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Release Date: August 3, 1998

For immediate release

The Federal Reserve Board today announced its approval of the notice of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland, Utrecht, The Netherlands, to acquire Weiss, Peck & Greer, L.L.C., New York, New York, and thereby engage in investment advisory and certain other nonbanking activities.

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

Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland
Utrecht, The Netherlands

Order Approving Notice to Engage in Nonbanking Activities

Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland ("Rabobank"), a foreign bank subject to the provisions of the Bank Holding Company Act ("BHC Act"),1 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 Weiss, Peck & Greer, L.L.C., New York, New York ("Company"),2 and thereby engage in the following nonbanking activities:

  1. providing financial and investment advisory services in accordance with section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6));
  2. providing agency transactional services for customer investments in accordance with section 225.28(b)(7) of Regulation Y (12 C.F.R. 225.28(b)(7));
  3. providing certain administrative services for open-end investment companies ("mutual funds");
  4. acting as general partner or managing member for certain private investment funds that invest in assets in which a bank holding company is permitted to invest; and
  5. acting as a commodity pool operator for private investment funds organized as commodity pools that invest in assets in which a bank holding company is permitted to invest.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 33,374 (1998)). 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.

Rabobank, with total consolidated assets of approximately $211.4 billion, is the second largest banking organization in The Netherlands and the 40th largest banking organization in the world.3 In the United States, Rabobank operates a branch in New York, New York; an agency in Dallas, Texas; and representative offices in San Francisco, California; Atlanta, Georgia; and Chicago, Illinois. Rabobank also engages through subsidiaries in a broad range of nonbanking activities in the United States. Company, with total consolidated assets of $2.3 billion, engages in securities brokerage, investment advisory, and other activities.4

Company is currently and, after consummation of the proposal, will continue to be registered with the Securities and Exchange Commission ("SEC") as an investment adviser under the Investment Advisers Act of 1940 ("1940 Act"), as a broker-dealer under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) ("1934 Act") and a member of the National Association of Securities Dealers, Inc. ("NASD"). Company also is, and will continue to be registered as a futures commission merchant, commodity trading advisor, and commodity pool operator with the Commodity Futures Trading Commission ("CFTC") and the National Futures Association ("NFA"). Accordingly, Company is subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the 1934 Act, the 1940 Act, the SEC, and the NASD, as well as those of the Commodity Exchange Act (7 U.S.C. § 2 et seq.), the CFTC, and the NFA.

Mutual Fund Activities
The Board previously has determined that providing administrative services to mutual funds is closely related to banking within the meaning of section 4(c)(8) of the BHC Act.5 Rabobank proposes to provide investment advisory, brokerage, and administrative services through Company that previously have been approved by the Board, and Rabobank has committed that the proposed activities will be conducted in compliance with Regulation Y and subject to the prudential and other limitations established by the Board.6 Rabobank has committed that distribution activities of mutual funds will be the responsibility of an independent distributor, which will enter into contractual agreements with the mutual funds to serve as "principal underwriter."7 The independent distributor also would be responsible for supervising sales as the principal underwriter for purposes of the federal securities laws.8

Rabobank also proposes to have certain director and officer interlocks with the funds. In particular, Rabobank proposes that up to 25 percent of the directors of a mutual fund would be employees, officers, or directors of Rabobank or one of its subsidiaries, including Company.9 Rabobank proposes that one of these directors may serve as chairman of the board of the fund. In addition, Rabobank seeks to have up to three directors, officers, or employees of Rabobank or its subsidiaries, including Company, serve as senior officers of the fund and have other Rabobank personnel serve as junior-level officers of the fund.10

The Board previously has authorized a bank holding company and its nonbank subsidiaries to have limited director and officer interlocks with mutual funds that the bank holding company advises and administers.11 The Board noted that independent directors would constitute at least 40 percent of the board of directors of the fund and would be responsible for the selection and review of the investment adviser, the underwriter, and the other major service contractors of the fund.12

In this case, Rabobank's personnel would not comprise more than 25 percent of any fund's board of directors. Accordingly, all of the funds to which Rabobank provides advisory and administrative services would have boards of directors in which 75 percent of the directors are unaffiliated with Rabobank. In addition, any director of a fund who also serves as a director, officer, or employee of Rabobank would be an "interested person" under the 1940 Act and, therefore, would be required to abstain from voting on investment advisory and other major contracts of the fund.

