Applications Under Regulation Y

FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket No. R-0852]

Applications Under Regulation Y

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Interim rule with request for comments.

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SUMMARY: These rules are intended to implement the simplified notice

procedures recently established under section 346 of the Riegle

Community Development and Regulatory Improvement Act of 1994 for bank

holding companies proposing to engage de novo or through an acquisition

in nonbanking activities. Because Section 346 implements this procedure

immediately, the Board has proposed the following as an interim rule

that will take effect immediately and will apply to all notices filed

subsequent to enactment of Section 346. The Board also is seeking

comments on the interim rule, and will amend the rule as needed to

address the comments received. The Board is currently developing

additional initiatives to reduce the regulatory burden associated with

its application and notice procedures, and the Board invites comment on

any suggestions in furtherance of these initiatives.

DATES: Interim rule effective on November 2, 1994, comments must be

received by December 5, 1994.

ADDRESSES: Comments should refer to Docket No. R-0852 and may be mailed

to William W. Wiles, Secretary, Board of Governors of the Federal

Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC

20551. Comments also may be delivered to Room B-2222 of the Eccles

Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the Board's

Security Control Room inside the Eccles Building courtyard on 20th

Street (between Constitution Avenue and C Street, NW) anytime. Comments

may be inspected in room MP-500 of the Martin Building between 9 a.m.

and 5 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's

rules regarding availability of information.

FOR FURTHER INFORMATION CONTACT: Scott G. Alvarez, Associate General

Counsel (202/452-3583), or Terence F. Browne, Senior Attorney (202/452-

3707), Legal Division; or Don E. Kline, Associate Director (202/452-

3421), Nicholas A. Kalambokidis, Supervisory Financial Analyst (202/

452-3830), or Larry R. Cunningham, Senior Financial Analyst (202/452-

2701), Division of Banking Supervision and Regulation of the Board of

Governors of the Federal Reserve System. For the hearing impaired only,

Telecommunications Device for the Deaf (TDD), Dorothea Thompson (202/

452-3544).

SUPPLEMENTARY INFORMATION: Section 4 of the Bank Holding Company Act of

1956 (12 U.S.C. 1843) (BHC Act) prohibits bank holding companies from

acquiring or retaining shares of any company that is not a bank or

engaging in any activity other than managing and controlling banks,

except under certain circumstances. The primary exception permits bank

holding companies to conduct activities and acquire companies engaged

solely in activities the Board has determined to be closely related to

banking and a proper incident thereto. See 12 U.S.C. 1843(c)(8).

Section 346 of the Riegle Community Development and Regulatory

Improvement Act of 1994 (Pub. L. No. 103-325, section 346, 108 Stat.

2160, 2239 (1994)(``Section 346'')) amends section 4 of the BHC Act to

establish a new notice procedure for obtaining Board approval under

sections 4(a)(2) and 4(c)(8) of the BHC Act.\1\ Under Section 346, a

proposal requiring Board approval under section 4(a)(2) or 4(c)(8) may

be consummated 60 days after providing the Board with a complete

written notice of the proposal, unless the notice period is extended as

provided in the statute. Section 346 also permits proposals to be

consummated at anytime during this notice period if approved by the

Board during this period.

\1\Section 346 establishes a notice procedure for situations in

which prior Board approval is required under section 4(c)(8) or

4(a)(2) of the BHC Act, and was not intended to impose any new

approval requirements on transactions that may otherwise be

consummated under section 4 of the BHC Act without Board approval.

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The proposed interim rule would replace the current application

procedure of section 4(c)(8) of the BHC Act with the new notice

procedure.\2\ The rule would streamline the current procedure for

obtaining Board approval for nonbanking proposals in several respects.

In particular, the proposed revisions would:

\2\All applications and notices to engage in nonbanking

activities that were filed with a Reserve Bank prior to September

23, 1994 will continue to be processed under the existing rules.

Establish a simplified notice procedure for action on

proposals to engage de novo or through an acquisition in a listed

activity (i.e., an activity on the Regulation Y list of permissible

nonbanking activities\3\) within 30 days of receipt of the notice by

the Reserve Bank;

\3\12 CFR 225.25.

