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| ## Comptroller of the Currency                                        |
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| > **Administrator of National Banks**                                 |
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Washington, D.C.

**Corporate Decision #2001-28**

**October 2001**

**DECISION OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY**

**ON APPLICATIONS TO REORGANIZE THE CREDIT CARD OPERATIONS OF**

**CITIGROUP INC. AND TO TRANSFER CERTAIN OTHER SUBSIDIARIES TO CITIBANK,
NATIONAL ASSOCIATION, NEW YORK, NEW YORK**

**September 21, 2001**

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##### I. INTRODUCTION AND OVERVIEW

These applications involve two groups of transactions in which Citigroup
Inc. ("Citigroup") is reorganizing certain of its businesses. In one
group of transactions, the domestic credit card business of Citigroup's
subsidiary banks will be restructured. In the other, certain commercial
finance and international consumer finance subsidiaries that are
currently subsidiaries at the holding company level will be moved to
become subsidiaries of Citibank, National Association, New York, New
York, ("CBNA") Citigroup's lead bank.

##### A. Credit Card Restructuring

Citigroup currently has a number of subsidiary banks that issue credit
cards and provide funding for credit card receivables. It also has
nonbank subsidiaries, both holding company subsidiaries and bank
subsidiaries, that provide various services for the credit card
operations. In summary, after the restructuring, one bank will be the
main issuer of consumer credit cards, and another bank will be the
issuer of government, corporate, and certain consumer credit cards. The
subsidiaries that provide credit card services will be combined, and the
resulting companies moved to become subsidiaries of banks involved with
the credit cards.

Citigroup is a diversified financial holding company and, through its
subsidiaries, provides a broad range of financial services to consumer
and corporate customers worldwide. Citigroup Holdings Company is a
registered bank holding company and a direct wholly-owned subsidiary of
Citigroup. Its primary asset is the common stock of Citicorp. Citicorp
is a registered bank holding company and a direct wholly-owned
subsidiary of Citigroup Holdings Company. Citicorp's primary direct
subsidiaries are CBNA, Citibank (South Dakota), National Association,
Citicorp Banking Corporation, and Associates First Capital Corporation
("AFCC").

Citibank (South Dakota), National Association, Sioux Falls, South
Dakota, ("CBSD") is principally engaged in offering credit cards. It has
no branch offices. In the restructuring, the consumer credit card
business of other banks will be transferred to CBSD. The corporate,
government, and certain consumer credit card business of CBSD will be
transferred to a sister bank. CBSD will limit its activities so that it
is not a "bank" under the Bank Holding Company Act ("BHCA"). *See*
12 U.S.C. § 1841(c)(2)(F). Citicorp will contribute CBSD to CBNA,
Citicorp's lead bank, so that it becomes an operating subsidiary of
CBNA.

Hurley State Bank, Sioux Falls, South Dakota, ("Hurley") is an insured
South Dakota commercial bank. It operates a credit card business
offering private-label credit cards to consumers on behalf of major U.S.
companies. It currently limits its activities so that it is not a "bank"
under the BHCA. In the restructuring, its consumer credit card business
will be transferred to CBSD, and the government and corporate credit
card business of CBSD transferred to Hurley. Hurley will convert to a
national bank ("Converted Hurley"), expand its activities beyond those
permitted under section 1841(c)(2)(F), and change its name to Citibank
USA, National Association. Hurley is a direct subsidiary of AFCC, and
therefore an indirect subsidiary of Citicorp. It will be moved to become
a direct subsidiary of Citicorp.

Citibank USA, Wilmington, Delaware, is a Delaware-chartered limited
purpose credit card bank. Substantially all of its credit card assets
and liabilities will be transferred to CBSD, and Citibank USA will be
dissolved.

Universal Bank, National Association, Columbus, Georgia, ("Universal")
currently is an indirect, wholly-owned operating subsidiary of CBNA, the
lead bank. Universal has no branch offices. It is principally engaged in
offering consumer credit cards, and it limits its activities so that it
is not a "bank" under the BHCA. *See* 12 U.S.C. § 1841(c)(2)(F). It will
merge into CBSD after CBSD has become an operating subsidiary of CBNA.

Citicorp Credit Services Inc. ("CCSI") is currently a direct
wholly-owned subsidiary of Citicorp. It will be contributed to CBNA and
become an operating subsidiary of CBNA. Other credit card servicing and
other card related businesses will also be moved under CBNA. Of the
resulting combined business, the New York operations will remain a
direct subsidiary of CBNA, and the operations outside New York will be
conducted in a subsidiary of CBSD.

##### B. Transfer of Commercial Finance and International Consumer Finance Subsidiaries

Citigroup acquired AFCC in November 2000. As part of an internal
corporate reorganization, Citigroup proposes to transfer the commercial
finance and international consumer finance business of AFCC to CBNA. The
U.S. consumer finance business of AFCC would not be transferred and
would remain at the holding company level.

##### II. THE TRANSACTIONS AND LEGAL AUTHORITY

##### A. Credit Card Restructuring

The transactions involved in the credit card restructuring are proposed
to occur in the order set out below. The merger transactions and notice
of change-in-control were subject to public notice. Proper publication
of those notices occurred, and no public comments or requests for
hearings were received by the OCC.

**1. Contribution of Citicorp Credit Services, Inc. to CBNA**

Citicorp proposes to contribute the stock of CCSI to CBNA, with the
result that CCSI becomes an operating subsidiary of CBNA. A national
bank may establish or acquire an operating subsidiary to conduct
activities that are part of or incidental to the business of banking
under 12 U.S.C. § 24(Seventh) and activities permissible for national
banks or their operating subsidiaries under other statutory authority.
12 C.F.R. § 5.34. Based on the information and representations provided
by the applicants, CCSI is a credit card servicing company, all of whose
activities are permissible for national banks. Therefore, CBNA may
acquire the proposed subsidiary.

The contribution of the stock of CCSI to CBNA constitutes a material
noncash contribution to capital surplus.[^1] Such contributions are
permissible, and CBNA may include the value as an increase in capital
for regulatory and supervisory purposes, provided the shareholders have
approved the transaction and the Office of the Comptroller of the
Currency ("OCC") has approved the transaction under 12 C.F.R. § 5.46. In
connection with the contribution of stock, CBNA has requested OCC
approval for an increase in permanent capital under 12 C.F.R. § 5.46.

