|For immediate release|
The Federal Reserve Board announced today its approval of the notice of Stichting Prioriteit ABN AMRO Holding, Stichting Administratiekantoor ABN AMRO Holding, ABN AMRO Holding N.V., and ABN AMRO Bank N.V., all of Amsterdam, The Netherlands, and ABN AMRO North America, Inc., Chicago, Illinois, to acquire Standard Federal Bancorporation, Inc., and Standard Federal's wholly owned subsidiaries, Standard Federal Bank and Standard Brokerage Services, Inc., all of Troy, Michigan.
Attached is the Board's Order relating to this action.
Stichting Prioriteit ABN AMRO Holding
Stichting Prioriteit ABN AMRO Holding, Stichting Administratiekantoor ABN AMRO Holding, ABN AMRO Holding N.V., and ABN AMRO Bank N.V., all of Amsterdam, The Netherlands, and ABN AMRO North America, Inc., Chicago, Illinois (collectively, the "Notificants"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire Standard Federal Bancorporation, Inc. ("Standard Federal"), and Standard Federal's wholly owned subsidiaries, Standard Federal Bank and Standard Brokerage Services, Inc., all of Troy, Michigan, and thereby engage in operating a savings association and providing securities brokerage services pursuant to sections 225.25(b)(9) and 225.25(b)(15) of the Board's Regulation Y (12 C.F.R. 225.25(b)(9) and 225.25(b)(15)).1
Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 7,231 (1997)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act.
Notificants, with total consolidated assets of $344.4 billion,2 is the largest commercial banking organization in The Netherlands, and controls seven depository institutions in Illinois and one commercial bank in New York. ABN AMRO Bank N.V. operates branches in Boston, Massachusetts; Chicago, Illinois; New York, New York; Pittsburgh, Pennsylvania; and Seattle, Washington; and agencies in Atlanta, Georgia; Miami, Florida; Houston, Texas; and Los Angeles and San Francisco, California. Notificants also engage in a number of nonbanking activities in the United States.
Standard Federal is the fifth largest depository institution in Michigan, controlling approximately $8.3 billion in deposits, representing 8.2 percent of total deposits in depository institutions in the state.3 Notificants and Standard Federal do not compete directly in any banking market. Accordingly, the Board has determined that consummation of the proposal would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market.
The Board has determined that the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act.4 In making this determination, the Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4(c)(8) of the BHC Act. Notificants have committed to conform all activities of Standard Federal and its subsidiaries to those permissible for bank holding companies under section 4(c)(8) of the BHC Act and Regulation Y.5 The Board also has determined that the provision of securities brokerage services is closely related to banking for purposes of section 4(c)(8) of the BHC Act.6
In order to approve the proposal, the Board also must determine that the proposed activities are a proper incident to banking, that is, that the proposal "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."7 As part of its review of these factors, the Board considers the financial and managerial resources of the notificant and its subsidiaries and the effect the proposal would have on such resources.8
The Board notes that Notificants' capital ratios satisfy applicable risk-based capital standards under the Basle Accord and are considered equivalent to the capital levels that would be required of a U.S. banking organization. The Board also has considered recent financial statements and other available information, including pro forma financial statements and reports of examination, and determined that the proposed transaction would not have a significant effect on the financial resources of Notificants and their subsidiaries.
In addition, the Board has considered the managerial resources of Notificants in light of all the facts of record, including information from several commenters who oppose the proposal ("Protestants").9 Protestants allege that certain underwriting activities of the Foreign Parent outside the United States raise managerial concerns. These activities relate to the involvement of the Foreign Parent and an affiliate as underwriter for bonds issued by a trucking company in The Netherlands (the "Netherlands bond underwriting") and as trustee for the bondholders. Protestants also contend that the Foreign Parent and its affiliate were involved in conflicts of interests and self-dealing in The Netherlands in connection with the multiple roles they played in the Netherlands bond underwriting and as senior creditor of the company issuing the bonds.10
Notificants have denied Protestants' allegations of wrongdoing relating to the Netherlands bond underwriting. The matter is before the courts in The Netherlands, where a lower court has ruled in favor of the Foreign Parent and an appeal is pending. The allegations relating to the Netherlands bond underwriting involve issues governed by the securities and bankruptcy laws of a foreign country that can be adjudicated by the courts of that country. In accordance with its standard procedures, the Board has contacted Notificants' home country supervisors regarding the proposal. The Board has considered the extensive record of examination of Notificants' U.S. subsidiaries by their primary federal supervisors. Based on all the facts of record, including comments from Protestants, and for the reasons discussed above, the Board concludes that financial and managerial considerations are consistent with approval. The Board has full supervisory authority to take appropriate action if a court determines or an examination finds that Notificants have engaged in illegal or improper activities.
