|For immediate release|
The Federal Reserve Board announced today its approval of the application of Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja, Valencia, Spain, to establish a state-licensed agency in Miami, Florida.
Attached is the Board's Order relating to this action.
Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja
Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja ("Bank"), Valencia, Spain, 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. § 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, September 15, 1997). 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 $14.3 billion,1 is the fourth largest savings bank and the parent entity of the ninth largest financial group in Spain. Bank is a not-for-profit organization whose operations are controlled and governed by its general assembly and board of directors. The Government of the Community of Valencia has the power to elect 28 percent of Bank's general assembly and board of directors.2 Bank's depositors and the municipalities in which Bank's branches are located each has the power to elect an additional 28 percent of the general assembly and board of directors.3
Bank engages primarily in retail deposit-taking, public and private sector lending, foreign exchange trading activities, foreign debt conversion, and trade-related financing. Bank operates more than 650 branches in Spain. In addition, Bank owns a number of bank and nonbank subsidiaries that engage in commercial banking, financial brokerage, insurance services, travel services, valuations, real estate sales and development, and repossessions. Bank's only operations outside Spain consist of two subsidiaries in the Cayman Islands that engage in the issuance of debt securities.
Bank's primary purpose for establishing the proposed agency in Florida is to expand its international customer base. The agency would provide correspondent, corporate, and private banking services. Bank does not engage directly or indirectly in any nonbanking activities in the United States, and it is a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. 211.23(b)).
The Bank of Spain, Bank's primary home supervisor, has indicated no objection to the 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. § 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. § 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 the 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 Bank of Spain. The Board previously has determined that other Spanish credit institutions are subject to comprehensive supervision on a consolidated basis by the Bank of Spain.5 The Board has determined that Bank is supervised on substantially the same terms and conditions as the Spanish credit institutions previously considered by the Board. 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. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, the Bank of Spain has indicated no objection to the establishment of the proposed agency.
Spain's risk-based capital standards conform to European Union capital standards which are consistent with 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, and Bank appears to have the experience and capacity to support the proposed agency. Bank has established controls and procedures for the proposed agency to ensure compliance with U.S. law, as well as controls and procedures 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 has 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 has 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 Bank of Spain 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 the Board may request.
On the basis of all the facts of record, and subject to the commitments made by Bank, as well as 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. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, and its affiliates.
By order of the Board of Governors,7 effective January 21, 1998.
(signed) Jennifer J. Johnson
Jennifer J. Johnson
1 Asset data are as of June 30, 1997.
2 The Community of Valencia is one of Spain's autonomous regions and consists of three provinces: Castellón, Alicante, and Valencia. The Government of the Community of Valencia ("GCV") does not provide financial support to Bank, nor is it required to do so by law or regulation.
3 The remaining 16 percent of the general assembly and board of directors is elected by Bank's employees (11 percent) and the Royal Society of Friends of the Valencian People (5 percent), the non-profit civic improvement organization that founded Bank in 1878.
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; and (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 Banco de Sabadell, S.A., 79 Federal Reserve Bulletin 366 (1993); Banco Santander, S.A., 79 Federal Reserve Bulletin 622 (1993); and Banco Exterior de España, S.A., 81 Federal Reserve Bulletin 616 (1995).
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.
7 Voting for this action: Chairman Greenspan and Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Vice Chair Rivlin.
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1998 Orders on banking applications