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Establish a notice procedure for action on proposals to

engage de novo or through an acquisition in an un-listed activity or

a new activity within 60 days of filing of a complete notice;

Eliminate the current 28 day pre-acceptance period for

notices involving nonbanking proposals;

Reduce from 30 days to 15 days the public comment

period for proposals involving listed activities; and

Specify in the regulation the core information that

bank holding companies must provide for a nonbanking proposal.

These revisions to the current application procedures should result

in an overall reduction in the total period of time involved in

reviewing nonbanking proposals, and in a reduction in the paperwork

burden associated with proposals to engage in nonbanking activities.

Comment is invited on all aspects of this proposal.

Notice Procedure Under Interim Rule

To implement these statutory changes, the Board proposes to amend

Regulation Y to replace the application procedures for obtaining

approval to engage in nonbanking activities with a notice procedure.

The interim rule contemplates action by the Reserve Bank on nonbanking

proposals involving listed activities within 30 days after a notice

containing all of the information required in the rule has been

received by the Reserve Bank, in cases that qualify for Reserve Bank

action, and within 60 days of that date in cases involving any

previously approved activity that are subject to Board action. While

the rule also indicates that the Board will seek to act on notices

involving new activities within 60 days of receipt of the notice by the

Reserve Bank, proposals that involve activities that have not been

previously approved by the Board often require substantial information

and may continue to require a greater processing period.

The interim rule specifies the different types of information

required for proposals to engage de novo in listed activities,

proposals to acquire a company engaged in listed activities, and

proposals to engage in activities not previously approved by regulation

(``unlisted activities'').

Listed Activities

The proposed rule contemplates that proposals to engage de novo or

to acquire a company engaged in a listed activity will be approved

within 30 days of the original date of filing of the notice, even if

additional information is subsequently requested by the Reserve Bank or

the Board. Upon receipt of a notice to engage in or to acquire a

company engaged in a listed activity (or an activity previously

approved by order), the Reserve Bank shall immediately notify the

Board, and the Board will publish notice of the proposal in the Federal

Register inviting public comment for a period of 15 days. Within 30

calendar days after receipt by the Reserve Bank of a notice filed under

the interim rule, the Reserve Bank must approve the notice, extend the

notice period for 15 calendar days, or refer the notice to the Board

for decision because a substantive comment on the proposal has been

received or action on the notice by the Reserve Bank is not

appropriate. The Reserve Bank also may, within 15 calendar days of

receipt of the notice, return the notice if it is informationally

incomplete. Under the interim rule, the return of a notice by a Reserve

Bank under such circumstances is deemed action on the notice.

Unlisted Activities

As is the practice under the current rules, proposals to engage in

activities not previously approved by the Board by regulation or order

will be published by the Board in the Federal Register within 10

business days of acceptance by the Reserve Bank, unless the Board

determines to extend this 10-day period for an additional 30 days.

Public notice of proposals to engage in such new activities shall

invite comment for a period of generally 30 days, or if the Board

determines that the notificant has not adequately demonstrated that the

proposed activity is so closely related to banking as to be a proper

incident thereto, the Board may return the notice and explain the

reasons for its determination.

The interim rule provides that the Board will attempt to act on all

cases referred for Board action within 60 days of the date the notice

is received by the Reserve Bank. As noted above, proposals that involve

new activities that have not been previously approved by the Board are

likely to require a greater processing period. In the event the Board

does not act on the notice within 60 days of receipt by the Reserve

Bank, the Board will notify the bank holding company, and explain the

reasons for needing additional time as well as provide an anticipated

date by which the Board expects to act on the notice.

Elimination of Pre-Acceptance Review Period

As noted above, the interim rule eliminates the pre-acceptance

review procedure currently contained in Regulation Y for proposals to

engage in nonbanking activities. This procedure established a defined

period of up to 28 days during which an applicant and the Reserve Bank

could identify and address significant issues prior to the filing of a

final application. This procedure has been particularly beneficial to

the processing of complex proposals and applications to engage in

activities not previously approved by the Board by regulation or order,

where information requests often must be tailored to the specific

proposal.

While the elimination of pre-acceptance procedures should shorten

the review process, the Board recognizes the utility of a pre-

acceptance procedure and anticipates that there will be certain

proposals that could benefit from some form of pre-acceptance review.

The Board invites comments as to whether some form of pre-notice review

procedure should be reinstated in the final regulations.

