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ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT.

Banco de Credito e Inversiones S.A. Santiago, Chile

Order Approving Establishment of an Agency

Banco de Credito e Inversiones S.A. ("Bank"), Santiago, Chile, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. [sections] 3105(d)) to establish an agency in Miami, Florida. The Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish an agency in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Miami, Florida (The Miami Herald, April 23, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with total consolidated assets of approximately $5.9 billion,(1) is the sixth largest bank in Chile. Approximately 70 percent of the shares of Bank are held by related parties.(2) Mr. Yarur directly owns less than 1 percent of Bank's shares, and persons related to Mr. Yarur directly and indirectly own another 15 percent of Bank's shares. The remaining shares of Bank are widely held, with no single shareholder owning more than 5 percent of shares.(3)

Bank engages in a full range of wholesale, retail, and investment banking activities, including deposit-taking, private-sector lending, foreign exchange trading, and trade-related financing. Bank operates 139 branches or offices in Chile. In addition, Bank operates six subsidiaries in Chile, which engage in stock brokerage, mutual fund administration, financial consulting, collections, insurance brokerage, and marketing activities, and owns a one-third equity interest in an unincorporated association that engages in electronic funds clearing activities. At present, Bank does not operate any foreign branches, agencies, or subsidiaries.

Bank's primary purposes for establishing the proposed agency in Florida are to enhance its ability to serve existing customers and to expand its international customer base.

The agency would provide correspondent banking, corporate banking, private banking, and investment advisory and fund management services. Bank does not engage directly or indirectly in any nonbanking activities in the United States. Bank would be a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. 211.23(b)).

The Superintendencia de Bancos e Instituciones Financieras ("SBIF"), Bank's primary home country supervisor, has indicated that it has no objection to establishment of the proposed agency.

In order to approve an application by a foreign bank to establish an agency in the United States, the IBA and Regulation K require the Board to determine that the foreign bank applicant engages directly in the business of banking outside of the United States and has furnished to the Board the information it needs to assess the application adequately. The Board generally also must determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [sections] 3105(d)(2); 12 C.F.R. 211.24). The Board also may take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)).

As noted above, Bank engages directly in the business of banking outside of the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues.

Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on the foreign bank's worldwide operations, including the relationship of the foreign bank to any affiliate, to assess the overall financial condition of the foreign bank and its compliance with law and regulation (12 C.F.R. 211.24(c)(1)).(4)

With respect to the issue of supervision by home country authorities, the Board has considered the following information. Bank is supervised and regulated by the SBIF. The Board previously determined that another Chilean credit institution was subject to comprehensive supervision on a consolidated basis by the SBIF.(5) The Board has determined that Bank is supervised on substantially the same terms and conditions as that other institution. Moreover, there have been recent enhancements to Chilean supervision in a number of areas, including increasing risk-based capital requirements and promoting information exchanges with foreign supervisory authorities. Based on all the facts of record, the Board concludes that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.

The Board also has taken into account the additional standards set forth in section 7 of the IBA (see 12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, the SBIF has indicated no objection to establishment of the proposed agency.

Chile's risk-based capital standards conform to those established by the Basle Capital Accord ("Accord"). Bank's capital is in excess of the minimum levels that would be required by the Accord and is considered equivalent to capital that would be required of a U.S. banking organization. Managerial and other financial resources of Bank also are considered consistent with approval of the proposed agency. Bank does not currently have operations outside Chile. Nevertheless, in view of the experience of the proposed agency manager, and given the fact that Bank has had extensive experience conducting the types of activities in which the proposed agency would be engaged, Bank appears to have the experience and capacity to support the activities to be conducted by the proposed agency. Bank has established controls and procedures for the proposed agency to ensure compliance with U.S. law and for its operations in general.

Finally, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities about access to information. Bank and Baquio have committed to make available to the Board such information on the operations of Bank and any affiliate of Bank that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable Federal law. To the extent that the provision of such information is prohibited or impeded by law, Bank and Baquio have committed to cooperate with the Board to obtain any necessary, consents or waivers that might be required from third parties in connection with disclosure of such information. In addition, subject to certain conditions, the SBIF may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank and Baquio have provided adequate assurances of access to any necessary information the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Bank and Baquio and the terms and conditions set forth in this order, the Board has determined that Bank's application to establish a state-licensed agency should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank or its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of Bank's direct or indirect activities in the United States. Approval of this application is also specifically conditioned on Bank's compliance with the commitments made in connection with this application, and with the conditions in this order.(6) The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. [sections] 1818 or 12 U.S.C. [sections] 1847 against Bank, its offices, and its affiliates.

By order of the Board of Governors, effective April 12, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSON Associate Secretary of the Board

(1.) Asset data are as of June 30, 1998.