Notificants indicate that the proposal would result in greater efficiencies, and, accordingly, would enable both institutions to offer their customers more services, lower costs, and added convenience. On the basis of the foregoing and all the facts of record, the Board has concluded that the proposal can be expected to produce public benefits that outweigh any possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act.11
Based on the foregoing and all other facts of record, the Board has determined that the notice should be, and hereby is, approved.12 Approval of the notice is specifically conditioned on compliance by Notificants with all the commitments made in connection with this notice. The Board's determination also is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and 225.23(g)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasions of, the provisions of the BHC Act and the Board's regulations and orders thereunder. For purposes of this transaction, the commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.
The proposal shall not be consummated 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 Chicago, acting pursuant to delegated authority.
By order of the Board of Governors,13 effective April 10, 1997.
(signed) Jennifer J. Johnson
Jennifer J. Johnson
1 The Notificants also have acquired an option to purchase up to 19.9 percent of the voting shares of Standard Federal under certain circumstances. This option would terminate on consummation of the proposal.
2 Asset data are as of December 31, 1996, and use exchange rates then in effect.
3 Deposit data are as of June 30, 1996. In this context, depository institutions include banks, savings and loan associations, and savings banks.
4 12 C.F.R. 225.25(b)(9).
5 Notificants have committed that all impermissible real estate activities will be divested or terminated within two years of consummation of the proposal, that no new impermissible projects or investments will be undertaken during this period, and that capital adequacy guidelines will be met, excluding impermissible real estate investments. Notificants also have committed that all impermissible insurance activities conducted by Standard Federal or its subsidiaries will cease within six months of consummation of the proposal, and Notificants have indicated that the activities will be divested to an unrelated third party or transferred to an affiliated national bank that is authorized by the Office of the Comptroller of the Currency to engage in the activities. In addition, Notificants have committed that all impermissible securities activities will cease on or before consummation of the proposal.
6 12 C.F.R. 225.25(b)(15).
7 12 U.S.C. § 1843(c)(8).
8 See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987).
9 One of the Protestants asserts that press accounts about the U.S. activities of ABN AMRO Bank N.V. (formally Algemene Bank Nederland, N.V.), the foreign parent holding company of ABN AMRO North America, Inc. (the "Foreign Parent"), raise adverse managerial issues. The Board has considered these comments in light of Notificants' extensive supervisory record in the United States, which includes examination reports by appropriate supervisory authorities, and actions taken by the Foreign Parent to enhance risk management at its U.S. trading operations.
10 Protestants also refer to other events that occurred outside the United States involving the Foreign Parent, including two additional foreign underwriting transactions in which the Foreign Parent is alleged to have made inadequate or inaccurate disclosures to investors, alleged fraudulent activity by employees, and circumstances surrounding the recent resignation of a senior official.
11 Protestants have requested that the Board hold a public hearing to receive additional evidence concerning the allegations about the Netherlands bond underwriting. Under the Board's rules, a hearing is required on a proposed acquisition of a savings association under section 4 of the BHC Act if there are disputed issues of material fact that cannot be resolved in some other manner. 12 C.F.R. 225.23(f). Protestants have not raised a disputed issue concerning a fact that is material to the Board's consideration of this notice and that cannot otherwise be resolved.
The Board may also, in its discretion, hold a public hearing or meeting on a notice to clarify factual issues related to the notice and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 12 C.F.R. 262.25(d). In the Board's view, the Protestants have had ample opportunity to present their views, and have, in fact, provided substantial written comments that have been considered by the Board in acting on this proposal. The Protestants failed to demonstrate why the written submissions are not adequate to present their views on the notice. After a careful review of all the facts of record, including all the comments on this proposal, the Board has determined that a public hearing or meeting is not necessary to clarify the factual record of the proposal and is not otherwise warranted in this case. Accordingly, the request for a public hearing on the notice is hereby denied.
12 One of the Protestants has requested that the Board investigate Notificants and their management in light of the Protestant's allegations about illegal and unethical conduct by Notificants' employees and delay action on the proposal until the investigation is completed and the matter involving the Netherlands bond underwriting is resolved. The Board is required under the BHC Act to act on applications and notices within specified time periods. The Board notes, moreover, that Protestant has had a reasonable opportunity to comment as provided in the Board's notice processing procedures and has submitted substantial comments that have been carefully considered by the Board. Based on all the facts of record, and for the reasons discussed above, the Board concludes that the record is sufficient to act on the proposal at this time, and that delay or denial of the proposal on the grounds of informational insufficiency is not warranted.
13 This action was taken pursuant to the Board's Rules Regarding Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of Board members. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governor Kelley.
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1997 Orders on banking applications