Public Notice

Regulation Y currently provides that (with the exception of

proposals processed under the abbreviated procedure for small

acquisitions) all proposals to engage in previously approved nonbanking

activities must be published in the Federal Register and provide for a

public comment period of not more than 30 days. Under the interim rule,

the public comment period has been shortened from 30 days to 15 days

for proposals to engage in activities previously approved by the Board

by regulation or order. The interim rule also provides that the Reserve

Bank may not act on a notice before the fifth business day following

the close of the public comment period unless an emergency exists

requiring expedited or immediate action.

Section 346 authorizes the Board to prescribe shorter notice

periods by regulation for particular activities or transactions. The

Board invites comment on whether further shortening of the comment

period is appropriate, particularly for notices to engage in activities

previously approved by the Board. In particular, the Board requests

comment on a proposal to reduce the public comment period to 5 calendar

days for proposals that involve listed activities and/or activities

that have been previously approved by Board order. This would enable

the Reserve Banks to act on proposals that raise no substantive issues

well within the 30-day target.

Statutory Period

The interim rule incorporates the provisions of Section 346 that

establish the permissible length of the notice period. Under the

interim rule, a notice is deemed approved by operation of law 60 days

after receipt of a complete notice, unless extended as provided in

Section 346. As provided in the statute, the interim rule provides that

a notice is deemed complete when it contains all information required

in the interim rule and all other information requested by the Board or

the Reserve Bank in connection with the notice. The Board may extend

the notice period for an additional 30 days upon notice to the bank

holding company. If the proposal involves an unlisted activity, the

Board may extend the notice period for a 90-day period in addition to

the 30-day extension, provided the Board notifies the bank holding

company and explains the reasons for this additional extension. Further

extensions are only permissible in the event the Board determines to

conduct a hearing on the proposal, or the notificant has consented to

an extension or tolling of the notice period.

The interim rule adopts the provision in Section 346 that permits

the Board to request additional information about a proposal at any

time during the notice period. The rule also includes the provision of

Section 346 that provides that the Board may deny any notice if the

notificant neglects, fails, or refuses to furnish the Board all the

information required by the Board.

Abbreviated Notice Procedure for Small Acquisitions

The interim rule retains the current abbreviated notice procedure

contained in Regulation Y for small acquisitions of assets or shares of

companies engaged in activities previously approved by the Board by

regulation.\4\ Currently, this abbreviated notice procedure may be used

for acquisitions where neither the book value of the assets to be

acquired nor the gross consideration to be paid for the securities or

assets exceeds the greater of (i) $15 million or (ii) 5 percent of the

consolidated assets of the acquiring company up to a maximum of $100

million. The interim rule retains this abbreviated notice procedure for

small acquisitions of companies engaged in laundry list activities, and

increases the size limitation for acquisitions that qualify for this

procedure from a maximum of $100 million to a maximum of $300 million.

\4\This procedure is only available to bank holding companies

that meet the Board's Capital Adequacy Guidelines and are proposing

to acquire a company engaged in activities for which the bank

holding company has previously received System approval.

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The primary benefit of the abbreviated notice procedure for small

acquisitions is the shortened approval process realized by opting to

publish public notice of the proposal in local newspapers in the

communities affected by the proposal. Since this provision of

Regulation Y was adopted, notificants have increasingly opted to

publish notice of the proposed acquisition in the Federal Register in

order to conduct the nonbanking activity nationwide or throughout a

geographic area so large that public notice of the proposal by means of

local newspaper publication is unduly expensive or impracticable.

Moreover, the streamlined notice procedure established by the interim

rule would effectively shorten the notice period for all acquisitions

involving listed activities.

In light of this, the Board invites comment as to whether the

abbreviated notice procedure for small acquisitions should be retained,

eliminated, or amended.

Simplified Notice Procedures

The Board believes that these proposals will substantially reduce

the burden associated with the approval requirement under section 4 of

the BHC Act without resulting in unsafe and unsound banking practices.

Because the provisions of Section 346 are implemented immediately, the

Board is proposing to adopt the following regulation as an interim rule

in connection with nonbanking activities conducted pursuant to section

4 of the BHC Act. The Board invites comments on all aspects of this

interim rule, and will amend this rule as needed to reflect the

comments received. The Board also invites suggestions on other means of

reducing the regulatory burden associated with the System's application

and notices procedures.

Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.), the Board does not believe that these changes will

have a significant adverse economic impact on a substantial number of

small entities. This interim rule will reduce the regulatory burden on

bank holding companies imposed by the Board's procedures, and the Board

is inviting public comment on additional ways to reduce regulatory

burden.

Paperwork Reduction Act Analysis

No collections of information pursuant to section 3504(h) of the

Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in these

changes, and comment is invited on a proposal that would reduce the

current information collection requirements imposed in connection with

certain applications.

List of Subjects in 12 CFR Part 225

Administrative practice and procedure, Banks, Banking, Federal

Reserve System, Holding companies, Reporting and recordkeeping

requirements, Securities.

For the reasons set forth in the preamble, the Board amends 12 CFR

part 225 as follows:

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL

(REGULATION Y)

1. The authority citation for part 225 continues to read as

follows:

Authority: 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-1,

1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3907, 3909, 3310, and

3331-3351.

2. Sections 225.23 and 225.24 are revised to read as follows:

Sec. 225.23 Procedures for notices to engage in nonbanking activities.

(a) Notice required for nonbanking activities. A notice for the

Board's prior approval under Sec. 225.21(a) to engage in or acquire a

company engaged in a nonbanking activity shall be filed by a bank

holding company (including a company seeking to become a bank holding

company) with the appropriate Reserve Bank in accordance with this

section and the Board's Rules of Procedure (12 CFR 262.3).

(1) Engaging de novo in listed activities. A bank holding company

seeking to commence or to engage de novo, either directly or through a

subsidiary, in a nonbanking activity listed in Sec. 225.25 shall file a

notice containing the following:

(i) A description of the activities to be conducted;

(ii) The identity of the company that will conduct the activity;

and

(iii) If the notificant proposes to conduct the activity through an

existing subsidiary, a description of the existing activities of the

subsidiary.

(2) Acquiring company engaged in listed activities. A bank holding

company seeking to acquire or control voting securities or assets of a

company engaged in a nonbanking activity listed in Sec. 225.25 shall

file a notice containing the following:

(i) A description of the proposal, including a description of each

proposed activity, and the effect of the proposal on competition among

entities engaging in each proposed activity;

(ii) The identity of any entity involved in the proposal, and if

the notificant proposes to conduct the activity through an existing

subsidiary, a description of the existing activities of the subsidiary;

(iii) A statement of the public benefits that can reasonably be

expected to result from the proposal; and

(iv) A description of the terms and sources of funds for the

transaction; a copy of any pertinent purchase agreement(s); balance

sheet and income statements for the most recent fiscal quarter and

year-end for any company to be acquired; parent company only and

consolidated pro forma balance sheets for the notificant as of the most

recent fiscal quarter; and calculations of pro forma consolidated risk-

based capital ratios and leverage ratio for the notificant as of the

most recent fiscal quarter.

(3) Engaging in or acquiring company to engage in unlisted

activities. A bank holding company seeking to commence or to engage de

novo, or to acquire or control voting securities or assets of a company

engaged in, any activity not listed in Sec. 225.25 shall file a notice

containing the following:

(i) Evidence that the proposed activity is so closely related to

banking or managing or controlling banks as to be a proper incident

thereto;

(ii) A commitment to comply with all conditions and limitations

that have been established by the Board governing the proposed

activity; and

(iii) The information required in paragraph (a)(2) of this section,

as appropriate.

(b) Notice provided to Board. The Reserve Bank shall immediately

send to the Board a copy of any notice received under paragraphs (a)(2)

or (a)(3) of this section.

(c) Notice to public--(1) Listed activities and activities approved

by order. A Reserve Bank that receives a notice involving an activity

listed in Sec. 225.25 or previously approved by the Board by order

shall immediately send notice of receipt of the proposal to the Board

for publication in the Federal Register. The Federal Register notice

shall invite public comment on the proposal for a period of 15 days.

(2) New activities--(i) In general. In the case of a notice under

this section involving an activity that is not listed in Sec. 225.25

and that has not been previously approved by the Board by order, the

Board shall send notice of the proposal to the Federal Register for

publication, unless the Board determines that the notificant has not

demonstrated that the activity is so closely related to banking or to

managing or controlling banks as to be a proper incident thereto. The

Federal Register notice shall invite public comment on the proposal for

a reasonable period of time, generally for 30 days.