**2. Merger of Universal Card Services, Corp., into CBNA**

Universal Card Services Corp., Jacksonville, Florida ("UCS"), a Delaware
corporation, is a nonbank credit card servicing company that does not
accept deposits. It is a direct wholly-owned subsidiary of CBNA. UCS, in
turn, owns 100% of Universal Bank, N.A. In this step of the
restructuring, UCS will merge into CBNA under 12 U.S.C. § 215a-3 and
1828(c) ("the UCS Merger"). In the UCS Merger, CBNA seeks to eliminate
UCS as a separate corporate entity. [^2]

In December 2000, Congress amended the National Bank Consolidation and
Merger Act, 12 U.S.C. § 215 *et seq.*, to add a new section 6 expressly
authorizing the merger of a national bank with its nonbank subsidiaries
or affiliates: "Upon the approval of the Comptroller, a national bank
may merge with one or more of its nonbank subsidiaries or affiliates."
12 U.S.C. § 215a-3(a), as added by section 1206 of the Financial
Regulatory Relief and Economic Efficiency Act of 2000 (Title XII of the
American Homeownership and Economic Opportunity Act of 2000), Pub L. No.
106-569, 114 Stat. 2944, 3034 (December 27, 2000). Section 1206 was
adopted in order to facilitate the ability of banking organizations to
effect corporate restructuring between national banks and their
subsidiaries and affiliates in the most efficient way possible, while
preserving regulatory oversight by requiring OCC approval. *See* S. Rep.
No. 106-11, 106^th^ Cong., 1^st^ Sess. 8 (1999).

UCS is not a bank and is wholly-owned by CBNA, and so it is a nonbank
subsidiary of CBNA for purposes of section 215a-3.[^3] At the time of
the UCS Merger, UCS will be only a holding company, and its two
subsidiaries (CCSI NonNY and Universal) engage in credit card servicing
and the issuance of consumer credit cards. These are activities
permissible for national banks, and so the merger will not add any
impermissible powers for the bank. UCS is located in a different state
than CBNA. However, section 215a-3 authorizes mergers with any nonbank
subsidiary or affiliate, without regard to geographic location. UCS is a
Delaware corporations. Delaware law authorizes Delaware corporations to
merge with foreign corporations, including national banks, with the
foreign corporation as the surviving corporation.[^4] CBNA represents
that it and UCS will comply with the requirements of Delaware law for
the merger of a Delaware corporation with a foreign corporation. The UCS
Merger is authorized under section 215a-3.[^5]

**3. Transfer of Certain Assets and Liabilities from Hurley to CBSD**

CBSD applied to the OCC for approval to acquire certain assets and
assume certain liabilities, including deposit liabilities, from Hurley,
constituting the consumer credit card business of Hurley ("the
CBSD/Hurley Purchase and Assumption Transaction").

CBSD may purchase and assume these assets and liabilities. National
banks have long been authorized to purchase bank-permissible assets and
assume bank-permissible liabilities from other institutions, including
assuming the deposit liabilities from other institutions, as part of
their general banking powers under 12 U.S.C. § 24(Seventh).[^6] Such
purchase and assumption transactions are commonplace in the banking
industry. No nonconforming or impermissible assets or activities will be
acquired by CBSD, and CBSD does not propose to acquire any branches. The
CBSD/Hurley Purchase and Assumption Transaction is legally permissible.

**4. Conversion of Hurley State Bank into a National Bank**

Hurley, a South Dakota state-chartered bank, applied to convert into a
national bank ("the Hurley Conversion"). With OCC approval, state banks
may convert into national banks, provided the conversion is not in
contravention of state law. 12 U.S.C. § 35; 12 C.F.R. § 5.24. No South
Dakota law prohibits state banks from converting to national banks, and
so the Hurley Conversion is not in contravention of state law.[^7] The
applicants represent that Hurley has no branches and has no assets, and
engages in no activities, that are impermissible for a national bank.

The Hurley Conversion is legally authorized.[^8] The applicants have
also requested a waiver of the directors' residency requirement of
12 U.S.C. § 72 with respect to Converted Hurley. Under section 72, at
least a majority of a national bank's directors must reside within the
state in which the bank is located or within 100 miles of the bank's
office, but the OCC is authorized to waive the directors' residency
requirement. With one exception, all current directors of Hurley, a
well-capitalized and profitable bank with a satisfactory level of
performance under the CRA, are slated to retain their positions in the
converted bank. Having reviewed the record, we have concluded these
individuals possess the requisite qualifications and experience to
fulfill their responsibilities. The granting of the requested residency
waivers is thus appropriate.

**5. Transfer of Certain Assets and Liabilities from CBSD to Converted
Hurley**

Application was also made to the OCC for approval for Hurley, after the
conversion to a national bank (Converted Hurley) to acquire certain
assets and assume certain liabilities, including deposit liabilities,
from CBSD ("the Converted Hurley Purchase and Assumption Transaction").
These assets and liabilities constitute the government and corporate
credit card business of CSBD, certain consumer credit card business, and
other business not consistent with CBSD's plans to qualify for the CEBA
credit card bank exemption under the BHCA.

As discussed above, national banks are permitted to purchase
bank-permissible assets and assume bank-permissible liabilities from
other institutions, including assuming the deposits, as part of their
general banking powers under 12 U.S.C. § 24(Seventh). No nonconforming
or impermissible assets or activities will be acquired by Converted
Hurley, and it does not propose to acquire any branches. The Converted
Hurley Purchase and Assumption Transaction is legally permissible.

**6. Contribution of CBSD to CBNA**

After the Converted Hurley Purchase and Assumption Transaction, CBSD's
activities will be such that it will no longer be a "bank" under the
BHCA. *See* 12 U.S.C. § 1841(c)(2)(F). It will engage primarily in the
issuance of consumer credit cards. It intends to limit its business in
this manner on an ongoing basis. It filed with the OCC a notice of its
intention to contract its activities, along with proposed revised
Articles of Association containing the limitation. It will adopt the
revised Articles at the appropriate time in the restructuring process.

After the Converted Hurley Purchase and Assumption Transaction and CBSD
limits its activities, Citicorp proposes to contribute the stock of CBSD
to CBNA, with the result that CBSD becomes an operating subsidiary of
CBNA. A national bank may establish or acquire an operating subsidiary
to conduct activities that are part of or incidental to the business of
banking under 12 U.S.C. § 24(Seventh) and activities permissible for
national banks or their operating subsidiaries under other statutory
authority. 12 C.F.R. § 5.34. Based on the information and
representations provided by the applicants, at the time of the
contribution, CBSD will be a limited purpose credit card bank whose
activities are permissible for national banks, and indeed, whose
activities are the same as one of CBNA's current operating subsidiaries,
Universal Bank, N.A. CBNA's acquisition of the stock of CBSD is also
consistent with the factors considered by the OCC under 12 U.S.C.
§ 1817(j) and 12 C.F.R. § 5.50, to the extent applicable. Therefore,
CBNA may acquire the proposed subsidiary.

The contribution of the stock of CBSD to CBNA constitutes a material
noncash contribution to capital surplus. Such contributions are
permissible, and CBNA may include the value as an increase in capital
for regulatory and supervisory purposes, provided the shareholders have
approved the transaction and the OCC has approved the transaction under
12 C.F.R. § 5.46. In connection with the contribution of stock, CBNA has
requested OCC approval for an increase in permanent capital under
12 C.F.R. § 5.46.

