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Release Date: February 24, 1997


For immediate release

The Federal Reserve Board today announced its approval of the application of First Commercial Bank, Taipei, Taiwan, to acquire all the voting shares of FCB Taiwan California Bank, Alhambra, California, and thereby become a bank holding company.

Attached is the Board's Order relating to this action.


First Commercial Bank
Taipei, Taiwan

Order Approving the Formation of a Bank Holding Company

First Commercial Bank, Taipei, Taiwan ("FCB"), a foreign bank subject to 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 become a bank holding company by acquiring all the voting shares of FCB Taiwan California Bank, Alhambra, California ("Bank"), a de novo state-chartered bank.1

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (60 Federal Register 45,485 (1995)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act.

FCB, with total consolidated assets equivalent to $33 billion, is the fourth largest commercial bank in Taiwan.2 FCB operates a branch in Los Angeles, California, and an agency in New York, New York. Taiwan directly and indirectly owns or controls approximately 71 percent of the voting shares of FCB.3

FCB proposes to establish Bank as a de novo state-chartered bank.4 Accordingly, the Board concludes that consummation of this proposal would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market. In addition, based on all the facts of record, the Board concludes that convenience and needs considerations are consistent with approval of the proposal.

Financial, Managerial, and Other Supervisory Considerations
Under section 3 of the BHC Act, as amended by the Foreign Bank Supervision Enhancement Act of 1991,5 the Board may not approve an application involving a foreign bank unless the bank is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country."6 The Board previously has determined, in applications under the International Banking Act (12 U.S.C. 3101 et seq.) ("IBA"), that certain Taiwan banks were subject to comprehensive supervision on a consolidated basis by their home country authorities.7 In this case, the Board has determined that FCB is supervised on substantially the same terms and conditions as those other Taiwan banks. Based on all the facts of record, the Board has concluded that FCB is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisors.

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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 IBA. The Board has reviewed restrictions on disclosure in jurisdictions where FCB has material operations and has communicated with relevant authorities concerning access to information. FCB has committed that, to the extent not prohibited by applicable law, it will make available to the Board such information on the operations of FCB 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. FCB also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary in order to enable FCB to make any such information available to the Board. In light of these commitments and other facts of record, the Board has concluded that FCB has provided adequate assurances of access to any appropriate information that the Board may request. For these reasons, based on all the facts of record, and subject to the conditions noted below, 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.8

The Board also must consider the financial and managerial resources of a foreign bank that files an application under section 3 of the BHC Act. FCB must comply with minimum capital standards that conform to the Basle Capital Accord, as implemented by Taiwan. FCB's capital exceeds the minimum standards and is equivalent to the capital that would be required of a United States banking organization. Based on these and other facts of record, including confidential examination and supervisory information, the Board concludes that financial and managerial factors are consistent with approval, as are all other supervisory factors the Board must consider under section 3 of the BHC Act.

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Based on the foregoing and all other facts of record, including the commitments provided by FCB, the Board has determined that the application should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of FCB or any of its affiliates subsequently interfere with the Board's ability to determine the compliance by FCB or its affiliates with applicable federal statutes, the Board may require termination of any of FCB's or its affiliates' direct or indirect activities in the United States. The commitments and conditions relied on by the Board in reaching this decision, including the commitments discussed in this order, shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decisions, and, as such, may be enforced in proceedings under applicable law.

This transaction shall not be consummated before the fifteenth calendar day following 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 San Francisco, acting pursuant to delegated authority.

By order of the Board of Governors,9 effective February 24, 1997.

(signed) Jennifer J. Johnson

Jennifer J. Johnson

Deputy Secretary of the Board


Footnotes

1 Bank of Taiwan, Taipei, Taiwan ("BOT"), controls 12.84 percent of the voting shares of FCB. BOT operates a branch in Los Angeles, California, and an agency in New York, New York, and is subject to the BHC Act in the same manner and to the same extent as a bank holding company. See 12 U.S.C. § 3106(a). Accordingly, BOT also has requested the Board's approval to acquire more than 5 percent of the voting shares of a bank holding company and a bank upon consummation of the proposal. See Bank of Taiwan, 83 Federal Reserve Bulletin __ (1997) (Order dated February 24, 1997).

2 Asset data are as of June 30, 1996, and reflect the exchange rate then in effect. Ranking data are as of December 31, 1995.

3 The Taiwan authorities directly own 51 percent of FCB's shares and control another 20 percent of the bank's shares through other banks that are controlled by Taiwan.

4 The California State Banking Department and the Federal Deposit Insurance Company have approved Bank's applications for a charter and federal deposit insurance, respectively.

5 Pub. L. No. 102-242, § 201 et seq., 105 Stat. 2286 (1991)

6 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(b)(5). 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).

7 See Taiwan Business Bank, 81 Federal Reserve Bulletin 746 (1995); The Farmers Bank of China, 81 Federal Reserve Bulletin 620 (1995); Chiao Tung Bank, 79 Federal Reserve Bulletin 543 (1993); Bank of Taiwan, 79 Federal Reserve Bulletin 541 (1993); United World Chinese Commercial Bank, 79 Federal Reserve Bulletin 146 (1993); and Taipei Bank, 79 Federal Reserve Bulletin 143 (1993).

8 Because Taiwan will control Bank, transactions between Bank and other companies controlled by Taiwan will be subject to section 23A and section 23B of the Federal Reserve Act. 12 U.S.C. § 371c, 371c-1. FCB and Bank have committed that Bank will adopt and maintain appropriate internal control procedures and operational safeguards to assure that all transactions with, or for the benefit of, an affiliate are in compliance with the requirements of sections 23A and 23B of the Federal Reserve Act.

9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer.

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1997 Orders on banking applications


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