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October 12, 2004

William S. Eckland, Esq.
Sidley Austin Brown & Wood LLP
1501 K Street, N.W.
Washington, D.C. 20005

Dear Mr. Eckland:

This responds to your September 17, 2004, letter requesting a determination that the proposed conversion of American Investment Bank, N.A., Salt Lake City, Utah ("AIB"), from a national bank to a Utah-chartered commercial bank would not cause AIB's parent company, Leucadia National Corporation ("Leucadia"), to lose certain grandfather rights that it maintains under section 4(f) of the Bank Holding Company Act ("BHC Act"). 1

AIB became a "bank" for purposes of the BHC Act as a result of the Competitive Equality Banking Act of 1987. Accordingly, Leucadia may retain its ownership of AIB and not be treated as a bank holding company only if Leucadia and AIB abide by the conditions set forth in section 4(f) of the BHC Act. One of these conditions generally prohibits Leucadia from acquiring control of an additional bank or savings association. 2

You have represented that AIB seeks only to change its charter and will convert directly from a national bank to a state-chartered commercial bank. Leucadia would not operate two banks for any instant in time and will not establish, or acquire any shares of, a separate bank or savings association in order to complete the proposed conversion.3 Accordingly, the proposed transaction would not result, even temporarily, in any increase in the number of banks or bank charters controlled by Leucadia. Moreover, the new state bank would succeed to all of the assets and liabilities of AIB, and AIB would not assume any assets or liabilities of another bank or savings association through the transaction.

You also have represented that the proposed conversion would not result in any change in ownership or control of AIB. In this regard, Leucadia currently is the sole shareholder of AIB and would remain so after the conversion. The executive officers and directors of AIB also would remain the same after the conversion.

Under these circumstances, the Legal Division would not recommend that the Board determine that the proposed conversion would cause Leucadia to lose its grandfather rights under section 4(f) of the BHC Act. Of course, after the conversion, AIB and Leucadia must continue to comply with the conditions applicable to a nonbank bank and a grandfathered holding company, respectively, under the BHC Act.

This opinion is limited to the transaction described above and is based on the facts and representations included in your letter and related correspondence. Any material change in the facts presented may result in a different conclusion and should be reported to Board staff. If you have any questions about this letter, please contact Kieran Fallon of my staff at (202) 452-5270.

Sincerely,

(signed) Scott G. Alvarez


Footnotes

1. See 12 U.S.C. 1843(f)(1). Return to text

2. Id. at 1843(f)(2)(A)(i). Return to text

3. You have indicated that the direct conversion of AIB from a national bank to a Utah-chartered state bank is permissible under both the Utah Code and the National Bank Act. See Utah Code 7-1-713; 12 U.S.C. 214(b). Return to text

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