**7. Merger of Universal Bank, N.A., into CBSD**

Application was also made to the OCC for approval, after CBSD has become
a subsidiary of CBNA, for Universal to merge into CBSD ("the Universal
Merger"). Universal's main office is in Georgia. CBSD's main office is
in South Dakota. After the merger, CBSD will not retain Universal's main
office as a branch; nor will it otherwise acquire a branch in Georgia.
In this transaction national banks with different home states will
merge. Such mergers are authorized under section 44 of the Federal
Deposit Insurance Act:

> > Beginning on June 1, 1997, the responsible agency may approve a
> > merger transaction under section 18(c) \[12 U.S.C. § 1828(c), the
> > Bank Merger Act\] between insured banks with different home States,
> > without regard to whether such transaction is prohibited under the
> > law of any State.

12 U.S.C. § 1831u(a)(1) (the Riegle-Neal Act).[^9] The Act permits a
state to elect to prohibit such interstate merger transactions involving
a bank whose home state is the prohibiting state (*i.e.,* "opt-out") by
enacting a law between September 29, 1994, and May 31, 1997, that
expressly prohibits all mergers with all out-of-state banks. *See* 12
U.S.C. § 1831u(a)(2). In the Universal Merger, the home states of the
banks are Georgia and South Dakota; neither state opted out.
Accordingly, the Universal Merger may be approved under 12 U.S.C.
§§ 215a-1 & 1831u(a).

An application to engage in an interstate merger transaction under
12 U.S.C. § 1831u is also subject to certain requirements and conditions
set forth in the Riegle-Neal Act. These conditions are: (1) compliance
with state-imposed age limits, if any, subject to the Act's limits; (2)
compliance with certain state filing requirements, to the extent the
filing requirements are permitted in the Act; (3) compliance with
nationwide and state concentration limits; (4) community reinvestment
compliance; and (5) adequacy of capital and management skills. The
Universal Merger application satisfies all these conditions to the
extent applicable.

First, the proposal satisfies the state-imposed age requirements
permitted by section 1831u(a)(5). Under that section, the OCC may not
approve a merger under section 1831u(a)(1) \"that would have the effect
of permitting an out-of-State bank or out-of-State bank holding company
to acquire a bank in *a host state* that has not been in existence for
the minimum period of time, if any, specified in the statutory law of
*the host State*.\" 12 U.S.C. § 1831u(a)(5)(A) (emphasis added). In the
proposed merger CBSD is acquiring a bank in Georgia, but there is no
"host state' for this transaction, since no branch will be maintained in
Georgia. The term \"host state\" means, \"with respect to a bank, a
State, other than the home State of the bank, in which the bank
maintains, or seeks to establish and maintain, a branch.\" 12 U.S.C.
§ 1831u(f)(5). Thus, without a branch being retained in Georgia, Georgia
is not a "host state" for Riegle-Neal Act purposes, and no state age
limit is applicable to this transaction. Moreover, even if the state age
limit were applicable, it would be met here. The maximum age limit a
state may impose under the Riegle-Neal Act is five years. 12 U.S.C.
§ 1831u(a)(5)(B). Universal is more than five years old. Thus, the
Universal Merger satisfies the Riegle-Neal Act's age requirement.

Second, the proposed merger is not subject to the Riegle-Neal Act's
filing requirements. A bank applying for an interstate merger
transaction under section 1831u(a) must (1) \"comply with the filing
requirements of *any host State* of the bank which will result from such
transaction\" as long as the filing requirement does not discriminate
against out-of-state banks and is similar in effect to filing
requirements imposed by the host state on out-of-state nonbanking
corporations doing business in the host state, and (2) submit a copy of
the application to the state bank supervisor of *the host state*. 12
U.S.C. § 1831u(b)(1) (emphasis added).[^10] As discussed above with
respect to the age requirement, in this merger transaction there is no
"host state" and thus, the filing requirement provision of the
Riegle-Neal Act does not apply.

Third, the proposed merger does not raise issues with respect to the
deposit concentration limits of the Riegle-Neal Act. Section 1831u(b)(2)
places certain nationwide and statewide deposit concentration limits on
section 1831u(a) interstate merger transactions. However, interstate
merger transactions involving only affiliated banks are specifically
excepted from these provisions. 12 U.S.C. § 1831u(b)(2)(E). Universal
and CBSD are affiliates; thus section 1831u(b)(2) is not applicable to
this merger.

Fourth, the proposed interstate merger transaction also does not raise
issues with respect to the special community reinvestment compliance
provisions of the Riegle-Neal Act. In determining whether to approve an
application for an interstate merger transaction under section 1831u(a),
the OCC must (1) comply with its responsibilities under section 804 of
the federal Community Reinvestment Act (\"CRA"), (2) take into account
the CRA evaluations of any bank which would be an affiliate of the
resulting bank, and (3) take into account the applicant bank's record of
compliance with applicable state community reinvestment laws. 12 U.S.C.
§ 1831u(b)(3). However, these provisions do not apply to mergers between
affiliated banks. Universal and CBSD are affiliates. Thus, this
Riegle-Neal Act provision is not applicable. However, the Community
Reinvestment Act itself is applicable, as discussed below in Part III-B.

Fifth, the proposal satisfies the adequacy of capital and management
skills requirements in the Riegle-Neal Act. The OCC may approve an
application for an interstate merger transaction under section 1831u(a)
only if each bank involved in the transaction is adequately capitalized
as of the date the application is filed and the resulting bank will
continue to be adequately capitalized and adequately managed upon
consummation of the transaction. 12 U.S.C. § 1831u(b)(4). As of the date
the application was filed, Universal and CBSD satisfied all regulatory
and supervisory requirements relating to adequate capitalization.
Currently, the banks are at least satisfactorily managed. The OCC has
also determined that, following the merger, the resulting bank will
continue to exceed the standards for an adequately capitalized and
adequately managed bank. The requirements of 12 U.S.C. § 1831u(b)(4)
are, therefore, satisfied.

Accordingly, the proposed Universal Merger is legally permissible under
section 1831u. In this transaction, the resulting bank, CBSD, will not
maintain Universal's main office as a branch. We note that retention of
that office in Georgia as a branch would have been authorized under
12 U.S.C. § 36(d) & 1831u(d)(1).[^11]

**8. Transfer of Certain Assets and Liabilities from Citibank USA to
CBSD**

Application was also made to the OCC for approval for CBSD to acquire
certain assets and assume certain liabilities, including deposit
liabilities, from Citibank USA, Wilmington, Delaware ("CBUSA") ('the
CBSD/CBUSA Purchase and Assumption Transaction"). CBUSA is a
Delaware-chartered limited purpose credit card bank. Substantially all
of its credit card assets and liabilities will be transferred to CBSD,
and CBUSA will be liquidated.

As discussed above, national banks are permitted to purchase
bank-permissible assets and assume bank-permissible liabilities from
other institutions, including assuming the deposits, as part of their
general banking powers under 12 U.S.C. § 24(Seventh). No nonconforming
or impermissible assets or activities will be acquired by CBSD, and it
does not propose to acquire any branches. The CBSD/CBUSA Purchase and
Assumption Transaction is legally permissible.