The director and officer interlocks proposed by Rabobank would not appear to affect the independence of the other directors on the boards of directors for the funds. The independent members of the boards of directors would continue to have authority to review brokerage, advisory, administrative and other major contracts and would retain authority to change the distributor of fund shares. Based on the foregoing, the Board concludes that the proposed director and officer interlocks would not compromise the independence of the boards of the funds or permit Rabobank to control the funds and are consistent with previous Board decisions, the BHC Act, and the Glass-Steagall Act.

Other Activities Approved by Regulation or Order
The Board previously has determined that providing financial and investment advisory services, providing agency transactional services for customer investments, acting as general partner to private investment limited partnerships that make investments that a bank holding company may make, and acting as a commodity pool operator are all closely related to banking within the meaning of section 4(c)(8) of the BHC Act.13 Rabobank has committed that it will conduct these activities in accordance with the limitations set forth in Regulation Y and the Board's orders and interpretations relating to each of the activities.14

Other Considerations
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 proposed transaction "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."15 As part of its evaluation of these factors, the Board considers the financial and managerial resources of the notificant, its subsidiaries, and any company to be acquired, and the effect the transaction would have on such resources.16 Rabobank's capital ratios satisfy applicable risk-based standards under the Basle Accord and are considered equivalent to the capital levels that would be required of a United States banking organization. Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval.

The Board also has carefully considered the competitive effects of the proposal. To the extent that Rabobank and Company offer different types of products and services, the proposed acquisition would result in no loss of competition. In those markets where the product offerings of Rabobank and its subsidiaries and Company do overlap, there are numerous existing and potential competitors. As a result, consummation of the proposal would have a de minimis effect on competition for these services, and the Board has concluded that the proposal would not result in a significantly adverse effect on competition in any relevant market.

The Board expects that consummation of the proposal can reasonably be expected to provide added convenience to Rabobank's customers by offering them an expanded range of investment products and expertise. The Board previously has determined that the provision of administrative services to mutual funds within the parameters established by the Board is not likely to result in the types of subtle hazards at which the Glass-Steagall Act is aimed or in any other adverse effects. Rabobank also would be required to comply with the Board's interpretive rule on Investment Adviser Activities, which was designed to mitigate potential conflicts of interests and the potential for customer confusion associated with the proposed activities. Based on the foregoing and all the facts of record, the Board concludes that there is no evidence in the record to indicate that consummation of the proposal is likely to result in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices, that would outweigh the public benefits of the proposal. Accordingly, the Board has determined that the balance of public benefits that it must consider under the proper incident to banking standard of section 4(c)(8) of the BHC Act is favorable and consistent with approval of the proposal.

Based on the foregoing and all other facts of record, the Board has determined that the notice should be, and hereby is, approved. This determination is subject to all the terms and conditions discussed in this order, including the Board's reservation of authority to establish additional limitations to ensure that Rabobank's activities are consistent with safety and soundness, conflicts of interests, and other relevant considerations under the BHC Act.

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 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and 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 evasion of, the provisions 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 made in connection with the notice and related correspondence, the conditions established in this order, and the Board's regulations and other orders noted above. 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 by the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors,17 effective August 3, 1998.

(signed) Robert deV. Frierson

Robert deV. Frierson

Associate Secretary of the Board

List of Administrative Services

  1. Maintaining and preserving the records of funds, including financial and corporate records.
  2. Computing net asset value, dividends, performance data, and financial information regarding funds.
  3. Furnishing statistical and research data to funds.
  4. Preparing and filing with the SEC and state securities regulators registration statements, notices, reports, and other materials required to be filed under applicable laws.
  5. Preparing reports and other informational materials regarding funds, including proxies and other shareholder communications, and reviewing prospectuses.
  6. Providing legal and other regulatory advice to funds.
  7. Providing office facilities and clerical support for funds.
  8. Developing and implementing procedures for monitoring compliance with regulatory requirements and compliance with funds' investment objectives, policies, and restrictions as established by the boards of directors of the funds.
  9. Providing routine accounting services to funds and liaison with outside auditors.
  10. Preparing and filing tax returns.
  11. Reviewing and arranging for payment of expenses for funds.
  12. Providing communication and coordination services with regard to funds' transfer agent, custodian, distributor, and other service organizations that render distribution, recordkeeping, or shareholder communication services.
  13. Preparing advertising materials, sales literature, and marketing plans for the funds.
  14. Providing information to the distributor's personnel concerning performance and administration of funds.
  15. Participating in seminars, meetings, and conferences designed to present information to financial intermediaries concerning operations of the funds.
  16. Assisting in the development of additional funds.
  17. Providing reports to the board of directors of funds.
  18. Providing telephone shareholder services through a toll-free number.