(2.) Empresas Juan Yarur S.A.C., Santiago, Chile ("Empresas"), which owns 54.7 percent of Bank's shares, is the only shareholder that directly owns more than 5 percent of Bank's shares. Mr. Luis Enrique Yarur Rey, chairman of Bank's board, controls Empresas through two holding companies: Inversiones Petro S.A., Santiago, Chile ("Petro"), which directly owns 55.2 percent of Empresas; and Inversiones Baquio S.A., Santiago, Chile ("Baquio"), which directly owns 5.7 percent of Empresas's shares and directly owns 53 percent of Petro. Together, Mr. Yarur and his wife own all of the shares of Baquio.

(3.) Approximately 12 percent of Bank's shares are held in custodial accounts by Deposito Central de Valores ("DCV"), the clearinghouse for the Santiago stock exchange. DCV acts only as a clearinghouse and custodian of securities and does not exercise any voting authority over shares in its custody.

(4.) In determining whether this standard is met, the Board considers, among other factors, the extent to which the home country supervisor:

(a) Ensures that the bank has adequate procedures for monitoring and controlling its activities worldwide;

(b) Obtains information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise;

(c) Obtains information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic;

(d) Receives from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis;

(e) Evaluates prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination.

(5.) See Banco de Chile, 80 Federal Reserve Bulletin 179 (1994).

(6.) The Board's authority to approve the establishment of the proposed agency parallels the continuing authority of the Florida Department of Banking and Finance to license offices of a foreign bank. The Board's approval of the application does not supplant the authority of the State of Florida and its agent, the Florida Department of Banking and Finance, to license the proposed agency of Bank in accordance with any terms or conditions that the Florida Department of Banking and Finance may impose.

ING Bank, N.V. Amsterdam, The Netherlands

Order Approving Establishment of a Representative Office

ING Bank, N.V. ("Bank"), Amsterdam, The Netherlands, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. [sections] 3107(a)) to establish a representative office in New York, New York. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in New York, New York (New York Times, September 14, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with assets of $298.5 billion,(1) is the third largest bank in The Netherlands. Bank has 380 offices in The Netherlands, and approximately 125 offices in more than 50 countries.

Bank's parent company, ING Groep, N.V. ("ING Group"),(2) Amsterdam, The Netherlands, with total assets of $460.6 billion,(3) is one of the world's largest financial services providers, offering life and non-life insurance, commercial and investment banking, asset management and related products and services. ING Group has operations in Europe, North America, South America, Africa, Asia, and Australia.

The proposed representative office's activities would include marketing the products of Bank, maintaining relationships with U.S. corporate clients, and supporting Bank's Latin American offices on such matters as product development and marketing.

In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside of the United States, and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [sections] 3107(a)(2); 12 C.F.R. 211.24(d)(2)).(4) In addition, the Board also may take; into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)).

As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues.

With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in The Netherlands, that those banks were subject to home country supervision on a consolidated basis.(5) Bank is supervised by De Nederlandsche Bank (the "Central Bank") on substantially the same terms and conditions as those other banks.(6) Based on all the facts of record, the Board has determined that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.

The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24)(2)). The Central Bank has no objection to the establishment of the proposed representative office.

With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the experience and capacity to support the proposed representative office and has established controls and procedures for the proposed representative office to ensure compliance with U.S. law.

With respect to access to information about Bank's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities regarding access to information. Bank and its parents have committed to make available to the Board such information on the operations of Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Bank and its parents have committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure of such information. In addition, subject to certain conditions, the Central Bank may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information that the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Bank and its parents, as well as the terms and conditions set forth in this order, the Board has determined that Bank's application to establish the representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of Bank's activities in the United States. Approval of this application also is specifically conditioned on compliance by Bank and its parents with the commitments made in connection with this application and with the conditions in this order.(7) The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision and may be enforced in proceedings under 12 U.S.C. [sections] 1818 against Bank and its affiliates.

By order of the Board of Governors, effective April 19, 1999.

(1.) Unless otherwise indicated, data are as of January 5, 1998.

(2.) Ninety-nine percent of the outstanding voting shares of ING Group are owned by a Dutch trust, Stichting Administratiekantoor ING Groep (the "Trust"). The Trust engages in no activity other than holding shares of ING Group. Interests in the Trust are evidenced by bearer receipts which carry no voting rights. Other than the Trust, no person owns more than 10 percent of the voting shares or bearer receipts.

(3.) Data as of December 31, 1998.

(4.) In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors:
 (i) Ensure that the bank has adequate procedures for monitoring and
 controlling its activities worldwide;

 (ii) Obtain information on the condition of the bank and its subsidiaries
 and offices through regular examination reports, audit reports, or
 otherwise;

 (iii) Obtain information on the dealings with and relationship between the
 bank and its affiliates, both foreign and domestic;

 (iv) Receive from the bank financial reports that are consolidated on a
 worldwide basis or comparable information that permits analysis of the
 bank's financial condition on a worldwide consolidated basis;

 (v) Evaluate prudential standards, such as capital adequacy and risk asset
 exposure, on a worldwide basis. These are indicia of comprehensive,
 consolidated supervision. No single factor is essential, and other elements
 may inform the Board's determination.


(5.) See MeesPierson, N.V., 80 Federal Reserve Bulletin 662 (1994); Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland, 80 Federal Reserve Bulletin 947 (1994).