##### B. Transfer of Commercial Finance and International Consumer Finance Subsidiaries

**1. General**

AFCC engages in four lines of business: domestic U.S. consumer finance,
commercial finance, international consumer finance, and credit cards. In
these applications, the commercial finance and international consumer
finance businesses will be moved to CBNA. The U.S. consumer finance
business of AFCC would not be transferred and would remain at the
holding company level. After the reorganization is completed, AFCC will
be engaged solely in U.S. consumer finance.[^12]

The commercial finance business is conducted in Associates Commercial
Corporation ("ACC") and in various other companies that are subsidiaries
of ACC or will be subsidiaries of ACC at the time of transfer. Citicorp
proposes to contribute the stock of ACC to CBNA, so that it and its
subsidiaries become operating subsidiaries of CBNA. ACC's commercial
finance business will be combined with CBNA's commercial lending and
leasing business. The applicants have represented that all but one of
the subsidiaries are engaged in activities for which CBNA has been
previously approved to have an operating subsidiary and/or activities
that are eligible for after-the-fact notice under 12 C.F.R.
§ 5.34(e)(5)(v). These subsidiaries are permissible for CBNA. One
subsidiary, Associates Leasing Inc., engages in some activities the OCC
has not previously addressed. They are discussed in Part II-B-2 below.

The international consumer finance business is conducted in Associates
International Holdings Corp. ("AIHC") and in various other companies
that are subsidiaries of AIHC or will be subsidiaries of AIHC at the
time of transfer. Citicorp proposes to contribute the stock of AIHC to
CBNA, and then CBNA will contribute the stock down to Citibank Overseas
Investment Corporation ("COIC"), CBNA's Edge Act subsidiary, so that
AIHC becomes a subsidiary of COIC.[^13]

The contribution of the stock of ACC and AIHC to CBNA constitutes a
material noncash contribution to capital surplus. Such contributions are
permissible, and CBNA may include the value as an increase in capital
for regulatory and supervisory purposes, provided the shareholders have
approved the transaction and the OCC has approved the transaction under
12 C.F.R. § 5.46. In connection with the contribution of stock, CBNA has
requested OCC approval for an increase in permanent capital under
12 C.F.R. § 5.46.

**2. Associates Leasing, Inc.**

One of ACC's subsidiaries is Associates Leasing Inc. Associates Leasing
engages in lease financing, other commercial finance activities, and a
number of activities ancillary to its lease financing. Most of
Associates Leasing's activities are activities for which CBNA has been
previously approved to have an operating subsidiary and/or activities
that are eligible for after-the-fact notice under 12 C.F.R.
§ 5.34(e)(5)(v). As well as other types of leasing business, Associates
Leasing also conducts AFCC's commercial fleet services leasing business
("Associates' Fleet Services" or "AFS"). A portion of the AFS business
involves activities the OCC has not previously addressed in the leasing
context. We conclude they are legally permissible and CBNA may acquire
them.

**a. Proposed activities**

The principal activity of the fleet services business consists of
leasing automobiles for terms of more than 90 days, consistent with 12
C.F.R. Part 23.[^14] AFS also offers the following optional, fee-based
services to its customers with respect to vehicles leased from AFS,
vehicles leased from others, and vehicles owned by the customers
("Ancillary Services"). More than 98 percent of the AFS customers lease
some portion of their vehicles from AFS.[^15] The Ancillary Services
include the following activities.

*Vehicle Acquisition* -- AFS will acquire vehicles through local dealers
for lease. AFS will also assist customers in locating and acquiring
vehicles for purchase.

*Vehicle Re-sale* -- AFS will dispose of the vehicles it leases and will
assist customers in disposing of their own vehicles.

*Driver Purchase Program* -- As part of its re-sale program, AFS assists
drivers (employees of AFS' customers) interested in purchasing off-lease
vehicles from AFS customers. AFS makes a list of the vehicles available
and processes paperwork to facilitate the sale. AFS does not set the
sale price and does not finance the driver's purchase.

*Accident Management Program* -- In response to a call from a driver
involved in an accident, AFS staff will help arrange for a tow truck,
locate a repair facility, and find a rental vehicle. The driver makes
the decision to hire a tow truck, to have repairs made to the vehicle,
and to rent another vehicle. AFS advances the costs and bills the
customer for reimbursement. AFS also manages third-party subrogation
claims.

*Safety Management Program* -- AFS assists its customers in establishing
a corporate safety policy with respect to the customers' fleets of
vehicles.

*Maintenance Management Program* -- AFS assists customers experiencing
mechanical problems in locating a repair facility. AFS does not advise
customers as to what repairs should be done or when any repairs should
be done. AFS advances the costs for the repairs and bills the customer
for reimbursement. AFS may also assist a driver in finding a rental car.

*Fuel Card Program* -- AFS offers a third party fuel card which drivers
may use to purchase fuel. AFS pays for the fuel, then bills the customer
for reimbursement.

*License Renewal* -- AFS tracks vehicle registrations and drivers'
licenses and sends advance notice to drivers of upcoming registration
and license expirations.

*Driver Records* -- At the request of a customer, AFS assists the
customer in obtaining driver records from state motor vehicle
departments.

*Fleet Management Software* -- AFS provides customers with software that
enables customers to manage all aspects their fleets, including lease
payments.

*Fleet Administration Program* -- AFS answers questions from customers
about all aspects of the above services.

**b. Legal authority**

The principal activity of AFS is the leasing of vehicles, an activity
that is clearly permissible for national banks and their operating
subsidiaries.[^16] For the reasons discussed below, the Ancillary
Services are also permissible for national banks and their subsidiaries.

*Vehicle Acquisition* -- AFS acquires vehicles for its customers to
lease. This is a necessary part of the vehicle leasing business and is
authorized under 12 C.F.R. §§ 23.3(a), 23.4. AFS also assists its
customers in locating and acquiring vehicles for the customers to
purchase. In doing so, AFS is acting as a finder by bringing together
its customers and vehicle vendors.[^17] AFS will not commit to any
vehicle pricing -- rather, the customer and the vendor will negotiate
the transaction. In addition to bringing together its customers and
vendors, AFS may forward to vendors its customers' paperwork necessary
for ordering vehicles. This is a permissible part of the finder
function.[^18]

*Vehicle Re-sale* -- At the end of lease terms, AFS sells its leased
vehicles. Such re-sale of vehicles is a component of the leasing
business and is specifically required by 12 C.F.R. § 23.4(c). When
requested by a customer, AFS also assists the customer in the re-sale of
its other vehicles, *i.e.*, those vehicles not leased from AFS. AFS will
provide prospective buyers with information about these vehicles and
accept inquiries of interest. AFS will not commit to any vehicle pricing
-- rather, the customer and the potential purchaser will negotiate the
transaction. In bringing together its customers with potential
purchasers for its vehicles, AFS is acting as a finder.[^19]

*Driver Purchase Program* -- As part of its re-sale program, AFS assists
drivers who may be interested in purchasing off-lease vehicles. AFS
makes a list of vehicles for sale available to drivers and processes
paperwork necessary to facilitate the sale. To the extent AFS performs
these services for the vehicles it leases, these services are a part of
AFS' efforts to re-sell the vehicles -- a necessary component of vehicle
leasing and specifically required by 12 C.F.R. § 23.4(c). To the extent
AFS assists a driver in purchasing a vehicle not leased by AFS, AFS will
play no role in setting the sales price or in negotiating the sale. In
this role, AFS is acting as a finder.[^20]

*Accident Management and Maintenance Management Programs --* To aid in
the preservation of the vehicles' values, AFS operates a maintenance
management program and an accident management program. When a driver
needs maintenance to his vehicle or reports an accident, AFS staff
assists the driver in arranging for a tow truck, in locating a repair
facility, and in finding a rental vehicle. The decision to hire a tow
truck, have repairs made to the vehicle, and to rent another vehicle is
made by the driver. To the extent AFS provides these services for the
vehicles it leases, these services aid in the preservation of the
vehicles' values and are, therefore, permissible under 12 C.F.R. Part 23
as part of the AFS leasing program.[^21] When AFS provides these
services for drivers of vehicles not leased from AFS, these services are
permissible finder services. AFS acts to bring together the driver and
service providers, and the driver then makes the decision to hire the
service providers.

