|For immediate release|
The Federal Reserve Board announced today its approval of the application of Erste Bank der österreichischen Sparkassen Aktiengesellschaft, Vienna, Austria, to establish a federally licensed branch in New York, New York.
Attached is the Board's Order relating to this action.
Erste Bank der österreichischen Sparkassen Aktiengesellschaft
Erste Bank der österreichischen Sparkassen Aktiengesellschaft, Vienna, Austria ("Bank"), 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 a federally licensed branch 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 branch in the United States.
Notice of the application, affording interested persons an opportunity to comment, has been published in a newspaper of general circulation in New York (The New York Times, May 28, 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 $57 billion, is one of the largest banks in Austria.1 Die Erste österreichische Spar-Casse Anteilsverwaltungssparkasse, Vienna, Austria ("AVS"), which owns 43 percent of Bank's voting shares, is Bank's largest shareholder.2 No other single shareholder holds 10 percent or more of the outstanding voting shares of Bank.
In addition to its network of domestic branches, Bank operates bank and nonbank subsidiaries that engage in a number of activities in Austria, including commercial banking, finance, insurance, real estate, and travel-related services. International operations include branches, representative offices, and bank and nonbank subsidiaries located in Europe, Asia, and the United States. Bank is a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. 211.23(b)).
Bank was formed as the result of the merger of GiroCredit Bank Aktiengesellschaft der Sparkassen AG ("GiroCredit") into Die Erste österreichische Spar-Casse Bank Aktiengesellschaft ("Die Erste"), both of Vienna, Austria. Before the merger, Die Erste had no banking operations in the United States. GiroCredit operated a federally licensed, uninsured branch in New York, which Bank seeks authority to operate through the instant application. Pursuant to Regulation K, the Board allowed the merger to proceed before an application to establish the office was filed and acted on by the Board.3
The Austrian Federal Ministry of Finance (the "Ministry"), which approved the merger of Die Erste and GiroCredit, has no objection to the continued operation of the existing branch of Bank.
In order to approve an application by a foreign bank to establish a branch 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)). The Board may also 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)).
Bank engages directly in the business of banking outside of the United States through its banking operations in Austria and elsewhere. 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
In this case, 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 Ministry and the Austrian National Bank ("Central Bank"). The Board previously has determined that another Austrian credit institution is subject to comprehensive supervision on a consolidated basis by the Ministry and the Central Bank.5 The Board has determined that Bank is supervised on substantially the same terms and conditions as that other institution. Based on all the facts of record, the Board concludes that Bank is subject to comprehensive supervision 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 Ministry has not objected to Bank establishing the proposed federally licensed uninsured branch.
Austria is a signatory to the Basle risk-based capital standards, and Austrian risk-based capital standards meet those established by the Basle Capital Accord and the European Union. Bank's capital is in excess of the minimum levels that would be required by the Basle Capital 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, and Bank appears to have the experience and capacity to support the branch. Bank has established controls and procedures for the branch to ensure compliance with U.S. law, as well as controls and procedures for its worldwide 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 Verein DE 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 Verein DE 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 certain information. In addition, subject to certain conditions, the Ministry 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 federally licensed branch 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 recommend 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 October 14, 1998 .
(signed) Robert deV. Frierson
Robert deV. Frierson
1 All data are as of June 30, 1998.
2 AVS, an inactive savings bank that acts as a holding company for Bank, is controlled by Verein - Die Erste österreichische Spar-Casse Anteilsverwaltungssparkasse ("Verein DE"), a savings bank association. Verein DE engages in no activities other than controlling AVS.
3 12 C.F.R. 211.24(a)(3).
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 Creditanstalt-Bankverein, 82 Federal Reserve Bulletin, 594 (1996).
6 The Board's authority to approve establishment of the proposed branch office parallels the continuing authority of the Office of the Comptroller of the Currency ("OCC") to license federal offices of a foreign bank. The Board's approval of this application does not supplant the authority of the OCC to license the proposed branch office of Bank in accordance with any terms or conditions that the OCC may impose.
7 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Meyer, Ferguson, and Gramlich. Absent and not voting: Governor Kelley.
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1998 Orders on banking applications