[Federal Register Volume 60, Number 86 (Thursday, May 4, 1995)]
[Notices]
[Pages 22066-22067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11038]
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FEDERAL RESERVE SYSTEM
Deutsche Bank AG, Frankfurt, Germany; Application to engage in
Nonbanking Activities
Deutsche Bank AG, Frankfurt, Germany (Deutsche Bank), 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)), through a newly-formed wholly-owned
subsidiary, Deutsche Bank Futures Corporation, New York, New York
(Futures), to engage in the following activities: 1) acting as a
futures commission merchant (FCM) for nonaffiliated persons in
executing and clearing, executing without clearing, and clearing
without executing, on the Chicago Board of Trade and the Chicago
Mercantile Exchange with respect to certain futures and options
contracts, 2) acting as an FCM for nonaffiliated persons in executing
and clearing, and clearing without executing, through omnibus trading
accounts with affiliated and nonaffiliated futures commission merchants
or brokers with respect to certain futures and options contracts, 3)
providing related investment advisory services, 4) providing securities
brokerage services on the American Stock Exchange, the Chicago Board
Options Exchange and the Philadelphia Stock Exchange, and 5) providing
related data processing services. Deutsche Bank would engage in these
activities on a worldwide basis.
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 (1984).
Deutsche Bank states that the Board previously has determined by
regulation that certain of the proposed activities, when conducted
within limitations established by the Board in its regulations and in
related interpretations and orders, are closely related to banking for
purposes of section 4(c)(8) of the BHC Act. See 12 CFR
225.25(b)(15)(full-service securities brokerage); 12 CFR
225.25(b)(4)(investment advisory services); 12 CFR
225.25(b)(18)(futures commission merchant services);12 CFR
225.25(b)(7), Citicorp, 72 Federal Reserve Bulletin 497 (1986), and
Citicorp, 68 Federal Reserve Bulletin 505 (1982)(data processing
services).
Deutsche Bank also maintains that the Board has determined by order
that several of the other proposed activities, when conducted within
the limitations established by the Board in previous orders, are
closely related to banking. See Sakura Bank, Limited, 79 Federal
Reserve Bulletin 723 (1993)(providing execution-only, clearing-only,
and investment advisory services, and buying and selling contracts
through omnibus accounts, with respect to financial futures and options
on futures); Northern Trust Corporation, 79 Federal Reserve Bulletin
723 (1993)(providing execution-only, clearing-only, and investment
advisory services, and buying and selling contracts through omnibus
accounts, with respect to financial futures and options on futures);
Commerzbank Aktiengesellschaft, 79 Federal Reserve Bulletin 961
(1993)(providing execution-only, clearing-only, and investment advisory
services, and buying and selling contracts through omnibus accounts,
with respect to [[Page 22067]] financial futures and options on
futures); and Societe Generale, 76 Federal Reserve Bulletin 776 (1990).
Deutsche Bank maintains that Futures would conduct these previously
approved activities in conformance with the conditions and limitations
established by the Board in prior cases.
In order to approve the proposal, the Board must determine that the
proposed activities to be conducted by Deutsche Bank and Futures ``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). Deutsche Bank
believes that the proposal will produce public benefits that outweigh
any potential adverse effects. In particular, Deutsche Bank maintains
that the proposal will enhance competition and enable Deutsche Bank to
assist its customers in lowering financing costs, contributing to
greater market stability, increasing efficiency and reducing portfolio
risk. In addition, Deutsche Bank states that the proposed activities
will not result in adverse effects such as an undue concentration of
resources, decreased or unfair competition, conflicts of interest, 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 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 May 18,
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 New York.
Board of Governors of the Federal Reserve System, April 28, 1995.
Jennifer J. Johnson
Deputy Secretary of the Board.
[FR Doc. 95-11038 Filed 5-3-95; 8:45 am]
BILLING CODE 6210-01-F
