[Federal Register Volume 59, Number 218 (Monday, November 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27989]
[[Page Unknown]]
[Federal Register: November 14, 1994]
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FEDERAL RESERVE SYSTEM
United Carolina Bancshares Corporation, Whiteville, North
Carolina; Application to Engage in Nonbanking Activities
United Carolina Bancshares Corporation, Whiteville, North Carolina
(Applicant), has applied pursuant to section 4(c)(8) of the Bank
Holding Company Act (12 U.S.C. 1843(c)(8)) (BHC Act) and Sec.
225.23(a) of the Board's Regulation Y (12 CFR 225.23(a)) to retain its
investment in Southeast Switch, Inc. (Company), which engages in data
processing and related nonbanking activities pursuant to Regulation Y.
Applicant currently owns indirectly 8.33 percent of the Class A shares
of Company. Applicant also has joined the application filed by Bank
South Corporation, et al., for Company to provide card production and
related services to entities that are not members of the Honor
electronic funds transfer (EFT) network. See 59 FR 51197 (October 7,
1994).
Closely Related to Banking Standard
Section 4(c)(8) of the BHC Act provides that a bank holding company
may, with Board approval, engage in any activity ``which the Board
after due notice and opportunity for hearing has determined (by order
or regulation) to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto....'' In
determining whether a proposed activity is closely related to banking
for purposes of the BHC Act, the Board considers, inter alia, the
matters set forth in National Courier Association v. Board of Governors
of the Federal Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). These
considerations are (1) whether banks generally have in fact provided
the proposed services, (2) whether banks generally provide services
that are operationally or functionally so similar to the proposed
services as to equip them particularly well to provide the proposed
services, and (3) whether banks generally provide services that are so
integrally related to the proposed services as to require their
provision in a specialized form. See 516 F.2d at 1237. In addition, the
Board may consider any other basis that may demonstrate that the
activity has a reasonable or close relationship to banking or managing
or controlling banks. Board Statement Regarding Regulation Y, 49 FR 806
(January 5, 1984).
Applicant would engage through Company in those nonbanking
activities in which Company may currently engage and in providing card
production and related services to entities that are not members of the
Honor electronic funds transfer (EFT) network, as proposed by Bank
South et al. Applicant maintains that the proposed card production
activities are closely related to banking within the meaning of the BHC
Act. Specifically, Applicant maintains that the Board has previously
authorized bank holding companies to provide data processing services
to nonfinancial customers. See, e.g., Citicorp, 72 Federal Reserve
Bulletin 497 (1986). In addition, Applicant maintains that the Board
has authorized card embossing and issuance functions with respect to
medical benefits cards issued by payer organizations. Banc One
Corporation, 80 Federal Reserve Bulletin 139 (1994). Applicant also
maintains that the Board has authorized card embossing and encoding
functions with respect to stored value cards for nonfinancial
institutions. Banc One Corporation, 79 Federal Reserve Bulletin 1158
(1993). Applicant further maintains that the data embossed on the type
of cards that are the subject of this application are banking,
economic, or financial data that permit the cardholder to initiate or
consummate a banking or financial transaction, and that the identity of
the customer does not change the financial nature of the information
being encoded and processed.
Proper Incident to Banking Standard
In order to approve the proposal, the Board also must determine
that the proposed activities to be conducted by Company ``can
reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency,
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).
Applicant believes that the proposal will produce public benefits
that outweigh any potential adverse effects. In particular, Applicant
maintains that the proposal will enhance customer convenience and
efficiency. In addition, Applicant states that the proposed activities
will not result in adverse effects such as an undue concentration of
resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices.
In publishing the proposal for comment, the Board does not take a
position on issues raised by the proposal. Notice of the proposal is
published solely in order to seek the views of interested persons on
the issues presented by the application, and does not represent a
determination by the Board that the proposal meets or is likely to meet
the standards of the BHC Act.
Any comments or requests for hearing should be submitted in writing
and received by William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551, not later than December
5, 1994. Any request for a hearing on this application must, as
required by Sec. 262.3(e) of the Board's Rules of Procedure (12 CFR
262.3(e)), be accompanied by a statement of the reasons why a written
presentation would not suffice in lieu of a hearing, identifying
specifically any questions of fact that are in dispute, summarizing the
evidence that would be presented at a hearing, and indicating how the
party commenting would be aggrieved by approval of the proposal.
This application may be inspected at the offices of the Board of
Governors, the Federal Reserve Bank of Atlanta, or the Federal Reserve
Bank of Richmond.
Board of Governors of the Federal Reserve System, November 7,
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-27989 Filed 11-10-94; 8:45 am]
BILLING CODE 6210-01-F
