For immediate release

The Federal Reserve Board today announced its approval of the notice of The Sanwa Bank Limited, Osaka, Japan, to acquire through its wholly owned subsidiary, Sanwa Business Credit Corporation, Chicago, Illinois, all the shares of Morcroft Capital Corporation, Fairfield, New Jersey, and thereby engage in providing financing and leasing services pursuant to Regulation Y. Attached is the Board's Order relating to this action.

The Sanwa Bank Limited Osaka, Japan Order Approving Notice to Engage in Nonbanking Activities

The Sanwa Bank Limited, Osaka, Japan ("Notificant"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24(a) of the Board's Regulation Y (12 C.F.R. 225.24(a)) to acquire through its wholly owned subsidiary, Sanwa Business Credit Corporation, Chicago, Illinois, all the shares of Morcroft Capital Corporation, Fairfield, New Jersey ("Morcroft"), and thereby engage in providing financing and leasing services pursuant to sections 225.28(b)(1) and (b)(3) of Regulation Y (12 C.F.R. 225.28(b)(1) and (b)(3)). Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 52,339 (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. Notificant, with total consolidated assets of approximately $446.9 billion, is the fourth largest banking organization in Japan, and the sixth largest banking organization in the world.1 In the United States, Notificant controls Sanwa Bank California, San Francisco, California. In addition, Notificant operates branches in New York, New York; Chicago, Illinois; and San Francisco and Los Angeles, California; agencies in Atlanta, Georgia; and Dallas, Texas; and representative offices in Boston, Massachusetts; Cleveland, Ohio; and Houston, Texas. Notificant also engages in a number of nonbanking activities in the United States. The Board previously has determined by regulation that financing and leasing activities are closely related to banking and permissible for bank holding companies under section 4(c)(8) of the BHC Act. Notificant has committed to conduct these activities subject to the limitations set forth in Regulation Y.2 In order to approve the proposal, the Board also must find that the performance of the proposed activities by Notificant "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." 12 U.S.C. § 1843(c)(8). As part of its evaluation of these factors, the Board considers the financial resources of the notificant and its subsidiaries and the effect of the transaction on those resources.3 Notificant has submitted a comprehensive business plan demonstrating that the proposed transaction would not involve significant risk or a significant expansion of Notificant's operations in the United States, but rather a filling out of existing lines of business. The proposed financial investment would be relatively small and would be funded by an existing U.S. subsidiary that has a track record of successfully and prudently managing similar activities. Accordingly, this acquisition would not require substantial funding from Notificant. The most recently reported capital ratios of Notificant meet the relevant risk-based capital standards established under the Basle Accord, and the proposed transaction is not expected to have any significant effect on the capital of the consolidated organization. The Board also has considered recent financial statements and other available information, including pro forma financial statements and the condition of the U.S. operations of Notificant. Based on these and other facts of record, including information regarding the risk management system of Sanwa Business Credit Corporation, the Board has determined that financial considerations are consistent with approval of the proposal. In addition, based on relevant supervisory information, and considering the size of the acquisition and activities proposed, managerial considerations are consistent with approval. The Board also has carefully considered the competitive effects of the proposed acquisition of Morcroft. Sanwa currently engages in the activities conducted by Morcroft. The Board notes that the markets for lending and leasing services are unconcentrated and that there are numerous providers of the services. Consummation of the proposal would have a de minimis effect on competition, and the Board has determined that the proposal would not have a significantly adverse effect on competition in any relevant market. The Board expects that the proposed transaction would give Notificant an increased ability to serve the needs of its customers and would allow Notificant to provide existing and new customers with a broader range of products and services at lower costs. The Board also expects that combining the expertise of Notificant and Morcroft would allow Notificant to be a more effective competitor. Based on the foregoing and all the other facts of record, including the commitments made by Notificant, the Board has determined that the performance of the proposed activities by Notificant can reasonably be expected to produce benefits to the public that would outweigh any possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Conclusion Based on all the facts of record, including all the commitments and representations made by Notificant, and subject to all the terms and conditions set forth in this order, the Board has determined that the notice should be, and hereby is, approved. This determination is subject to all the conditions set forth in the Board's Regulation Y, including those in sections 225.7 and 225.25(g) (12 C.F.R. 225.7 and 225.25(g)), and to the Board's authority to require modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on compliance with all the commitments and representations made in the notice, including the commitments and conditions discussed in this order. The commitments, representations, and conditions relied on in reaching this decision shall be 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. This 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 San Francisco, acting pursuant to delegated authority.

By order of the Board of Governors,4 effective December 1, 1997. (signed) William W. Wiles William W. Wiles Secretary of the Board

Footnotes 1 Asset data are as of March 31, 1997. Foreign ranking data are as of December 31, 1996. 2 See 12 C.F.R. 225.28(b)(1) and (b)(3). 3 See 12 C.F.R. 225.26; The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerishe Vereinbank AG, 73 Federal Reserve Bulletin 155 (1987). 4 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not voting: Governor Meyer.

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1997 Orders on banking applications