|For immediate release|
The Federal Reserve Board announced today its approval of the application of Paribas, Paris, France, to establish a representative office in Atlanta, Georgia.
Attached is the Board's Order relating to this action.
Paribas, Paris, France, 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 Atlanta, Georgia. 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 Atlanta, Georgia (Atlanta Journal and Constitution, October 23, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.
Paribas, with total consolidated assets of approximately $309 billion,1 is the surviving entity resulting from the merger into Banque Paribas of its parent company, Compagnie Financière de Paribas, and certain other subsidiaries and affiliated companies in May 1998.
Paribas, which primarily engages in investment banking, asset management, and retail financial services, is the fifth largest banking group in France and has offices in more than 60 countries. In the United States, Paribas operates branches in New York, New York, and Chicago, Illinois; agencies in Houston, Texas, and Los Angeles, California; and representative offices in Dallas, Texas, and San Francisco, California. Paribas also owns several U.S. subsidiaries that engage in nonbanking activities. The proposed representative office would market Paribas's products and services.
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 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)).2 In addition, the Board may take into account additional standards 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, Paribas engages directly in the business of banking outside the United States. Paribas 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 France, that those banks were subject to home country supervision on a consolidated basis.3 Paribas is supervised by the French regulators on substantially the same terms and conditions as those other banks. Based on all the facts of record, the Board has determined that Paribas is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisors.4
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)). The Commission Bancaire has no objection to the establishment of the proposed representative office.
With respect to the financial and managerial resources of Paribas, taking into consideration Paribas's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed representative office. Paribas 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 Paribas's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Paribas operates and has communicated with relevant government authorities regarding access to information. Paribas has committed to make available to the Board such information on the operations of Paribas 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 to the Board may be prohibited by law, Paribas has 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 Commission Bancaire may share information on Paribas's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the conditions described below, the Board concludes that Paribas has provided adequate assurances of access to any necessary information that the Board may request.
On the basis of all the facts of record, and subject to the commitments made by Paribas, as well as the terms and conditions set forth in this order, the Board has determined that Paribas's application to establish a representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Paribas and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by Paribas or its affiliates with applicable federal statutes, the Board may require termination of any of Paribas's direct or indirect activities in the United States. Approval of this application is also specifically conditioned on Paribas's compliance 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 Paribas and its affiliates.
By order of the Board of Governors,6 effective April 1, 1999.
(signed) Jennifer J. Johnson
Jennifer J. Johnson
1 Data are as of December 31, 1998.
2 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.
3 See Banque Nationale de Paris, 81 Federal Reserve Bulletin 515 (1995); Caisse Nationale de Crédit Agricole, 81 Federal Reserve Bulletin 1055 (1995); Crédit Agricole Indosuez, 83 Federal Reserve Bulletin 1025 (1997).
4 On February 1, 1999, Société Générale ("SoGen") announced its intention to make a stock-for-stock exchange offer for all of the shares of Paribas. The Board previously determined that the home country supervision of SoGen was consistent with the approval of a representative office. See Société Générale, 80 Federal Reserve Bulletin 665 (1994).
5 The Board's authority to approve the establishment of the proposed office parallels the continuing authority of the State of Georgia to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of Georgia and the State of Georgia Department of Banking and Finance ("Department") to license the proposed office of Paribas 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