For immediate release

The Federal Reserve Board today announced its approval of the notice of Banco Bilbao Vizcaya, S.A., Bilbao, Spain, to engage through its wholly owned subsidiary, BBV LatInvest Securities Inc., New York, New York, in a variety of nonbanking activities, including underwriting and dealing, to a limited extent, in all types of debt and equity securities. Attached is the Board's Order relating to this action.

Banco Bilbao Vizcaya, S.A. Bilbao, Spain Order Approving Notice to Engage in Certain Nonbanking Activities

Banco Bilbao Vizcaya, S.A., Bilbao, Spain ("BBV"), a foreign bank subject to the provisions of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to engage in the following nonbanking activities through its wholly owned subsidiary, BBV LatInvest Securities Inc., New York, New York ("Company"):1 Underwriting and dealing in, to a limited extent, all types of debt and equity securities, other than ownership interests in open-end investment companies; Extending credit and servicing loans, in accordance with section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)); Providing financial and investment advisory services, in accordance with section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); Providing securities brokerage services, in accordance with section 225.28(b)(7)(i) of Regulation Y (12 C.F.R. 225.28(b)(7)(i)); Buying and selling all types of securities on the order of customers as a "riskless principal," in accordance with section 225.28(b)(7)(ii) of Regulation Y (12 C.F.R. 225.28(b)(7)(ii); Acting as agent in the private placement of all types of securities, in accordance with section 225.28(b)(7)(iii) of Regulation Y (12 C.F.R. 225.28(b)(7)(iii)); Providing other transactional services, in accordance with section 225.28(b)(7)(v) of Regulation Y (12 C.F.R. 225.28(b)(7)(v)); and Underwriting and dealing in obligations of the United States and Canada, general obligations of U.S. states, Canadian provinces, and their political subdivisions, and other obligations in which state member banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securities"), in accordance with section 225.28(b)(8)(i) of Regulation Y (12 C.F.R. 225.28(b)(8)(i)). Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 7231 (1997)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. BBV, with total consolidated assets of approximately $129.6 billion, is the second largest banking organization in Spain.2 In the United States, BBV operates a branch and a representative office in New York, New York; two agencies in Miami, Florida; and a branch and an insured nonmember bank in San Juan, Puerto Rico. Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and is a member of the National Association of Securities Dealers, Inc. ("NASD"). Accordingly, Company is subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the SEC, and the NASD. Underwriting and Dealing in Bank-Ineligible Securities The Board has determined that -- subject to the framework of prudential limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, or other adverse effects -- underwriting and dealing in bank-ineligible securities is so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.3 The Board also has determined that underwriting and dealing in bank-ineligible securities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. § 377), provided that the company engaged in the activity derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities over a two-year period.4 BBV has committed that Company will conduct its underwriting and dealing activities using the methods and procedures and subject to the prudential limitations established by the Board in the Section 20 Orders. BBV also has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities subject to the Board's revenue restriction. As a condition of this order, BBV is required to conduct its bank-ineligible securities activities subject to the revenue restrictions and Operating Standards established for section 20 subsidiaries ("Operating Standards").5 Activities Approved by Regulation As noted above, BBV proposes that Company engage in providing credit and servicing loans; financial and investment advisory activities; securities brokerage, riskless principal, private placement, and other transactional activities; and bank-eligible securities underwriting and dealing activities. The Board has determined by regulation that each of these activities is closely related to banking for purposes of section 4(c)(8) of the BHC Act.6 BBV has committed that Company will conduct these activities in accordance with the limitations set forth in Regulation Y and the Board's orders and interpretations relating to each of the activities. Proper Incident to Banking Standard In order to approve this notice, the Board also must consider whether performance of the proposed activities is a proper incident to banking, that is, whether the activities proposed "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."7 As part of its evaluation of these factors, the Board considers the financial condition and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.8 The Board notes that BBV's capital ratios satisfy applicable risk-based standards under the Basle Accord and are considered equivalent to the capital levels that would be required of a U.S. banking organization. The Board also has reviewed the capitalization of BBV and Company in accordance with the standards set forth in the Section 20 Orders and finds the capitalization of each to be consistent with approval of the proposal. The Board has reviewed these factors in light of all the facts of record, including BBV's projection of the volume of Company's underwriting and dealing activities in bank-ineligible securities. On the basis of its supervisory experience with BBV, the results of a recent infrastructure review of Company, the commitments provided in this case, and the proposed management of Company, the Board has determined that BBV and Company have established policies and procedures to ensure compliance with this order and the Section 20 Orders, including computer, audit, and accounting systems, internal risk management controls, and the necessary operational and managerial infrastructure. The Board also has reviewed other aspects of the managerial resources of the entities involved in the proposal, including the expected effect of the proposal on such resources. On the basis of the foregoing and all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval of the notice. The Board expects, moreover, that consummation of the proposal would provide added convenience to BBV's customers and increase the level of competition among existing providers of these services. As noted above, BBV has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities in accordance with the prudential framework established by the Board's Section 20 Orders, including the Operating Standards. Under the framework and conditions established in this order and the Section 20 Orders, the Board concludes that Company's proposed limited conduct of bank-ineligible securities underwriting and dealing activities is not likely to result in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of the proposal. Similarly, the Board finds no evidence that Company's private placement, riskless principal, and other activities -- conducted under the framework and conditions established in this order and Regulation Y -- would likely result in any significantly adverse effects that would outweigh the public benefits of the proposal. Accordingly, the Board has determined that performance of the proposed activities by BBV can reasonably be expected to produce public benefits that outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Conclusion Based on all the facts of record, and subject to the commitments made by BBV, as well as the terms and conditions set forth in this order and in the Board's orders and regulations noted above, including the Operating Standards, the Board has determined that the notice should be, and hereby is, approved. Underwriting and dealing in any manner other than as approved in this order and the Section 20 Orders, as modified by the Modification Orders, is not authorized. The Board's determination also is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. In approving the proposal, the Board has relied on all the facts of record and all the representations and commitments made by BBV. These commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decisions, and may be enforced in proceedings under applicable law. This transaction shall not be consummated later than three months after the effective date of this order, unless such period is extended for good .cause by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors,9 effective March 23, 1998. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 BBV previously received approval under section 4(c)(9) of the BHC Act to acquire Company and to engage temporarily in various nonbanking activities through Company. See Letter dated October 15, 1995, from Jennifer J. Johnson, Deputy Secretary of the Board, to Eileen P. Matthews, Esq. 2 Asset data are as of September 30, 1997, and are based on exchange rates then applicable. Ranking data are as of June 30, 1997. 3 See Canadian Imperial Bank of Commerce, et al., 76 Federal Reserve Bulletin 158 (1990); J.P. Morgan & Co. Inc., et. al., 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert. denied, 486 U.S. 1059 (1988), as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997) (collectively, "Section 20 Orders"). 4 Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989); 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engage in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996); and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). 5 Company may provide services that are necessary incidents to the proposed underwriting and dealing activities. Unless Company receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, any revenues from the incidental activities must be treated as ineligible revenues subject to the Board's revenue limitation. 6 See 12 C.F.R. 225.28(b)(1), (b)(6), (b)(7)(i), (b)(7)(ii), (b)(7)(iii), (b)(7)(v), and (b)(8)(i). 7 12 U.S.C. § 1843(c)(8). 8 See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987). 9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Meyer, and Ferguson. Absent and not voting: Governor Gramlich.

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1998 Orders on banking applications