When a driver makes the decision to hire a tow truck, to have repairs
made, or to rent another vehicle, AFS advances the costs and bills the
customer for reimbursement. Whether provided for customers who lease
vehicles from AFS or for other customers, these services are permissible
financing and billing services. *See* 12 C.F.R. § 5.34(e)(5)(v)(C)
(making loans and extensions of credit) & (D) (servicing loans or other
extensions of credit).[^22]

As part of the accident management program, AFS also manages third-party
subrogation claims. When done for customers who lease AFS vehicles, this
service is permissible under 12 C.F.R. Part 23 as part of AFS' vehicle
leasing business. Providing this service assists AFS in preserving the
value of its vehicles. When provided for customers whose vehicles are
not leased from AFS, AFS is making a permissible use of its retained
excess capacity. The OCC and the courts have long held that a bank may
make profitable use of excess capacity if the bank acquired the excess
capacity in good faith to meet either its needs or the needs of its
customers.[^23] The underlying justification of the excess capacity
doctrine is essentially that of avoidance of economic waste. If a bank
must leave its asset underutilized, the bank would fail to obtain full
economic value from the asset, thus incurring economic waste. However,
utilization of the excess capacity permits the bank to reduce the costs
of performing those services which are part of the banking business.
This, in turn, makes its banking business more profitable and
competitive.

Here, AFS' provision of management of subrogation claims for AFS-leased
vehicles will undoubtedly fluctuate, based upon the number of accidents
involving AFS-leased vehicles. To make an efficient and good faith use
of the existing personnel engaged in providing these services, AFS will
make these services available to customers whose vehicles are not leased
from AFS. This service will constitute a minimal part of AFS' business
-- indeed, 85 to 95 percent of AFS' revenues come from vehicle
leasing.[^24] The remaining revenues come from the provision of the
Ancillary Services, of which management of subrogation claims for
vehicles not leased from AFS is one small part. Moreover, vehicles not
leased from AFS constitute only 25 percent of the vehicles in the
program. Therefore, AFS may provide these services as a permissible use
of its excess capacity.

*Safety Management Program* -- AFS assists its customers in establishing
a corporate safety policy with respect to the customers' fleets of
vehicles. With respect to customers who lease vehicles from AFS, the
safety management program is permissible under 12 C.F.R. Part 23 -- it
aids in the preservation of the vehicles' values. When provided for
customers who do not lease vehicles from AFS, provision of the program
is a good faith use of excess capacity.[^25]

*Fuel Card Program* -- AFS will offer its customers a third-party fuel
card. Customers' employees will use the card, and AFS will pay the
expenses and bill the customers. Whether provided for customers who
lease vehicles from AFS or for other customers, the fuel card program
services are permissible financing and billing services. *See* 12 C.F.R.
§ 5.34(e)(5)(v)(C) (making loans and extensions of credit) & (D)
(servicing loans or other extensions of credit).[^26]

*License Renewal Program and Driver Records Program* -- As a service to
its customers, AFS tracks vehicle registrations and drivers' licenses
and sends advance notice to drivers of upcoming registration and license
expirations. AFS will also, if requested by a customer, assist that
customer in obtaining an employee's driver records from the state motor
vehicle department. When provided for customers who lease their vehicles
from AFS, the provision of these services aids in the preservation of
the vehicles' value and, therefore, is a permissible under 12 C.F.R.
Part 23 as part of AFS' vehicle leasing program.

Moreover, whether provided for customers who lease vehicles from AFS or
for other customers, both programs constitute permissible finder
services. In both cases, AFS brings together its customers with
government agencies for transactions that customers undertake.[^27] In
both programs, AFS forwards completed applications and requests to the
appropriate state motor vehicle department. As finders, national banks
may forward completed applications and requests for information to third
parties.[^28] With respect to the license renewal program, AFS sends
customers' employees notices of the need for upcoming license and
registration renewal. National banks, as finders, may make inquiries of
interest, arrange meetings between the parties, and otherwise bring the
parties together. 12 C.F.R. § 7.1002(b). The notices serve these
purposes.

*Fleet Management Software* -- AFS provides customers with software that
allows customers to monitor all aspects of the their vehicle fleet,
including lease payments. It is well established that a national bank
may use electronic means to perform services expressly or incidentally
authorized to national banks.[^29] The OCC has long held that national
banks may process banking, financial, and economic data.[^30] Vehicle
fleet data, including lease payments, constitutes financial data and,
therefore, AFS may, as part of the business of banking, supply the
customers with fleet management software.[^31]

*Fleet Administration Program* -- To promote its programs, AFS will
advise any customer about any available aspects and services of the
programs. Clearly, a national bank, as a permissible corporate activity,
may advertise and discuss with customers any services the bank may
permissibly provide. Because the above programs are permissible for AFS
to provide to its customers, AFS may discuss the above programs with
these customers.

Based upon the information and representations the CBNA has provided,
and for the reasons discussed above, CBNA's application to acquire
Associates Leasing and its AFS operation as an operating subsidiary and
to perform the leasing activities and Ancillary Services in the manner
and as described above is legally permissible.

**III. ADDITIONAL STATUTORY AND POLICY REVIEWS**

**A. The Bank Merger Act**

The Bank Merger Act, 12 U.S.C. § 1828(c), requires the OCC\'s approval
for certain transactions, including any merger between insured banks
when the resulting institution will be a national bank and for purchase
and assumption transactions in which a national bank acquires deposits
from another insured institution. Under the Act, the OCC generally may
not approve a transaction which would substantially lessen competition.
The Act also requires the OCC to take into consideration the financial
and managerial resources and future prospects of the existing and
proposed institutions, and the convenience and needs of the community to
be served.

In these applications, the following transactions are subject to OCC
review under the Bank Merger Act: the CBSD/Hurley Purchase and
Assumption Transaction, the Converted Hurley Purchase and Assumption
Transaction, the Universal Merger, and the CBSD/CBUSA Purchase and
Assumption Transaction (collectively, "the merger transactions").[^32]
For the reasons stated below, we find the merger transactions may be
approved under section 1828(c).

**1. Competitive analysis**

The OCC has reviewed the competitive effects of this proposal. As the
various banks involved in the merger transactions are wholly owned and
controlled by the same bank holding company, the contemplated mergers
and purchases/assumptions will clearly have no adverse impact on
competition.

