July 23, 2008 

Randall J. Erickson, Esq. 

Senior Vice President, Chief Administrative Officer 

 and General Counsel 

Marshall & Ilsley Corporation 

770 North Water Street 

Milwaukee, Wisconsin 53202 

Dear Mr. Erickson: 

 This is in response to your letter requesting a determination that Metavante 

Technologies, Inc., Milwaukee, Wisconsin, and its subsidiaries (“Metavante”) are not 

affiliates of the depository institution subsidiaries (collectively, the “Banks”)1

 of Marshall 

& Ilsley Corporation (“M&I”), also of Milwaukee, for purposes of section 23A and 

Regulation W. 2

 Prior to November 1, 2007, Metavante (a data processing company) was a 

wholly owned subsidiary of M&I. On November 1, 2007, M&I and Metavante separated

into two publicly traded companies in a sponsored spin-off transaction. As part of this 

transaction, 75 percent of the outstanding voting common stock of Metavante was 

distributed pro rata to the shareholders of M&I, and the remaining 25 percent of the 

outstanding voting common stock of Metavante was sold to an unaffiliated private equity 

fund, WPM L.P. (“Warburg”),3

 that does not own any stock in M&I. Because the 

shareholding of both companies is widely dispersed and most shares are held in 

 

1

 The five subsidiary depository institutions are M&I Marshall & Ilsley Bank, 

Milwaukee, Wisconsin; M&I Bank FSB, Las Vegas, Nevada; Southwest Bank of 

St. Louis, St. Louis, Missouri; Marshall & Ilsley Trust Company, N.A., Milwaukee, 

Wisconsin; and M&I Bank of Mayville, Mayville, Wisconsin. 

2

 12 U.S.C. § 371c; 12 CFR part 223. 

3

 Warburg is managed by Warburg Pincus LLC. 
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book-entry form in the name of Cede & Co.,4

 you have represented that M&I and 

Metavante cannot determine the identities of all their current shareholders or what the 

total percentage of overlapping shareholding is at this time. 

 Section 23A and Regulation W limit the amount of “covered transactions” 

between a bank and any single affiliate to 10 percent of the bank’s capital stock and 

surplus, and limit the amount of covered transactions between a bank and all its affiliates 

to 20 percent of the bank’s capital stock and surplus.5

 “Covered transactions” include the 

purchase of assets by a bank from an affiliate, the extension of credit by a bank to an 

affiliate, the issuance of a guarantee by a bank on behalf of an affiliate, and certain other 

transactions.6 The statute and regulation also require a bank to secure its extensions of 

credit to, and guarantees on behalf of, affiliates with prescribed amounts of collateral.7

 In 

addition, section 23A and Regulation W specifically authorize the Board to exempt 

transactions or relationships from the requirements of the statute and rule if the Board 

finds such an exemption to be in the public interest and consistent with the purposes of 

section 23A.8

 

 

 The definition of an “affiliate” of a bank in section 23A and Regulation W 

includes any company that is controlled, directly or indirectly, by or for the benefit of 

shareholders who control, directly or indirectly, the bank or any company that controls the 

bank.9

 Under the statute and rule, “control” of a company includes ownership or power to 

vote 25 percent or more of any class of voting securities of the company.10 As a result, if 

the same set of shareholders owns 25 percent or more of the voting stock of a bank and of 

another company, the bank and the company are affiliates for purposes of section 23A. 

 Both M&I and Metavante are widely held public companies. You have 

indicated that only two shareholders of M&I own greater than 5 percent of M&I’s voting 

common stock. Northwestern Mutual owns 5.1 percent of M&I’s voting common stock, 

and subsidiaries of M&I own 6.3 percent of M&I’s voting common stock in a fiduciary 

capacity. Warburg is the only shareholder of Metavante that owns more than 5 percent of 

4

 Cede & Co. is the nominee name for The Depository Trust Company, a large clearing 

house that holds shares in its name for banks, brokers and other financial institutions in 

order to expedite securities transactions. 

5

 12 U.S.C. § 371c(a)(1); 12 CFR 223.11 and 223.12. 

6

 12 U.S.C. § 371c(b)(7); 12 CFR 223.3(h). 

7

 12 U.S.C. § 371c(c); 12 CFR 223.14. 

8

 12 U.S.C. § 371c(f)(2); 12 CFR 223.43. 

9

 12 U.S.C. § 371c(b)(1); 12 CFR 223.2(a)(2). 

10 12 U.S.C. § 371c(b)(3); 12 CFR 223.3(g)(1). 
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Metavante’s voting common stock. M&I owns or has power to vote less than 5 percent of 

Metavante’s voting common stock and holds that stock in a fiduciary capacity. 

 While 75 percent of the shares of Metavante were initially distributed to the 

shareholders of M&I, the shares were not stapled and would be traded freely and 

separately. You have provided information indicating that shares of the two companies 

have traded in significant volumes since the spinoff in November 2007. Given the active 

trading in the stock of the two companies after the spin-off, M&I and Metavante are likely 

substantially below the initial 75 percent common ownership, though it is not possible to 

determine whether they are already below 25 percent common ownership. 

 Both companies are separately managed and operated and have no officer or 

employee interlocks. Moreover, there are no management agreements between the two 

companies. Two of the eleven directors of Metavante now serve on the board of M&I. 

One of the two common directors, Dennis J. Kuester, serves as the chair of the boards of 

both Metavante and M&I. [REDACTED], Mr. Kuester will step down as chair of the 

Metavante board but may continue as a director of Metavante, subject to shareholder 

approval. The other common director is an outside director on both boards. 

 Under these facts, the Legal Division would not recommend that the Board 

determine that Metavante is an affiliate of the Banks for purposes of section 23A and 

Regulation W once Mr. Kuester has stepped down as chair of the Metavante board. This 

opinion is based on the specific facts and circumstances of the relationship between M&I 

and Metavante described in your correspondence and this letter. Any material change in 

those facts or circumstances may result in a different conclusion and should be reported to 

Board staff. 

Sincerely, 

(signed) 

Scott G. Alvarez 

cc: Federal Reserve Bank of Chicago 

 Federal Deposit Insurance Corporation 

 Office of Thrift Supervision