|For immediate release|
The Federal Reserve Board today announced its approval of the proposal of The Fuji Bank, Limited, to acquire a majority interest in The Yasuda Trust and Banking Co., Ltd., both in Tokyo, Japan, and thereby acquire Yasuda Bank and Trust Company, New York, New York.
Attached is the Board's Order relating to this action.
The Fuji Bank, Limited
The Fuji Bank, Limited ("Fuji"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. §1842) to acquire more than 50 percent of the voting securities of The Yasuda Trust and Banking Co., Ltd., Tokyo, Japan ("Yasuda"), and thereby acquire Yasuda's wholly owned U.S. subsidiary bank, Yasuda Bank and Trust Company (U.S.A.), New York, New York ("Yasuda Bank").1
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 6,361 (1999)). 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 $417 billion, is the fifth largest banking organization in Japan.2 In the United States, Fuji owns The Fuji Bank and Trust Company, New York, New York, a state-chartered insured bank. Fuji also operates branches in New York, New York, and Chicago, Illinois; agencies in Los Angeles, California, and Houston, Texas; and a representative office in New York, New York. 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 $61 billion, is the 23rd largest banking organization in Japan. In addition to Yasuda Bank, Yasuda currently operates a representative office in New York, New York.
Comprehensive Consolidated Supervision and Access to Information
Based on all the facts of record, the Board has concluded that Fuji continues to be subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.
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.
Financial, Managerial, and Other Supervisory Considerations
The Board also 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, 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, as are the other supervisory factors that the Board must consider under section 3 of the BHC Act. Considerations related to the convenience and needs of the communities to be served also are consistent with approval.
The transaction shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or the Federal Reserve Bank of New York, acting pursuant to delegated authority.
By order of the Board of Governors,8 effective March 15, 1999.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 Fuji currently owns approximately 16.8 percent of Yasuda's voting shares. See The Fuji Bank, Limited, 84 Federal Reserve Bulletin 674 (1998) ("1998 Fuji/Yasuda Order").
2 Asset and ranking data are as of March 31, 1998, and are based on exchange rates then applicable.
3 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.
4 Market share data are as of June 30, 1997. The HHI for the Metropolitan New York-New Jersey banking market would remain at 761 after consummation of the proposal. 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 HHI thresholds for screening bank mergers and acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose lenders and other nondepository financial entities.
5 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 C.F.R. 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 its affiliates, to assess the foreign bank's overall financial condition and compliance with law and regulation. See 12 C.F.R. 211.24(c)(1)(ii).
6 See 1998 Fuji/Yasuda Order.
7 See 1998 Fuji/Yasuda Order. Among other things, in June 1998, the Financial Supervisory Agency was established and assumed from the Ministry of Finance primary responsibility for licensing, supervising, and examining private sector financial institutions in Japan, including banks. In addition, in October 1998, the Financial Revitalization Commission was established to assume responsibility for dealing with failures of financial institutions, managing financial crises, and inspecting and supervising financial institutions. The Financial Supervisory Agency is a subordinate agency of the Financial Revitalization Commission. The Bank of Japan retains its authority to examine banks, in coordination with the Financial Supervisory Agency.
8 Voting for this action: Vice Chair Rivlin and Governors Kelley, Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan.
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1999 Orders on banking applications