In reviewing the applications, the U.S. Department of Justice, the
Federal Deposit Insurance Corporation, and the Board of Governors of the
Federal Reserve System also considered the competitive impact of the
proposed transactions. They have similarly concluded the proposals will
produce no significant adverse effect on competition or concentrate
banking resources in a relevant geographic market.

**2. Financial and managerial resources**

The Bank Merger Act requires the OCC to consider "\...the financial and
managerial resources and future prospects of the existing and proposed
institutions, and the convenience and needs of the community to be
served."

We find that the financial and managerial resources of the various
parties to the merger transactions do not raise concerns that would
cause the applications to be disapproved. The proposed transactions are
merely components of a corporate reorganization structured to achieve
efficiencies and economies of scale. Further, the participant banks are
well capitalized and well managed. The future prospects of the
proponents, individually and combined, are thus considered favorable and
consistent with an approval.

**3. Convenience and needs**

The applications will have no adverse impact on the convenience and
needs of the communities to be served. The transactions are components
of an internal reorganization which will not result in any reduction in
products or services to the general public. Accordingly, we believe the
impact of these applications on community convenience and needs is
consistent with the granting of an approval.

**B. The Community Reinvestment Act.**

The Community Reinvestment Act ("CRA") requires the OCC to take into
account the applicants' record of helping to meet the credit needs of
their entire communities, including low- and moderate-income
neighborhoods, when evaluating certain applications, including merger
transactions subject to the Bank Merger Act and conversions involving
insured depository institutions. 12 U.S.C. § 2903; 12 C.F.R. § 25.29(a).
In these applications, the merger transactions listed above subject to
OCC review under the Bank Merger Act and the Hurley Conversion are
subject to OCC review under the CRA.

A review of the record of these applications and other information
available to the OCC as a result of its regulatory responsibilities has
revealed no evidence that the applicants' records of helping to meet the
credit needs of their communities, including low- and moderate-income
neighborhoods, is less than satisfactory.

The banks involved in these applications all have "Outstanding" or
"Satisfactory" CRA ratings as of their most recent examinations. No
public comments were received by the OCC relating to these applications,
and the OCC has no other basis to question the banks' performance in
complying with the CRA. These applications involve only a restructuring
of existing credit card operations. They are not expected to have any
adverse effect on the resulting national banks' CRA performance. We find
that approval of the applications is consistent with the Community
Reinvestment Act.

**IV. CONCLUSION AND APPROVAL**

For the reasons set forth above, including the representations and
commitments of the applicants, we find that: (1) CCSI, CBSD, ACC, and
AIHC may become a subsidiaries of CBNA, (2) UCS may merge into CBNA
under 12 U.S.C. § 215a-3, (3) Hurley may convert into a national bank
under 12 U.S.C. § 35, (3) the CBSD/Hurley Purchase and Assumption
Transaction, the Converted Hurley Purchase and Assumption Transaction,
the Universal Merger, and the CBSD/CBUSA Purchase and Assumption
Transaction are authorized under 12 U.S.C. § 24(Seventh) and 215a-1, and
(4) the increase in capital represented by the noncash capital
contribution of CCSI, CBSD, ACC, and AIHC to CBNA, as well as other
noncash contributions in the applications, is permissible under
12 C.F.R. § 5.46. The applications also meet the other relevant
statutory criteria for approval, and the transactions raise no
supervisory and policy concerns.[^33] Accordingly, the applications are
hereby approved.

**-signed- 09-21-01**

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Julie L. Williams Date

First Senior Deputy Comptroller

and Chief Counsel

Application Control Numbers:

2001-ML-01-0003 2001-ML-02-0030 2001-ML-11-0004

2001-ML-02-0027 2001-ML-02-0031 2001-ML-12-0293

2001-ML-02-0028 2001-ML-08-0014 2001-ML-12-0319

2001-ML-02-0029

[^1]: The value of the CCSI stock by itself may not be considered
    material under OCC regulations. However, other aspects of the
    overall restructuring include additional noncash contributions to
    capital, the aggregate amount is material, and accordingly, the OCC
    is reviewing the whole contribution and each part thereof.

[^2]: Certain other steps that do not require regulatory approval will
    occur after the contribution of CCSI to CBNA and before the UCS
    Merger. CCSI will contribute its non-New York assets to its newly
    formed subsidiary ("CCSI NonNY"), and CCSI NonNY will be spun off to
    CBNA. CBNA will contribute the stock of CCSI NonNY to UCS. UCS will
    contribute its operating assets to CCSI NonNY. At the time UCS
    merges into CBNA, UCS will have no operating assets and will be only
    a holding company that holds the stock of CCSI NonNY and Universal.
    The UCS Merger will eliminate UCS, and CCSI NonNY and Universal will
    become direct subsidiaries of CBNA.

[^3]: ^?^ Since UCS is a wholly-owned subsidiary of CBNA, we need not
    decide in this application what minimum level of ownership is
    required to make an entity a "subsidiary" or "affiliate" of the bank
    for purposes of section 215a-3. We note, however, that consideration
    of related statutes, namely, 12 U.S.C. § 371c (affiliate
    transactions) and the Bank Holding Company Act, suggests that
    Congress intended a similar 25% ownership threshold for section
    215a-3.

[^4]: *See* Del. Code Ann. tit. 8, § 252 (merger of Delaware and foreign
    corporations generally). *See also* Del. Code Ann. tit. 8, § 253
    (merger of parent corporation and subsidiary).

[^5]: CBNA has also applied to the Federal Deposit Insurance Corporation
    for approval of the merger under the Bank Merger Act. *See*
    12 U.S.C. § 1828(c)(1)(A) (no insured bank "shall merge or
    consolidate with any noninsured bank or institution" without the
    approval of the FDIC). CBNA is an insured bank; UCS is not an
    insured depository institution.

[^6]: ^?^ *See, e.g., City National Bank of Huron v. Fuller*, 52 F.2d,
    870, 872-73 (8^th^ Cir. 1931); *In re Cleveland Savings Society,*
    192 N.E.2d 518, 523-24 (Ohio Com. Pl. 1961). *See also* 12 U.S.C.
    *§ *1828(c) (purchase and assumption transactions included among
    transactions requiring review under the Bank Merger Act).

[^7]: Indeed, South Dakota law expressly permits state banks to convert
    into national banks, provided the converting institution receives
    authority from the OCC to transact business as a national bank,
    notifies the South Dakota Division of Banking, and surrenders its
    state charter. S.D. Codified Laws § 51A-14-3. The applicants
    represent they have notified the state of the application and, upon
    consummation, will notify the state and surrender the state charter.

