|For immediate release|
The Federal Reserve Board announced today its approval of the application of Banco BBA-Creditanstalt S.A., São Paulo, Brazil, to establish a representative office in New York, New York.
Attached is the Board's Order relating to this action.
Banco BBA-Creditanstalt S.A.
Banco BBA-Creditanstalt S.A. ("Bank"), São Paulo, Brazil, 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 Post, February 13, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.
Bank, with assets of approximately $6.8 billion,1 was incorporated in Brazil in 1988. Bank engages in a full range of commercial and investment banking activities. In addition, through subsidiaries, Bank provides consumer loans and private banking services. Bank operates five banking offices in Brazil, a branch in Nassau, the Bahamas, and a representative office in Buenos Aires, Argentina. Bank recently received approval from the U.K. Financial Services Authority to establish a representative office in London, England.
Bank is a subsidiary of BBA Participacoes S.A. ("Participacoes"), São Paulo, Brazil, a holding company, and Bank Austria Aktiengesellschaft ("Bank Austria"), Vienna, Austria. Participacoes owns a registered broker-dealer, BBA Securities Corp., in New York, New York. Bank Austria operates branches in Greenwich, Connecticut, and New York, New York; representative offices in Atlanta, Georgia, Chicago, Illinois, and San Francisco, California; and owns several U.S. subsidiaries that engage in nonbanking activities in accordance with the Bank Holding Company Act ("BHC Act") and Regulation Y.2
The proposed representative office would solicit new business, conduct research, and act as a liaison between Bank's head office in Brazil and customers in the United States.
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)).3 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)). The Board previously has stated that the standards that apply to the establishment of a branch or agency need not in every case apply to the establishment of a representative office, because representative offices do not engage in a banking business and cannot take deposits or make loans.4
With respect to home country supervision of Bank, the Board has considered the following information. Bank is subject to the regulatory and supervisory authority of the Central Bank of Brazil ("Central Bank"), which has primary responsibility for the regulation of financial institutions in Brazil. The Central Bank has no objection to Bank's establishment of the proposed representative office. The Board has previously determined that the Central Bank exercises a significant degree of supervision over the activities of two other Brazilian banks, both of which were approved to establish representative offices in the United States.5 The Board has determined that Bank is supervised by the Central Bank on substantially the same terms and conditions as the other Brazilian banks.
Bank Austria is subject to the supervisory authority of the Austrian Federal Ministry of Finance ("Ministry") and the Austrian National Bank. The Board has previously determined that the Austrian supervisors exercise a significant degree of supervision over the activities of Bank Austria in connection with the establishment of a representative office in Chicago, Illinois.6
Based on all the facts of record, the Board has determined that factors relating to the supervision of Bank and Bank Austria by their respective home country supervisors are consistent with approval of the proposed representative office.
The Board also has determined that for the purposes of the IBA and Regulation K, Bank and Bank Austria engage directly in the business of banking outside of the United States. Bank and its parent companies have provided the Board with information necessary to assess the application through submissions that address the relevant issues.
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)). As noted above, the Central Bank has no objection to Bank's establishment of the proposed representative office. 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 ultimate 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 BHC Act, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Bank and its ultimate 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 Central Bank and 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 conditions described below, the Board concludes that Bank 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 Bank and its ultimate parents, and the terms and conditions set forth in this order, the Board has determined that Bank'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 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 direct or indirect activities in the United States. Approval of this application also is specifically conditioned on compliance by Bank and its ultimate parents with the commitments made in connection with this application and with the conditions in this order.7 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,8 effective May 17, 1999.
(signed) Robert deV. Frierson
Robert deV. Frierson
1 Data are as of December 31, 1998.
2 Bank Austria's Greenwich, Connecticut, branch, and its Atlanta, Georgia, and San Francisco, California, representative offices were previously owned by Creditanstalt-Bankverein ("Creditanstalt"). Effective September 24, 1998, Creditanstalt was merged with and into Bank Austria. Before the merger, Bank Austria received approval from the Board, under section 211.24(a)(3) of Regulation K, to continue to operate these offices pending consideration of its application.
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 58 Federal Register 6348, 6351 (1993). See also Citizens National Bank, 79 Federal Reserve Bulletin 805 (1993); Agricultural Bank of China, 83 Federal Reserve Bulletin 617 (1997).
5 See Banco Bandeirantes, S.A., 81 Federal Reserve Bulletin 742 (1995); Unibanco-Uniao de Bancos Brasileiros, S.A., 82 Federal Reserve Bulletin 1148 (1996).
6 See Bank Austria, A.G., 81 Federal Reserve Bulletin 979 (1995).
7 The Board's authority to approve the establishment of the proposed representative office parallels the 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 its agent, the New York State Banking Department ("Department"), to license the proposed representative office of Bank in accordance with any terms or conditions that the Department may impose.
8 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