|February 14, 2002|
Mr. Theodore D. Itzkowitz
Dear Mr. Itzkowitz:
This is in response to the request by Israel Discount Bank of New York, New York, New York ("IDBNY"), for an exemption from section 23A of the Federal Reserve Act in order that IDBNY may acquire the assets of the Miami agency of Israel Discount Bank Limited, Tel Aviv, Israel. IDBNY is a subsidiary of IDB, and thus IDB is an affiliate of IDBNY for purposes of section 23A of the Federal Reserve Act.1 IDBNY requested an exemption to acquire assets and assume liabilities of approximately [amount redacted] from the Miami agency.
Section 23A limits the amount of "covered transactions," which include loans and purchases of assets, between a bank (and its subsidiaries) and any single affiliate to 10 percent of the bank's capital stock and surplus, and limits the aggregate of all covered transactions between a bank (and its subsidiaries) and all its affiliates to 20 percent of the bank's capital stock and surplus. IDBNY's acquisition of the Miami agency’s assets is covered by section 23A.2 IDBNY's capital stock and surplus totaled approximately $535 million as of September 30, 2001.
Section 23A specifically authorizes the Board to exempt purchases of real or personal property and to exempt "at its discretion [other]. . . transactions or relationships from the requirements of this section if it finds such exemptions to be in the public interest and consistent with the purposes of this section."3 The Board has approved exemptions in similar cases for one-time transfers that are part of a corporate reorganization and that are structured to ensure the quality of the transferred assets.4 As in previous cases reviewed by the Board, the proposed transaction in this case is a by-product of a one-time corporate reorganization. IDBNY is restructuring its U.S. banking business to consolidate all the organization’s operations in Florida under IDBNY. In IDBNY’s view, the proposed consolidation would allow it to better serve its customers.IDBNY and IDB also have made the following commitments accepted by the Board in similar exemption requests:
(Signed) Robert deV. Frierson
Deputy Secretary of the Board
|cc:||Federal Reserve Bank of New York|
|Federal Deposit Insurance Corporation|
|Robert E. Mannion, Esq.|
4. See Travelers Group Inc., 84 Federal Reserve Bulletin 985, 1013-14 (1998); Letter dated November 14, 1996, from William W. Wiles to John Byam; Letter dated April 19, 1988, from James McAfee to Timothy C. Roach, Esq.; Letter dated August 6, 1987, from William W. Wiles to Timothy McGinnis. Return to text
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