(ii) Time for publication. The Board shall send the notice required

under this paragraph to the Federal Register within 10 business days of

acceptance by the Reserve Bank. The Board may extend the 10-day period

for an additional 30 calendar days upon notice to the notificant. In

the event notice of a proposal is not published for comment, the Board

shall inform the notificant of the reasons for the decision.

(d) Action on notices--(1) Reserve Bank action.--(i) In general.

Within 30 calendar days after receipt by the Reserve Bank of a notice

filed pursuant to paragraphs (a)(1) or (a)(2) of this section, the

Reserve Bank shall:

(A) Approve the notice; or

(B) Refer the notice to the Board for decision because substantive

adverse comment has been received or because action under delegated

authority is not appropriate.

(ii) Return of incomplete notice. Within 15 calendar days of

receipt, the Reserve Bank may return any notice as informationally

incomplete that does not contain all of the information required by

this subpart. The return of such a notice shall be deemed action on the

notice.

(iii) Extension of period for action. The Reserve Bank may, within

the 30-day period provided in this paragraph for action on a notice,

extend such 30-day period for an additional 15 calendar days.

(iv) Notice of action. The Reserve Bank shall promptly notify the

bank holding company of any action, referral or extension under this

paragraph.

(v) Close of public comment period. The Reserve Bank shall not

approve any notice under this paragraph prior to the fifth business day

after the close of the public comment period, unless an emergency

exists that requires expedited or immediate action.

(2) Board action--(i) Internal schedule. The Board seeks to act on

every notice referred to it for decision within 60 days of the date

that the notice is filed with the Reserve Bank. If the Board is unable

to act within this period, the Board will notify the notificant and

explain the reasons and the date by which the Board expects to act.

(ii) Required time limit for Board action. The Board shall act on

any notice under this section that is referred to it for decision

within 60 calendar days after the submission of a complete notice.

(iii) Extension of required period for action--(A) In general. The

Board may extend the 60-day period required for Board action under

paragraph (d)(2)(ii) of this section for an additional 30 days upon

notice to the notificant.

(B) Unlisted activities. If a notice involves a proposal to engage

in an activity that is not listed in Sec. 225.25, the Board may extend

the period required for Board action under paragraph (d)(2)(ii) of this

section for an additional 90 days. This 90-day extension is in addition

to the 30-day extension period provided in paragraph (d)(2)(iii)(A) of

this section. The Board shall notify the notificant that the notice

period has been extended and explain the reasons for the extension.

(3) Requests for additional information. The Board or the Reserve

Bank may at any time request any additional information that either

believes is needed for a decision on any notice under this subpart.

(4) Tolling of period. The Board or the Reserve Bank, as the case

may be, may at any time extend or toll the time period for action on a

notice for any period with the consent of the notificant.

(5) Approval through failure to act. A notice under this subpart

shall be deemed to be approved at the conclusion of the period that

begins on the date the complete notice is received by the Reserve Bank

or the Board and that ends 60 calendar days plus any applicable

extension and tolling period thereafter.

(6) Complete notice. A notice shall be deemed to be complete for

purposes of this subpart at such time as it contains all information

required by this subpart and all other information requested by the

Board or the Reserve Bank in connection with the particular notice.

(e) Expedited procedure for small acquisitions--(1) Filing notice.

As an alternative to the notice procedure of paragraph (a)(2) of this

section, a bank holding company may satisfy the notice requirement of

this section in connection with the acquisition of voting securities or

assets of a company engaged in an activity listed in Sec. 225.25 by:

(i) Providing the appropriate Reserve Bank with a description of

the transaction; and either

(ii) Submitting a copy of a newspaper notice in the form prescribed

by the Board; or

(iii) Requesting the Board to publish notice of the proposal in the

Federal Register as provided in paragraph (c)(1) of this section.

(2) Contents of publication. A newspaper notice under this

subsection shall be published in a newspaper of general circulation in

the areas to be served as a result of the acquisition and shall provide

an opportunity for interested persons to comment on the notice for a

period of at least 10 calendar days.

(3) Criteria for use of expedited procedure. The procedure in this

paragraph is available only if:

(i) Neither the book value of the assets to be acquired nor the

gross consideration to be paid for the securities or assets exceeds the

greater of:

(A) $15 million; or

(B) Five percent of the consolidated assets of the acquiring

company up to a maximum of $300 million;

(ii) The bank holding company has previously received Board

approval to engage in the activity involved in the acquisition; and

(iii) The bank holding company meets the Board's Capital Adequacy

Guidelines (Appendix A of subparts A through E of this part).

