[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Notices]
[Pages 13436-13437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6073]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
Mellon Bank Corporation, Pittsburgh, Pennsylvania; Application to
Engage in Certain Nonbanking Activities
Mellon Bank Corporation, Pittsburgh, Pennsylvania (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)(3) of the Board's
Regulation Y (12 CFR 225.23(a)(3)), to acquire the shares of Mellon
Investment Products Corporation (Company) from its subsidiary bank,
Mellon Bank, N.A. (Bank), both of Pittsburgh, Pennsylvania, and to
engage in the following activities:
1) Underwriting and dealing to a limited extent in municipal
revenue bonds (including certain industrial development bonds and
unrated municipal revenue bonds), mortgage-related securities,
consumer-receivable-related securities and commercial paper;
2) Underwriting and dealing in bank-eligible instruments pursuant
to 12 CFR 225.25(b)(16);
3) Acting as agent in the private placement of securities,
including providing related advisory services;
4) Acting as riskless principal in the purchase and sale of all
types of securities on behalf of customers;
5) Providing securities brokerage services pursuant to 12 CFR
225.25(b)(15), including selling bank-ineligible securities
underwritten or dealt in by Company to retail customers;
6) Providing investment advisory services pursuant to 12 CFR
225.25(b)(4); and
7) Providing foreign exchange advisory and transactional services
pursuant to 12 CFR 225.25(b)(17).
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. This statutory
test requires that two separate tests be met for an activity to be
permissible for a bank holding company. First, the Board must determine
that the activity is, as a general matter, closely related to banking.
Second, the Board must find in a particular case that the performance
of the activity by the applicant bank holding company may reasonably be
expected to produce public benefits that outweigh possible adverse
effects.
A particular activity may be found to meet the ``closely related to
banking'' test if it is demonstrated that banks generally have provided
the proposed activity, that banks generally provide services that are
operationally or functionally similar to the proposed activity so as to
equip them particularly well to provide the proposed activity, or that
banks generally provide services that are so integrally related to the
proposed activity as to require their provision in a specialized form.
National Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 (D.C.
Cir. 1975). 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 maintains that the Board previously has determined that
the proposed activities are closely related to banking. See 12 CFR
225.25 (b)(4), (15), (16) & (17); PNC Financial Corp., 75 Federal
Reserve Bulletin 396 (1989) (section 20 company providing securities
brokerage services to retail customers with respect to bank-ineligible
securities underwritten or dealt in by the section 20 company); Bankers
Trust New York Corporation, 75 Federal Reserve Bulletin 829
(1989)(acting as agent in the private placement of securities and
purchasing and selling securities on the order of investors as a
riskless principal); Citicorp, 73 Federal Reserve Bulletin 473 (1987),
aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the
Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert. den., 486
U.S. 1059 (1988), and Chemical New York Corporation, 73 Federal Reserve
Bulletin 731 (1987) (underwriting and dealing to a limited extent in
municipal revenue bonds (including certain industrial development
bonds), mortgage-related securities, consumer-receivable-related
securities and commercial paper); and Letter dated December 5, 1994, to
Bruce Moland, Assistant General Counsel, Norwest Corporation, from
William W. Wiles, Secretary of the Board (underwriting and dealing to a
limited extent in unrated municipal revenue bonds). Applicant states
that it would conduct the proposed activities in accordance with the
Board's orders, regulations and related interpretations, with two
exceptions. In particular, Applicant proposes to establish up to two
interlocking directors between Bank and Company. These directors would
not be officers or employees of either Bank or Company. Applicant
maintains that the Board previously has permitted similar interlocks.
See SunTrust Banks, Inc., 80 Federal Reserve Bulletin 938 (1994).
Applicant also proposes that Company be permitted to have offices in
buildings in which Bank also has offices. Applicant states that it
would take a number of steps to ensure that Company's offices are
separate and distinct from those of Bank.
In order to approve the proposal, the Board 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 competition and enable Applicant to offer its
customers a broader range of products. Applicant also maintain that its
proposal would not result in any adverse effects.
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 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,
[[Page 13437]] Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551, not later than March 29, 1995. 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 or the Federal Reserve Bank of Cleveland.
Board of Governors of the Federal Reserve System, March 7, 1995.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 95-6073 Filed 3-10-95; 8:45 am]
BILLING CODE 6210-01-F