[^8]: ^?^ In connection with the Hurley Conversion, certain other steps
    will also occur. Hurley's immediate holding company will transfer
    the stock in Hurley up to Citicorp, so that Hurley becomes a direct
    subsidiary of Citicorp. Hurley, which currently limits its
    activities so that it is not a "bank" under the BHCA, will expand
    its activities beyond those permitted under section 1841(c)(2)(F),
    but will continue to be engaged principally in credit card
    operations. Hurley currently has a designation from the FDIC as a
    limited purpose bank for purposes of the Community Reinvestment Act;
    the applicants have requested continuation of that designation from
    the OCC for Converted Hurley after the conversion and other
    transactions here. Hurley will change its name to Citibank USA,
    National Association. In addition, Converted Hurley will purchase
    the credit card accounts of two other affiliated banks, Universal
    Financial Corporation ("UFC") and Associated Capital Bank ("ACB"),
    each of which is an FDIC- insured, Utah state-chartered industrial
    loan company. Only the credit card accounts will be transferred. UFC
    and ACB will retain their existing receivables and may purchase
    others in the future, and no insured deposits will be transferred.
    Because UFC and ACB will continue to operate and the transactions do
    not involve the transfer of deposit liabilities, these transactions
    are not subject to the Bank Merger Act and do not require OCC
    approval.

[^9]: Congress also enacted a conforming amendment authorizing national
    banks to engage in interstate merger transactions under section
    1831u. 12 U.S.C. §  215a-1. For purposes of section 1831u, the
    following definitions apply: The term \"home State\" means, with
    respect to a national bank, \"the State in which the main office of
    the bank is located.\" The term \"host State\" means, \"with respect
    to a bank, a State, other than the home State of the bank, in which
    the bank maintains, or seeks to establish and maintain, a branch.\"
    \"Interstate merger transaction\" means any merger transaction
    approved pursuant to section 1831u(a)(1). The term \"out-of-State
    bank\" means, \"with respect to any State, a bank whose home State
    is another State.\" The term \"responsible agency\" means the agency
    determined in accordance with 12 U.S.C. § 1828(c)(2) (namely, the
    OCC if the acquiring, assuming, or resulting bank is a national
    bank). *See* 12 U.S.C. § 1831u(f)(4), (5), (6), (8) & (10).

[^10]: Under this provision, states are permitted to impose a filing
    requirement on out-of-state banks that will operate branches in the
    state as a result of an interstate merger transaction under the
    Riegle-Neal Act, but the states may impose only those requirements
    that are within the terms specified. Since Congress has specifically
    set forth and limited what state filing requirements apply for these
    interstate transactions, it clearly intended that only those
    requirements would apply, and the states may not impose others.
    Thus, in a transaction involving only national banks, only the
    filing requirements allowed under section 1831u(b)(1) must be
    complied with. For a fuller discussion of this subject, see, e.g.,
    Decision on the Applications to Merge First Interstate Banks into
    Wells Fargo Bank, N.A. (OCC Corporate Decision No. 96-29, June 1,
    1996) (at pages 4-5, 12-14 & note 11).

[^11]: After the Universal Merger , CBNA will contribute the stock of
    CCSI NonNY to CBSD. This will make CCSI NonNY a subsidiary of CBSD
    and an indirect subsidiary of CBNA. As noted above, CCSI NonNY is a
    credit card servicing company whose activities are permissible for
    national banks and their operating subsidiaries. The stock
    contribution will constitute a noncash capital contribution for
    CBSD, subject to 12 U.S.C. § 5.46. CBSD also will contribute another
    credit card servicing subsidiary acquired in the Universal Merger
    down to become a subsidiary of CCSI NonNY.

    In addition, three other nonbank affiliates, Associates Credit Card
    Receivables Corp. ("ACCRC"), Associates Private Label Receivables
    Corp. ("APLRC"), and Associates Credit Card Services Inc. ("ACCSI"),
    will transfer their receivables to CBSD and Converted Hurley. ACCRC
    and APLRC will merge into ACCSI, and in a later transaction, not
    part of this series of transactions, ACCSI will merge into CCSI
    NonNY.

[^12]: ^?^ Some of the credit card operations are being moved in the
    credit card restructuring in the transactions above. It is planned
    to move the remainder of the credit card operations in the future.

[^13]: Since AIHC will be an Edge Act subsidiary under 12 U.S.C. § 601
    and 12 C.F.R. Part 211, it is not subject to OCC review and approval
    as an operating subsidiary under 12 C.F.R. § 5.34. It is included in
    the OCC applications since it is a material noncash capital
    contribution.

[^14]: ^?^ Approximately 85 - 95 percent of the AFS revenues are derived
    from such Part 23 leasing activities.

[^15]: ^?^ Seventy-five percent of the vehicles in the AFS program are
    leased by AFS.

[^16]: 12 U.S.C. §§ 24(Seventh) & 24(Tenth); 12 C.F.R. Part 23; 12
    C.F.R. § 5.34(e)(5)(v)(M) (leasing of personal property); *M & M
    Leasing Corp. v. Seattle First National Bank,* 563 F.2d 1377 (9th
    Cir. 1977), *cert. denied,* 436 U.S. 987 (1978) (personal property
    lease financing is "functionally interchangeable" with the express
    power to loan money on personal property).

[^17]: ^?^ The OCC has long recognized the finder function as a
    permissible banking activity that includes "without limitation,
    identifying potential parties, making inquiries as to interest,
    introducing or arranging meetings of interested parties, and
    otherwise bringing parties together for transactions that the
    parties themselves negotiate and consummate." 12 C.F.R. § 7.1002(b)
    (2001). *See* Interpretive Letter No. 856, *reprinted in*
    \[1998-1999 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81,313
    (Mar. 5, 1999); Corporate Decision No. 97-60 (July 1, 1997);
    Conditional Approval Letter No. 221 (Dec. 4, 1996).

[^18]: ^?^ *See* Interpretive Letter No. 824, *reprinted in* \[1997-1998
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-273 (Feb. 27,
    1998) (national bank may forward completed materials); Letter from
    James M. Kane, District Counsel (Oct. 24, 1985) (unpublished)
    (national bank may forward any business reply cards received for
    financial planning company); Letter from F.H. Ellis, Chief National
    Bank Examiner (Oct. 6, 1970) (unpublished) (bank may collect
    applications and fees and forward them).

[^19]: ^?^ *See* Corporate Decision No. 97-60, *supra* (national banks
    may act as finders for automobile sales and financing through
    databases, call centers, and internet services); Interpretive Letter
    No. 856, *supra;* Conditional Approval Letter No. 221, *supra.*

[^20]: ^?^ *See* Corporate Decision No. 97-60, *supra* (national banks
    may act as finders for automobile sales and financing through
    databases, call centers, and internet services); Interpretive Letter
    No. 856, *supra;* Conditional Approval Letter No. 221, *supra.*

[^21]: ^?^ These services are also permissible finder services, with AFS
    acting to bring together the driver and service providers. The
    driver then makes the decision to hire the service providers.

[^22]: ^?^ *See* Letter from Peter Liebesman, Assistant Director, LASD
    (August 15, 1983) (unpublished) ("Liebesman Letter") (program in
    which bank advances costs for goods and services purchased by
    trucking company employees and then bills trucking company for
    expenses constitutes permissible lending and billing activities).