1 As a foreign bank operating a branch and an agency in the United States, Rabobank is subject to certain provisions of the BHC Act by operation of section 8(a) of the International Banking Act of 1978 (12 U.S.C. § 3106(a)) ("IBA").

2 Rabobank would hold its interest in Company through Robeco Groep N.V., a Netherlands corporation.

3 Asset and ranking data are as of December 31, 1997, and are based on foreign exchange conversion rates as of that date.

4 Company currently controls certain limited partnerships that have investments that are not permissible for bank holding companies. Rabobank has committed to conform the investments and relationships of Company to those permissible for bank holding companies within two years of acquiring Company.

5 See, e.g., Societe Generale, 84 Federal Reserve Bulletin ___ (Order dated June 22, 1998) ("SoGen"); Bankers Trust New York Corporation, 83 Federal Reserve Bulletin 780 (1997) ("BTNY"); Commerzbank AG, 83 Federal Reserve Bulletin 679 (1997).

6 See, e.g., SoGen, BTNY. The administrative services that Rabobank would provide to mutual funds through Company and other Rabobank subsidiaries include computing the fund's financial data, maintaining and preserving the records of the fund, providing office facilities and clerical support for the fund, and preparing and filing tax returns for the funds. The services are listed in the Appendix. The Board previously has determined that the Glass-Steagall Act does not prohibit a bank holding company from providing advisory and administrative services to a mutual fund. See 12 C.F.R. 225.125. Although Rabobank does not own a member bank, Rabobank is subject to the limitations applicable to domestic banking organizations under the principle of national treatment. See, e.g., Canadian Imperial Bank of Commerce, et al., 76 Federal Reserve Bulletin 158 (1990).

7 As defined under the 1940 Act, a principal underwriter is any underwriter who, as principal, purchases from a mutual fund any security for distribution, or who as agent for such fund sells or has the right to sell the fund's securities to a dealer and/or to the public. 15 U.S.C. § 80a-2(a)(29).

8 An independent distributor would enter into any sales agreements with brokers or other financial intermediaries to sell shares of mutual funds. The independent distributor also would have legal responsibility under the rules of the NASD for the form and use of all advertising and sales literature and also would be responsible for filing these materials with the NASD or the SEC. In some cases, mutual funds advised and administered by Company would not have a distributor. In these cases, Rabobank has provided commitments to the Board to ensure that Company would not be engaged in distributing these funds. See Lloyds TSB Group plc, 84 Federal Reserve Bulletin 116 (1998) ("Lloyds"). Among these commitments are that these so-called distributorless funds would employ a marketing officer who is independent of Rabobank and Company who would initiate contact with financial intermediaries regarding the sale of fund shares, negotiate broker selling agreements on behalf of the funds, and be responsible for placing, reviewing, and filing with regulators, advertisements on behalf of the funds.

9 No employees, officers, or directors of Rabobank or its subsidiaries, including Company, would serve as directors of distributorless mutual funds advised or administered by Company. See Lloyds.

10 Senior officers include the president, secretary, treasurer, and vice presidents with policy-making functions. Junior officers include assistant secretaries, assistant treasurers, or assistant vice-presidents of the funds. Junior officers are fund employees who have no authority or responsibility to make policy.

11 See, e.g., SoGen, BTNY; Lloyds; BankAmerica Corporation, 83 Federal Reserve Bulletin 913 (1997); The Governor and Company of the Bank of Ireland, 82 Federal Reserve Bulletin 1129 (1996).

12 Under the 1940 Act, independent directors may not be affiliated with the mutual fund, investment adviser, or any other major contractor to the fund. The 1940 Act and related regulatory provisions require that independent directors annually review and approve the mutual fund's investment advisory contract and any plan of distribution or related agreement.

13 See 12 C.F.R. 225.28(b)(6), (7); Dresdner Bank AG, 84 Federal Reserve Bulletin 361 (1998) ("Dresdner").

14 See 12 C.F.R. 225.28(b)(6), (7); Dresdner.

15 See 12 U.S.C. § 1843(c)(8).

16 See 12 C.F.R. 225.26(b); see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987).

17 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, and Ferguson. Absent and not voting: Governor Gramlich.

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