(6.) The Central Bank also receives information on ING Group with regard to its nonbanking operations. The Central Bank and the Insurance Supervisory Board have entered into a protocol for the purpose of jointly regulating groups with interests in both banks and insurance companies.

(7.) The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the State of New York to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of New York and the New York State Banking Department ("Department") to license the proposed office of Bank in accordance with any terms or conditions that the Department may impose.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

ROBERT DEV. FRIERSON Associate Secretary of the Board

Paribas Paris, France

Order Approving Establishment of a Representative Office

Paribas, Paris, France, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. [sections] 3107(a)) to establish a representative office in Atlanta, Georgia. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Atlanta, Georgia (Atlanta Journal and Constitution, October 23, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.

Paribas, with total consolidated assets of approximately $309 billion,(1) is the surviving entity resulting from the merger into Banque Paribas of its parent company, Compagnie Financie re de Paribas, and certain other subsidiaries and affiliated companies in May 1998.

Paribas, which primarily engages in investment banking, asset management, and retail financial services, is the fifth largest banking group in France and has offices in more than 60 countries. In the United States, Paribas operates branches in New York, New York, and Chicago, Illinois; agencies in Houston, Texas, and Los Angeles, California; and representative offices in Dallas, Texas, and San Francisco, California. Paribas also owns several U.S. subsidiaries that engage in nonbanking activities. The proposed representative office would market Paribas's products and services.

In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside the United States, and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [sections] 3107(a)(2); 12 C.F.R. 211.24(d)(2)).(2) In addition, the Board may take into account additional standards set forth in the IBA and Regulation K (12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)).

As noted above, Paribas engages directly in the business of banking outside the United States. Paribas also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in France, that those banks were subject to home country supervision on a consolidated basis.(3) Paribas is supervised by the French regulators on substantially the same terms and conditions as those other banks. Based on all the facts of record, the Board has determined that Paribas is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisors.(4) The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. [sections] 3105(d)(3)-(4), 12 C.F.R. 211.24(c)(2)). The Commission Bancaire has no objection to the establishment of the proposed representative office.

With respect to the financial and managerial resources of Paribas, taking into consideration Paribas's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed representative office. Paribas appears to have the experience and capacity to support the proposed representative office and has established controls and procedures for the proposed representative office to ensure compliance with U.S. law.

With respect to access to information about Paribas's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Paribas operates and has communicated with relevant government authorities regarding access to information. Paribas has committed to make available to the Board such information on the operations of Paribas and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Paribas has committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties for disclosure of such information. In addition, subject to certain conditions, the Commission Bancaire may share information on Paribas's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the conditions described below, the Board concludes that Paribas has provided adequate assurances of access to any necessary information that the Board may request.

On the basis of all the facts of record, and subject to the commitments made by Paribas, as well as the terms and conditions set forth in this order, the Board has determined that Paribas's application to establish a representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Paribas and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Paribas or its affiliates with applicable federal statutes, the Board may require termination of any of Paribas's direct or indirect activities in the United States. Approval of this application is also specifically conditioned on Paribas's compliance with the commitments made in connection with this application and with the conditions in this order.(5) The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision and may be enforced in proceedings under 12 U.S.C. [sections] 1818 against Paribas and its affiliates.

By order of the Board of Governors, effective April 1, 1999.

Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

(1.) Data are as of December 31, 1998.

(2.) In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors:
 (i) Ensure that the bank has adequate procedures for monitoring and
 controlling its activities worldwide;

 (ii) Obtain information on the condition of the bank and its subsidiaries
 and offices through regular examination reports, audit reports, or
 otherwise;

 (iii) Obtain information on the dealings with and relationship between the
 bank and its affiliates, both foreign and domestic;

 (iv) Receive from the bank financial reports that are consolidated on a
 worldwide basis or comparable information that permits analysis of the
 bank's financial condition on a worldwide consolidated basis;


(v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination.

(3.) See Banque Nationale de Paris, 81 Federal Reserve Bulletin 515 (1995); Caisse Nationale de Credit Agricole, 81 Federal Reserve Bulletin 1055 (1995); Credit Agricole Indosuez, 83 Federal Reserve Bulletin 1025 (1997).

(4.) On February 1, 1999, Societe Generale ("SoGen") announced its intention to make a stock-for-stock exchange offer for all of the shares of Paribas. The Board previously determined that the home country supervision of SoGen was consistent with the approval of a representative office. See Societe Generale, 80 Federal Reserve Bulletin 665 (1994).

(5.) The Board's authority to approve the establishment of the proposed office parallels the continuing authority of the State of Georgia to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of Georgia and the State of Georgia Department of Banking and Finance ("Department") to license the proposed office of Paribas in accordance with any terms of conditions that the Department may impose.

JENNIFER J. JOHNSON Secretary of the Board3
COPYRIGHT 1999 Board of Governors of the Federal Reserve System
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Publication:Federal Reserve Bulletin
Geographic Code:1U5FL
Date:Jun 1, 1999
Words:4553
Previous Article:ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT.
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