[^23]: ^?^ *See, e.g.,* *Brown v. Schleier*, 118 F. 981 (8^th^ Cir.
    1902), *aff'd*, 194 U.S. 18 (1904). Although the excess capacity
    doctrine was originally developed in the real estate context, its
    principles have been applied in other areas where banks have
    obtained or developed in-house services or personnel in good faith
    and desired to make efficient use of the excess capacity. *See,
    e.g.,* Letter from Deborah K. Andrews, Senior Attorney (September 9,
    1999) (unpublished) ("Andrews Letter") (excess capacity in tax
    assessment appeal consulting services); Corporate Decision No. 98-25
    (April 1, 1998) (excess capacity in real estate appraisal services);
    Interpretive Letter No. 677 (June 28, 1995), *reprinted in*
    \[1994-95 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,625
    (excess capacity in, *inter alia*, personnel and facilities for
    production and distribution of non-financial software); No-Objection
    Letter No. 89-04 (July 11, 1989), *reprinted in* \[1989-90 Transfer
    Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,061 (excess capacity in
    messenger services); Interpretive Letter No. 137 (December 27,
    1979), *reprinted in* \[1981-82\] Fed. Banking L. Rep. (CCH) ¶
    85,218 (excess capacity in financial counseling services).

[^24]: ^?^ *See, e.g.*, Andrews Letter, *supra* (approximately 5 - 15
    percent of employee's time would be spent providing services as
    excess capacity); Corporate Decision No. 98-25, *supra* (provision
    of excess capacity services would constitute no more than ten
    percent of subsidiary's business).

[^25]: ^?^ *See* notes Error: Reference source not found & Error:
    Reference source not found, *supra*, and accompanying text. The OCC
    has approved the use of the excess capacity in consulting and
    counseling programs. *See, e.g.,* Andrews Letter, *supra* (in
    addition to tax assessment appeal consulting services, OCC has
    approved the use of the excess capacity doctrine for human resources
    consulting and career counseling).

[^26]: ^?^ *See* Liebesman Letter, *supra.*

[^27]: ^?^ The OCC has permitted national banks to act as a finder for
    government agencies. Conditional Approval No. 361 (March 3, 2000).

[^28]: ^?^ *See, e.g.,* note Error: Reference source not found, *supra*.
    *Cf.* Corporate Decision No. 98-13, *supra* (national bank operating
    subsidiary, acting as finder, may provide instruction and assistance
    with the application process, including help with the appropriate
    forms).

[^29]: ^?^ 12 C.F.R. § 7.1019. *See also* Interpretive Letter No. 677,
    *reprinted in* \[1994-1995 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 83,625 (June 28, 1995); Interpretive Letter No. 284,
    *reprinted in* \[1983-1984 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 85,448 (Mar. 26, 1984); Interpretive Letter No. 449,
    *reprinted in* \[1988-1989 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 85,673 (Aug. 23, 1988).

[^30]: ^?^ Interpretive Letter No. 856, *reprinted in* \[1998-1999
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-313 (Mar. 5,
    1999). An earlier version of 12 C.F.R. § 7.1019 stated that "as part
    of its banking business and incidental thereto, a national bank may
    collect, transcribe, process, analyze, and store for itself and
    others, banking, financial, or related economic data." Interpretive
    Ruling 7.3500, 39 Fed. Reg. 14195 (Apr. 22, 1974). Although in its
    1984 revision of the ruling, the OCC deleted this statement because
    it believed that "specific examples \[of permissible electronic
    activities\] are inappropriate given the imprecision of terms and
    rapid pace of change in the data processing industry," the
    "analytical framework" embodied in the ruling remained the same. 49
    Fed. Reg. 11157 (Mar. 26, 1984). There was no intent to narrow or
    restrict the substantive effect of the rule. Interpretive Letter No.
    677, *reprinted in*, \[1994-1995 Transfer Binder\] Fed. Banking L.
    Rep. (CCH) ¶ 83,625 (June 28, 1995). S*ee also* Interpretive Letter
    No. 737, *reprinted in* \[1996-1997 Transfer Binder\] Fed. Banking
    L. Rep. (CCH) ¶ 81,101 (Aug. 19, 1996) (national bank may provide
    transaction and information processing services to support an
    electronic stored value system); Interpretive Letter No. 653,
    *reprinted in* \[1994-1995 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 83,601 (Dec. 22, 1994) (national bank may act as an
    informational and payments interface between insurance underwriters
    and general insurance agents); OCC Interpretive Letter No. 346,
    *reprinted in* \[1985-1987 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 85,516 (July 31, 1985) (national banks may maintain records
    on commodities transactions). Case authority strongly supports the
    OCC precedent. In *Ass'n of Data Processing v. Board of Governors*,
    745 F.2d 677 (D.C. Cir. 1984), the D.C. Circuit Court of Appeals
    upheld a Federal Reserve Board finding that data processing and
    database services were closely related to banking (and thus a proper
    activity for bank holding companies) if the "data to be processed .
    . . are financial, banking or economic\...." In reaching this
    conclusion the court said: "The record of this proceeding amply
    demonstrates, if any demonstration is needed, that banks regularly
    develop and process for their customers large amounts of banking,
    financial and economic data, and that they do so (and will
    presumably continue to do so) through the most advanced
    technological means." 745 F.2d at 689. Moreover, the court indicated
    that "economic data" would include: "agricultural matters, retail
    sales matters, housing matters, corporate profits matters, and
    anything of value in banking and financial decisions." 745 F.2d at
    691.

[^31]: ^?^ *See* OCC Interpretive Letter No. 732, *reprinted in*
    \[1995-1996 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81.049
    (May 10, 1996) (national bank may acquire a minority interest in a
    firm that, *inter alia,* designs, develops, and markets software
    supporting electronic funds transfer and data interchange
    activities); Interpretive Letter No. 677, *reprinted in* \[1994-95
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,625 (June 28,
    1995) (national bank operating subsidiary may enter into a joint
    venture arrangement (through a limited liability company) to acquire
    MECA Software, Inc., a company that develops, produces, markets and
    distributes home banking and financial management software products
    designed to assist individuals and small business manage their
    finances through their personal computers).

[^32]: The UCS Merger is also subject to review under the Bank Merger
    Act, but the FDIC is the agency responsible for Bank Merger Act
    review of that transaction. *See* note Error: Reference source not
    found above.

[^33]: ^?^ Certain aspects of the proposed transactions involve "covered
    transactions" within the meaning of section 23A of the Federal
    Reserve Act, 12 U.S.C. § 371c. Of the covered transactions, some
    qualify for the statutory exemption for transactions between sister
    banks, 12 U.S.C. § 371c(d)(1), others qualify for the regulatory
    exemption for transactions subject to review under the Bank Merger
    Act, 12 C.F.R. § 250.241, but others may not be otherwise exempt.
    Citigroup requested an exemption from the Board of Governors of the
    Federal Reserve System for the corporate reorganization under
    12 U.S.C. § 371c(e)(2) (the Board may exempt specific transactions
    by regulation or order). The Board granted the exemption, subject to
    compliance by Citigroup with commitments and representations. *See*
    Letter from Robert deV. Frierson to Carl V. Howard (August 28,
    2001).