Bank, the identity of prospective buyers, the status of any ongoing proposals or negotiations, and the nature of any problems or concerns that have arisen in connection with selling the Bank -4- in the manner and within the time requirements set forth in this Order. 3. ICBC is assessed and has agreed to pay to the Board of Governors $5,000,000, (a) a civil money penalty in the amount of and (b) ICBC's estimated profit, as of September 1995, from its acquisition purposes and control of the Bank. 30, For the of this Order, ICBC's estimated profit from its acquisition and control of the Bank means the amount calculated by (i) subtracting $18.57 million, ICBC's cost of acquiring the Bank's shares in 1984, from the difference between the Bank's total assets and the Bank's total liabilities as shown on the Bank's September 30, 1995 Call Report; resulting amount in subsection ICBC's ownership product (ii) multiplying (i) by 93%;. the percentage in the Bank; and (iii) multiplying in subsection the resulting to ICBC's agency operations. 4. remitted of (ii) by 32%, the percentage of the Bank's business that is deemed to be not attributable pre-existing the The payment required by this Order shall be in full, at the time of ICBC‘s execution of this Order, payable to the "Board of Governors of the Federal Reserve System" and forwarded to William W. Wiles, Secretary of the Board, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, who shall make remittance of the same to the Treasury of the United States as required by statute. - 5. 5 - The Reserve Bank, within its sole discretion, may grant written extensions of time to comply with the provisions of this Order. 6. All communications regarding this Order shall be (a) Nancy Bercovici Senior Vice President Federal Reserve Bank of New York 33 Liberty Street . New York, N.Y. 10045 sent to: with a copy to: J. Virgil Mattingly, Esq. Board of Governors of the Federal Reserve System Washington, D.C. 20551 (b) Theodore S.S. Cheng, President International Commercial Bank of China 100 Chi Lin Road Taipei, Taiwan with a copy to: Robert D. Webster, Esq. Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, N.Y. 10004-1490 7. Each provision of this Order shall remain effective and enforceable until stayed, modified, terminated or suspended by the Board of Governors. 8. The provisions of this Order shall not bar, estop or otherwise prevent the Board of Governors or any other agency or department of the U.S. government or any state government taking any other action affecting ICBC or any of its from -6subsidiaries, they would Order; affiliates otherwise provided, the Reserve or institution-affiliated be entitled however, Bank shall that take any of its subsidiaries, parties based Governors this neither any further affiliates, information or the Reserve Bank in the absence the Board action which of this of Governors against ICBC nor or or institution-affiliated currently know concerning to the Board the matters of set forth in Order. 9. Order NO third or to have paragraph 10. lawful with is intended any rights By order in this applicable contractual System, party to be a beneficiary hereunder, except of this as provided in 8 herein. Nothing complying The on any to take parties, Order foreign International of China to prevent law or with valid, ICBC from binding, and obligations. of the Boar*of effective is intended this 37 Commercial I, Governors of the Federal Reserve day of Bank Board of Governors of the Federal Reserve System Jennfffetitiohnson D"eputy Se*cretary of the Board