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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 

WASHINGTON, 0. C. 20551 

MARK E. VAN DER WEIDE 

Gr.NF.KAI. COUNSF.I. 

May 20, 2022 

Donald Tourney, Esq. 

Sullivan & Cromwell LLP 

125 Broad Street 

New York, New York 10004-2498 

Dear Mr. Tourney: 

This letter responds to your request for an opinion that Popular, Inc. 

("Popular"), would not control Evertec, Inc. ("Evertec"), both of San Juan, Puerto Rico, 

for purposes ofthe Bank Holding Company Act of 1956 ("BHC Act"), following 

Popular's proposed reduction ofits ownership ofEvertec's voting shares from 

approximately 16.2 percent to less than five percent. Popular is a bank holding company 

under the BHC Act. Popular controls Banco Popular De Puerto Rico ("Bank"), San Juan, 

Puerto Rico, a state member bank. 

For purposes ofthe BHC Act and Regulation Y, a company has control 

over another company ifthe 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 ofthe other company; (ii) controls in any manner the election of 

a majority ofthe directors ofthe other company; or (iii) directly or indirectly exercises a 

controlling influence over the management or policies of the other company. 1 In 

addition, R~gu1ation Y sets forth presumptions of control.2 The BHC Act and 

Regulation Y also set forth presumptions of noncontrol.3 

1 12 U.S.C. § 1841(a)(2); see also 12 CFR 225.2(e)(l). 

2 See 12 CFR 225.32; see also Control and Divestiture Proceedings, 85 FR 12398 

(Mar. 2, 2020). 

3 12 U.S.C. § 1841(a)(3); 12 CFR 225.33(a). 
2 

Popular owns approximately 16.2 percent ofthe voting common stock of 

Evertec and does not have any other form of ownership interest in Evertec, including any 

options to acquire, or instruments convertible into, any such interests. More than five 

percent ofthe total annual revenues ofEvertec are attributable to Popular's business 

relationships with the firm. In addition, Popular has certain contractual rights with 

respect to Evertec, including the right to nominate two directors for election to Evertec' s 

board of directors, preemptive rights in connection with issuances ofstock by Evertec, 

and registration rights for Popular' s shareholdings ofthe common stock ofEvertec. 

Considering Popular's current ownership interest and business relationships with Evertec, 

Popular is presumed to control Evertec pursuant to the Board's Regulation Y.4 

Popular proposes a series oftransactions that would reduce its ownership 

interest in the voting common stock ofEvertec to less than five percent. Specifically, 

Bank has agreed to purchase certain information technology and related assets from 

Evertec Group, LLC ("Evertec LLC"), San Juan, Puerto Rico, a wholly owned subsidiary 

ofEvertec (the "Asset Purchase"). As part of the Asset Purchase, Popular would transfer 

some ofits voting common stock ofEvertec to Evertec LLC as consideration. After 

consummation ofthe Asset Purchase, Popular would own approximately 10.5 percent of 

the voting common stock ofEvertec. Popular has agreed to use commercially reasonable 

efforts to sell additional shares ofEvertec to third parties within 90 days of 

consummation ofthe Asset Purchase to reduce Popular's ownership interest to less than 

five percent ofthe voting common stock ofEvertec. At the end ofthis 90-day period, the 

amount ofEvertec voting common stock owned by Popular in excess of 4.5 percent, if 

any, would be exchanged for nonvoting preferred stock without any additional action by 

Popular.5 As a result ofthese transactions, Popular would own less than five percent of 

the outstanding voting common stock ofEvertec. 

Upon consummation of all the proposed transactions, it appears that 

Popular would not trigger any of the presumptions ofcontrol under the Board's 

Regulation Y, and would trigger the presumptions ofnoncontrol in the BHC Act and 

4 12 CFR 225.32(e)(3)(ii). 

5 Pursuant to Evertec's governing documents, the nonvoting preferred stock would be 

convertible into voting securities only under the circumstances specified in 

section 225.9(a)(3) ofRegulation Y and, therefore, would not be considered voting 

securities for purposes ofRegulation Y. 12 CFR 225.9(a)(3); see also 12 CFR 

225.9(q)(2) (defining "nonvoting securities"). 
3 

Regulation Y, with respect to Evertec.6 Based on all the facts of record in this case, and 

specifically conditioned on compliance with all the representations made in connection 

with your request, staff of the Legal Division would not recommend that the Board find 

Popular to control Evertec for purposes of the BHC Act upon Popular's reduction of its 

ownership interest in Evertec to less than five percent of the voting common stock of 

Evertec. 

This opinion is based on all the facts of record, including all the 

representations and commitments made by or on behalf of Popular, whether noted in this 

letter or otherwise contained in correspondence or discussions with staff of the Board or 

the Federal Reserve Bank of New York. Any change in the facts or representations may 

result in a different opinion and should be reported immediately to Board and 

Reserve Bank staff. 

If you have any questions about this matter, please contact Brian Phillips, 

Counsel (202-452-3321), or Josh Strazanac, Counsel (202-452-2457) of my staff. 

Sincerely, 

6 12 U.S.C. § 1841(a)(3); 12 CFR 225.33(a). 

Mark E. Van Der Weide (signed)