|For immediate release|
The Federal Reserve Board announced today its approval of the application of Westdeutsche ImmobilienBank, Mainz, Germany, to establish a representative office in New York, New York.
Attached is the Board's Order relating to this action.
Westdeutsche ImmobilienBank ("Bank"), Mainz, Germany, 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. § 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, July 24, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.
Bank, with assets of $7 billion,1 was established in January 1995, and is owned by three German Landesbanken, which are in turn owned by various savings banks associations and municipal and state authorities. Landesbank Rheinland-Pfalz Girozentrale ("LB Rh-Pfalz") owns 25 percent of Bank; Westdeutsche Landesbank Girozentrale ("WestLB") owns 50 percent of Bank; and Landesbank Baden-Württemberg ("LBW") owns 25 percent of Bank.2 All three Landesbanken are public law institutions that serve as the central and clearing bank for the savings banks in their respective states. The Landesbanken also provide commercial and investment banking services regionally, nationally, and internationally to both public and private entities and individuals.
Bank engages principally in real estate activities. Bank provides real estate financing, consulting and service activities, project development, construction and property management, and portfolio management. Bank has twelve offices in Germany, a branch in Great Britain, and a representative office in the Netherlands.
The proposed representative office would act as a liaison with customers and potential customers. It would also solicit new business, conduct research, make property inspections, verify external appraisals, secure title information, prepare applications for loans, and solicit investors to purchase such loans.
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. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).3 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)(2)).
As noted above, LB Rh-Pfalz, WestLB, LBW, and Bank engage 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 Germany, including WestLB and LBW, that those banks were subject to home country supervision on a consolidated basis.4 Bank and LB Rh-Pfalz are supervised by the German regulators on substantially the same terms and conditions as those other banks. Based on all the facts of record, the Board has determined that Bank and LB Rh-Pfalz are subject to comprehensive supervision and regulation on a consolidated basis by their home country supervisors.
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. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). In this regard, the German Federal Banking Supervisory Office 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 operation in its home country, its overall financial resources, and its standing with its home country supervisors, the Board also has 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 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 German supervisors 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 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 or its affiliates' direct or indirect 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.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. § 1818 against Bank and its affiliates.
By order of the Board of Governors,6 effective March 1, 1999.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 Data are as of June 30, 1998.
2 On January 1, 1999, Landeskreditbank Baden-Württemberg and Landesgirokasse-öffentliche Bank und Landessparkasse were merged into Südwestdeutsche Landesbank Girozentrale ("SüdwestLB"). SüdwestLB, which has been renamed Landesbank Baden-Württemberg ("LBW"), is the surviving legal entity.
3 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.
4 See West Merchant Bank Limited, 81 Federal Reserve Bulletin 519 (1995); Südwestdeutsche Landesbank Girozentrale, 83 Federal Reserve Bulletin 937 (1997). No material change has occurred in the manner of supervision of the banks since those determinations.
5 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.
6 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.
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1999 Orders on banking applications