BOAR D D F GOVERNOR S

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, 0. C. 2055 1

ADDRESS OFFICIAL CORRESPONDENCE

TO THE BOARD

August 3, 2012

Andrew R. Gladin, Esq.

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Dear Mr. Gladin:

This is in response to your letter dated December 12, 2011, on behalf

of Warburg Pincus,1for relief from one of the passivity commitments ("Passivity

Commitments") that it provided to the Board in connection with its 2009 notice to

acquire up to 24.9 percent of the outstanding voting shares of Webster Financial

Corporation ("Webster") and its subsidiary bank, Webster Bank, National

Association ("Bank"), both of Waterbury, Connecticut.

On October 13, 2009, the Federal Reserve Bank of Boston, under

authority delegated by the Board, did not object to the prior notice submitted by

Warburg Pincus to acquire up to 24.9 percent of the outstanding voting shares of

Webster under the Change in Bank Control Act. In connection with that noobjection determination, Warburg Pincus provided commitments previously relied

on by the Board to ensure that a company would not exercise a controlling

influence over a banking organization for purposes of the Bank Holding Company

Act ("BHC Act").

The Passivity Commitments included a commitment that Warburg

Pincus would not directly or indirectly enter into any banking or nonbanking

transactions with Webster. That commitment contained an exception allowing

Warburg Pincus and its affiliates to maintain deposit accounts with Webster that

1

In this context, "Warburg Pincus" refers to Warburg Pincus Private Equity X,

L.P.; Warburg Pincus X, L.P.; Warburg Pincus X Partners, L.P.; Warburg Pincus

X, LLC; Warburg Pincus Partners, LLC; Warburg Pincus & Co.; and Warburg

Pincus LLC.
2

would not exceed $500,000 in the aggregate.2 Warburg Pincus now requests a

modification of its passivity commitments to permit Warburg Pincus or its

subsidiaries to enter into nonexclusive transactions on an arm's-length basis with

Webster that would not exceed in the aggregate $1 million annually.

For purposes of the BHC Act, a company has control over another company

if the first company (i) directly or indirectly or acting through one or more other

persons owns, controls, or has power to vote 25 percent or more of any class of

voting securities of the other company; (ii) controls in any manner the election of a

majority of the directors of the other company; or (iii) directly or indirectly

exercises a controlling influence over the management or policies of the other

company.3 The Board's Regulation Y provides a set of rebuttable presumptions of

control.4

The Board typically has been concerned that a company could exercise a

controlling influence over a bank for BHC Act purposes if the company has

invested in the organization and has significant business relationships with it. The

Board has granted other requestors relief from the commitment limiting banking

and nonbanking transactions to allow for de minimis business relationships.5In

this case, the proposed business relationship would represent significantly less than

1 percent of the total consolidated revenue of either Warburg Pincus or Webster.

Additionally, any potential business relationship under the requested relief would

be nonexclusive and at arm's length, suggesting that neither Warburg Pincus nor

Webster would be overly dependent on it.

Based on all the facts of record, the Director of the Division of Banking

Supervision and Regulation, acting pursuant to authority delegated by the Board

under section 265.7(a)(2) of the Board's Rules Regarding Delegation of

Authority,6and after consulting with the General Counsel, has approved your

2 Under the Passivity Commitments, any such deposits must be maintained on

substantially the same terms as those prevailing for comparable accounts of

persons unaffiliated with Bank.

3

12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e).

4

See 12 CFR 225.31(d).

5

See, e.g., letter dated December 15, 2009, from Scott G. Alvarez, General

Counsel, to Andrew S. Baer, Esq. (limiting business relationships to 2.5 percent of

gross revenue).

6

12 CFR 265.7(a)(2).
3

request to modify one of the Passivity Commitments to permit Warburg Pincus to

engage in the business transactions described above as long as it does not, through

those activities or in any other manner, exercise or attempt to exercise a controlling

influence over the management or policies of Webster or any of its subsidiaries,

including Bank.

This action is based on the representations and commitments set forth in

your correspondence. Any change in the facts presented could result in a different

conclusion and should be reported to Board staff immediately. This determination

should not be construed as granting relief from any other conditions or

commitments to which Warburg Pincus may be subject.

Attachment (modified commitments)

cc: Maureen B. Savage, Assistant Vice President

Federal Reserve Bank of Boston

James C. Smith, Chairman of the Board

and Chief Executive Officer

Webster Financial Corporation

Very truly yours,

Robert deV. Frierson

Secretary of the Board