|For immediate release|
The Federal Reserve Board today announced its approval of the application of The Fuji Bank, Limited, Tokyo, Japan, to retain 16.8 percent of the voting shares of The Yasuda Trust and Banking Co., Ltd., Tokyo, Japan, and thereby retain an interest in Yasuda Bank and Trust Company (U.S.A.), New York, New York.
Attached is the Board's Order relating to this action.
The Fuji Bank, Limited
The Fuji Bank, Limited ("Fuji"), a registered bank holding company, has requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (12 U.S.C. § 1842) to retain 16.8 percent of the voting shares of The Yasuda Trust and Banking Co., Ltd., Tokyo, Japan ("Yasuda"), and thereby to retain an interest in the wholly owned U.S. bank subsidiary of Yasuda, Yasuda Bank and Trust Company (U.S.A.), New York, New York ("Yasuda Bank").
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 16,538 and 17,873 (1998)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.
Fuji, with total consolidated assets of approximately $453 billion, is the third largest banking organization in Japan.1 In the United States, Fuji owns The Fuji Bank and Trust Company, New York, New York. Fuji also operates a branch office in New York, New York; and Chicago, Illinois; an agency office in Los Angeles and San Francisco, California; Atlanta, Georgia; and Houston, Texas; and a representative office in New York, New York; Miami, Florida; and Washington, D.C. In addition, Fuji engages through its nonbanking subsidiaries in a number of activities in the United States that are permissible under section 4(c)(8) of the BHC Act.
Yasuda, with total consolidated assets of approximately $69 billion, is the 16th largest banking organization in Japan. In the United States, Yasuda operates Yasuda Bank, which has assets of approximately $201 million, and a branch office in New York, New York, which has assets of approximately $1.7 billion.2
Fuji and Yasuda compete directly in the Metropolitan New York-New Jersey banking market.4 Fuji controls deposits of approximately $160 million, representing less than 1 percent of the total deposits in depository institutions in the market.5 Yasuda controls deposits of approximately $42 million, representing less than 1 percent of the total deposits in depository institutions in the market. If Fuji and Yasuda are considered as a combined entity, the Herfindahl-Hirschman Index ("HHI") for the banking market would remain unchanged at 796. The banking market would remain unconcentrated and numerous competitors would remain in the market.6 Thus, any potential elimination of competition between the two entities is not expected substantially to lessen competition in the Metropolitan New York-New Jersey banking market or in any other relevant banking market.
Financial, Managerial, and Other Supervisory Considerations
The BHC Act also requires the Board to determine that the foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with the BHC Act and the International Banking Act ("IBA") (12 U.S.C. § 3101 et seq.). The Board has reviewed restrictions on disclosure in jurisdictions where Fuji has material operations and has communicated with relevant authorities concerning access to information. Fuji has committed that, to the extent not prohibited by applicable law, it will make available to the Board such information on the operations of Fuji and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal law. Fuji also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable Fuji to make any such information available to the Board. In light of these commitments and other facts of record, the Board has concluded that Fuji has provided adequate assurances of access to any appropriate information that the Board may request. For these reasons, and based on all the facts of record, the Board has concluded that the supervisory factors it is required to consider under section 3(c) of the BHC Act are consistent with approval.
The Board also has carefully considered the financial and managerial resources and future prospects of Fuji, Yasuda, and their respective subsidiaries, and the effect the proposal would have on these factors in light of all the facts of record. Fuji has submitted information indicating that the proposal, which is incidental to a corporate restructuring in Japan, would not affect the existing U.S. operations of Fuji, and would require no funding or other support from the U.S. operations of Fuji. In addition, the Board has reviewed supervisory information from the home country authorities responsible for supervising Fuji and Yasuda concerning the proposal and the condition of the parties, confidential financial information from Fuji and Yasuda Bank, and reports of examination from the appropriate federal and state supervisors of the affected organizations assessing the financial and managerial resources of the organizations. Based on all the facts of record, the Board has concluded that the financial and managerial resources and future prospects of the organizations are consistent with approval. Factors related to the convenience and needs of the community to be served that the Board is required to consider also are consistent with approval, as are the other supervisory factors that the Board must consider under section 3 of the BHC Act.
By order of the Board of Governors,9 effective June 8, 1998.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 Asset data are as of March 31, 1997, and are based on exchange rates then applicable. Ranking data are as of December 31, 1996.
2 Asset data are as of March 31, 1998.
3 12 U.S.C. § 1842(c)(1)(B).
4 The Metropolitan New York-New Jersey banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, and a portion of Mercer Counties in New Jersey; Pike County in Pennsylvania; and portions of Fairfield and Litchfield Counties in Connecticut.
5 In this context, depository institutions include commercial banks, savings banks, and savings institutions. Market share data are as of June 30, 1996, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991).
6 Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823) (1984), a market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal threshold for an increase in HHI when screening bank mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effects of limited-purpose and other nondepository financial entities.
7 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the Board determines whether a foreign bank is subject to consolidated home country supervision under the standards set forth in Regulation K. See 12 CFR 225.13(a)(4). Regulation K provides that a foreign bank may be considered subject to consolidated supervision if the Board determines that the bank is supervised or regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the foreign bank, including the relationship of the bank and it affiliates, to assess the foreign bank's overall financial condition and compliance with law and regulation. See 12 CFR 211.24(c)(1)(ii).
8 See The Mitsubishi Bank, Limited, 82 Federal Reserve Bulletin 436 (1996). See also The Bank of Tokyo, Ltd., 81 Federal Reserve Bulletin 279 (1995).
9 Voting for this action: Chairman Greenspan and Governors Kelley, Meyer, Ferguson, and Gramlich. Absent and not voting: Vice Chair Rivlin and Governor Phillips.
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1998 Orders on banking applications