B oard o f G overnors o f the F ederal R eserve S ystem

Washington , D C 20551

October 17, 2018

Diana E. McCarthy, Esq.

Drinker Biddle & Reath LLP 

One Logan Square 

Suite 2000

Philadelphia, Pennsylvania 19103 

Dear Ms. McCarthy:

This is in response to your request on behalf of Northern Funds and 

Northern Institutional Funds (each a “Trust” and, collectively, the “Trusts”), both 

affiliates of The Northern Trust Company (“TNTC”), Chicago, Illinois, a state 

member bank, and Northern Trust Corporation (“NTC” and, together with TNTC, 

“Northern”), Chicago, Illinois, a financial holding company, for an exemption 

from the prohibitions of the Depository Institution Management Interlocks Act 

(“Interlocks Act”)1 and the Board's Regulation L2 to permit Ms. Ingrid LaMae 

Allen de Jongh to become a trustee on the board of trustees of each Trust, while at 

the same time serving as a director on the board of directors of Bank Leumi USA 

(“Bank Leumi”), New York, New York, a state nonmember bank.

The Interlocks Act and Regulation L prohibit a management official 

of a depository institution or a depository holding company with total assets 

exceeding $2.5 billion (or of any affiliate of such an organization) from serving at 

the same time as a management official of an unaffiliated depository organization 

with total assets exceeding $1.5 billion (or of any affiliate of such an 

organization), regardless of the location of the depository organizations (“major 

assets prohibition”).3 As of June 30, 2018, TNTC, NTC, and Bank Leumi each 

had assets that exceeded the applicable thresholds of the major assets prohibition.

1 12 U.S.C. § 3201 et seq.

2 12 CFR part 212.

3 12 U.S.C. § 3203; 12 CFR 212.3(c).

www.federalreserve.gov
Ms. de Jongh became a director of Bank Leumi in 2017. Earlier this 

year, after an extensive search, the boards of trustees of the Trusts identified Ms. 

de Jongh as the best qualified candidate to fill an anticipated vacancy on each of 

the boards. The boards each intend to appoint Ms. de Jongh as a trustee following 

a meeting of the Trusts’ shareholders in October 2018. The Trusts seek a general 

exemption to permit Ms. de Jongh to serve as a trustee on the boards of each of the 

Trusts while also serving as a director of Bank Leumi.

Under the general exemption provision of Regulation L, the Board 

may permit an interlock that otherwise would be prohibited by the Interlocks Act 

and Regulation L if the Board determines that the interlock would not result in a 

monopoly or in a substantial lessening of competition and would not present safety 

and soundness concerns.4 The Board has delegated to the General Counsel, in 

consultation with the Director of the Division of Supervision and Regulation 

(“Director”), authority to grant exemptions under this provision of Regulation L.

The interlocks between the Trusts and Bank Leumi would not result 

in a monopoly or in a substantial lessening of competition. Northern and Bank 

Leumi have overlapping operations in five U.S. banking markets.5 If the proposed 

interlocks were evaluated as if Bank Leumi were merging into Northern, with the 

latter as the surviving entity, the competitive effects of the combination in the five 

banking markets, as measured by the Herfindahl-Hirschman Index (“HHI”), and 

the combined market share in each market, would be consistent with Board 

precedent and within the thresholds of the Department of Justice Bank Merger 

Competitive Review guidelines.6 In addition, the interlocks would not have any 

substantial effect on competition with respect to the nonbanking activities of 

Northern and Bank Leumi.7

The interlocks also do not present safety and soundness concerns. 

The Trusts have indicated that Ms. de Jongh has a range of business and financial 

skills, including commercial and investment banking experience, needed for a 

trustee. The Trusts represent that her service on their boards would be beneficial

4 12 CFR 212.6(a).

5 The five markets are: Los Angeles, California; San Francisco-Oakland-San Jose, 

California; Miami-Fort Lauderdale Area, Florida; Chicago, Illinois; and Metro New York 

City, New York-New Jersey-Connecticut-Pennsylvania.

6 Department of Justice, Bank Merger Competitive Review - Introduction and Overview, 

http://www.justice.gov/sites/default/files/atr/legacy/2007/08/14

/6472.pdf (current as of September 2000). The Department of Justice has informed the 

Board that a bank merger or acquisition generally will not be challenged (in the absence 

of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 

1800 and the merger increases the HHI by more than 200 points.

7 All of Bank Leumi’s nonbanking subsidiaries are currently inactive.
to the Trusts’ shareholders. In addition, her continued service as director of Bank 

Leumi would provide managerial continuity for Bank Leumi.

Based on all the facts of record and for the reasons discussed above, 

the General Counsel, acting pursuant to authority delegated by the Board and after 

consultation with the Director, has granted an exemption to allow Ms. de Jongh to 

serve as a management official of each of the Trusts while also serving as a 

management official of Bank Leumi.

The Board reserves the right to revoke the exemption should the 

interlocks result in a monopoly or a substantial lessening of competition or present 

safety and soundness concerns.

Sincerely yours,

Ann E. Misback 

Secretary of the Board