(4) Action on notice. Within 5 business days after the close of the

comment period specified in the Federal Register notice or within 15

calendar days after receipt by the Reserve Bank of the newspaper

notice, the Reserve Bank shall either approve the proposal or refer it

to the Board for decision if action under delegated authority is not

appropriate. The Board shall act in accordance with paragraph (d)(2) of

this section on a notice under this paragraph that is referred to it

for decision. The Reserve Bank, upon written notice to the notificant,

may extend the time period for approval under this paragraph for a

reasonable period of time not to exceed 30 days.

(f) Hearings--(1) Procedure to request hearing. Any request for a

hearing on a notice under this section shall comply with the provisions

of 12 CFR 262.3(e).

(2) Determination to hold hearing. The Board may order a formal or

informal hearing or other proceeding on a notice as provided in 12 CFR

262.3(i)(2). The Board shall order a hearing only if there are disputed

issues of material fact that cannot be resolved in some other manner.

(3) Extension of period for hearing. The Board may extend the time

for action on any notice for such time as is reasonably necessary to

conduct a hearing and evaluate the hearing record. Such extension shall

not exceed 91 calendar days after the date of submission to the Board

of the complete record on the notice. The procedures for computation of

the 91-day rule as set forth in Sec. 225.14(g) apply to notices under

this subpart that involve hearings.

(g) Notice to expand or alter nonbanking activities--(1) De novo

expansion. A notice under paragraph (a)(1) of this section is required

to open a new office or to form a subsidiary to engage in, or to

relocate an existing office engaged in, a nonbanking activity that the

Board has previously approved for the bank holding company under this

regulation, only if:

(i) The Board's prior approval was limited geographically;

(ii) The activity is to be conducted in a country outside of the

United States and the bank holding company has not previously received

prior Board approval under this regulation to engage in the activity in

that country; or

(iii) The Board or appropriate Reserve Bank has notified the

company that a notice under paragraph (a)(1) of this section is

required.

(2) Activities outside United States. With respect to activities to

be engaged in outside the United States that require approval under

this subpart, the procedures of this section apply only to activities

to be engaged in directly by a bank holding company that is not a

qualifying foreign banking organization or by a nonbank subsidiary of a

bank holding company approved under this subpart. Regulation K (12 CFR

part 211) governs other international operations of bank holding

companies.

(3) Alteration of nonbanking activity. A notice under paragraph

(a)(1) of this section is required to alter a nonbanking activity in

any material respect from that considered by the Board in acting on the

application or notice to engage in the activity.

(h) Emergency thrift institution acquisitions. In the case of a

notice to acquire a thrift institution, the Board may modify or

dispense with the public notice and hearing requirements of this

section if the Board finds that an emergency exists that requires the

Board to act immediately and the primary Federal regulator of the

institution concurs.

Sec. 225.24 Factors considered in acting on nonbanking proposals.

(a) In general. In evaluating a notice under Sec. 225.23, the Board

shall consider whether the performance by the notificant of the

activities can reasonably be expected to produce benefits to the public

(such as greater convenience, increased competition, and gains in

efficiency) that outweigh possible adverse effects (such as undue

concentration of resources, decreased or unfair competition, conflicts

of interest, and unsound banking practices).

(b) Financial and managerial resources. Consideration of the

factors in paragraph (a) of this section includes an evaluation of the

financial and managerial resources of the notificant, including its

subsidiaries, and any company to be acquired, and the effect of the

proposed transaction on those resources.

(c) Competitive effect of de novo proposals. Unless the record

demonstrates otherwise, the commencement or expansion of a nonbanking

activity de novo is presumed to result in benefits to the public

through increased competition.

(d) Denial for lack of information. The Board may deny any notice

submitted under this subpart if the notificant neglects, fails, or

refuses to furnish all information required by the Board.

By order of the Board of Governors of the Federal Reserve

System, effective October 26, 1994.

William W. Wiles,

Secretary of the Board.

[FR Doc. 94-27057 Filed 11-1-94; 8:45 am]

BILLING CODE 6210-01-P