[Federal Register Volume 59, Number 85 (Wednesday, May 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10690]
[[Page Unknown]]
[Federal Register: May 4, 1994]
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FEDERAL RESERVE SYSTEM
Mellon Bank Corp.; Acquisition of Companies Engaged in Nonbanking
Activities
Mellon Bank Corporation, Pittsburgh, Pennsylvania (applicant), has
applied pursuant to Section 4(c)(8) of the Bank Holding Company Act
(BHC Act) (12 U.S.C. 1843(c)(8)) and Sec. 225,23 of the Board's
Regulation Y (12 CFR 225.23) to acquire, directly or indirectly, all of
the voting securities of the following directly or indirectly held
subsidiaries of the Dreyfus Corporation, New York, New York (Dreyfus):
(1) The Dreyfus Security Savings Bank, F.S.B., Paramus, New Jersey
(DSSB), a federal savings bank (insured by the FDIC, Bank Insurance
Fund), and thereby engage in operating a savings association pursuant
to 12 CFR 225.25(b)(9);
(2) The Dreyfus Trust Company, Uniondale, New York (DTC), a trust
company holding a limited purpose charter from the New York Department
of Banking, and thereby engage in operating a trust company pursuant to
12 CFR 225.25(b)(3);
(3) Dreyfus Realty Advisors, Inc., New York, New York and Atlanta,
Georgia (DRA), and thereby engage in certain investment advisory
activities related to the acquisition, management, and disposition of
real estate and real estate-related investments (DRA also has 21
wholly-owned corporate subsidiaries, each of which acts as a managing
general partner in certain real estate limited or general
partnerships); and
(4) The Truepenny Corporation, New York, New York (Truepenny), a
holding company for the Trotwood Corporation (Trotwood), New York, New
York, and thereby engage in certain community development initiatives
and, with two of their subsidiaries and through several partnerships,
in a real estate development project in New York City, known as the
Queens West Redevelopment Project.
(5) Dreyfus Partnership Management, Inc., New York, New York (DPM),
and thereby serve as a non-managing general partner of two mutual funds
organized as limited partnerships which are sponsored, advised and
managed by Dreyfus;
(6) Major Trading Corporation, New York, New York (MTC), and
thereby engage primarily in investing in securities, including shares
of certain mutual funds advised by Dreyfus-affiliates; and
(7) Dreyfus Acquisition Corporation, New York, New York (DAC), and
thereby engage in making equity and debt investments, including
investments in certain mutual funds advised by Dreyfus-affiliates and
in certain limited partnerships.
Applicant proposes to acquire the above companies simultaneously
with the proposed acquisition of Dreyfus by its subsidiary, Mellon
Bank, N.A., which has filed a notice with the Office of the Comptroller
of the Currency regarding such proposed acquisition of Dreyfus.
Applicant proposes to acquire DSSB, DTC, DRA, DPM, MTC, and DAC through
a wholly owned subsidiary, MBC Investments Corporation (MBC), and to
acquire Truepenny directly.
Section 4(c)(8) of the BHC Act provides that a bank holding company
may, with Board approval, engage in any activity that 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 outweight possible adverse
effects.
A particular activity may be found to meet the closely related to
banking test if it is demonstrated that banks have generally 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 Assn v. Board of Governors, 516 F.2d 1229, 1237 (DC
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 6, (1984).
In order to satisfy the proper incident to banking test, section
4(c)(8) of the BHC Act requires the Board to find that the performance
of the activities of the subsidiaries that Applicant proposes to
acquire can reasonably be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in
efficiency that outweight possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices. Applicant believes that the
proposed activities will benefit the public by enabling Applicant to
provide a broader range of services to its customers and thereby
enhance Applicant's ability to compete and expand its participation in
the investment advisory business. Applicant also believes that the
proposed activities will not result in any unsound banking practices or
other adverse effects.
The Board has previously determined in Secs. 225.25(b)(9) and
225.25(b)(3) of Regulation Y that the operation of a savings
association and a trust company, respectively, are activities closely
related to banking and permissible for bank holding companies.
Applicant states that DSSB and DTC will be operated in accordance with
these sections. DSSB operates out of a principal office in Paramus, New
Jersey, has a branch office in San Francisco, California, and has
received approval from the Office of Thrift Supervision to open 13
additional interstate offices.
Applicant asserts that DRA's real estate-related investment
activities are permissible under Sec. 225.25(b)(4) of Regulation Y.
Applicant has committed that DRA will cease to engage in any activities
that are impermissible for bank holding companies or their nonbank
subsidiaries and that all subsidiaries of DRA will cease to engage in
impermissible activities or be divested within 2 years after
consummation of the proposed transaction.
According to Applicant, the direct and indirect investments of
Truepenny and Trotwood are authorized under Sec. 225.25(b)(6) of
Regulation Y as equity and debt investments in corporations or projects
designed primarily to promote community welfare. Applicant asserts that
the Queens West Redevelopment Project is designed to make affordable
housing available to persons of lower middle income and will create
significant employment opportunities for low- and moderate-income
communities.
Applicant contends that its proposed investments in DPM, MTC and
DAC are authorized under section 4(c)(7) of the BHC Act, which permits
bank holding companies to acquire shares of investment companies that
engage solely in acquiring 5 percent or less of the securities of other
companies. With respect to the role of DPM as non-managing general
partner to 2 mutual funds, Applicant claims that DPM engages only in
investment activity permitted by section 4(c)(7) of the BHC Act and
that the managing general partners have complete and exclusive control
over the management, conduct and operation of the funds' business.
Applicant commits to reduce any investment of DPM, MTC and DAC to below
the 5% threshold in section 4(c)(7) of the BHC Act, including limited
partnership interests that qualify as voting securities under
Sec. 225.2(p) of Regulation Y.
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, DC 20551, not later than May 30,
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 or the Federal Reserve Bank of Cleveland.
Board of Governors of the Federal Reserve System, April 28,
1994.
William W. Wiles,
Secreary of the Board.
[FR Doc. 94-10690 Filed 5-3-94; 8:45 am]
BILLING CODE 6210-01-P-M
