BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, 0. c:. 20551

ADDRESS OFFICIAL CORRESPONDENCE

TO THE BOARD

May 4, 2007

Stephen Johnson, Esq.

First Vice President and Counsel

SunTrust Banks, Inc.

SunTrust Plaza

303 Peachtree Street, Suite 3600

Atlanta, Georgia 30308

Dear Mr. Johnson:

This responds to the request by SunTrust Bank, Atlanta, Georgia

("SunTrust"), a state member bank, for prior approval to acquire equity

securities solely for the purpose of hedging SunTrust's exposure arising from

equity derivative transactions that the bank lawfully enters into with third

parties.

Section 9 of the Federal Reserve Act (12 U.S.C. § 335) provides

that state member banks are subject to the same limitations and conditions on

the purchase, sale, underwriting, and holding of investment securities and stock

that apply to national banks under 12 U.S.C. § 24 (Seventh). On February 21,

2002, the Board issued a policy statement ("Policy Statement") concerning the

acquisition of equity securities by state member banks to hedge their equity

derivative transactions. The Policy Statement provides that the Board will not

apply section 9 of the Federal Reserve Act so as to prohibit a state member bank

from purchasing equity securities to hedge the risks arising from equity

derivative transactions lawfully entered into by the bank with an unaffiliated

third party, provided such purchases are made in accordance with the same

conditions and restrictions applicable to national banks, and the state member

bank receives the approval of the Board's Director of the Division of

Supervision and Regulation ("Director") before acquiring any equity security for

hedging purposes.
2

SunTrust has committed that it will acquire equity securities solely

for purposes of hedging the bank's exposure arising from one or more

customer-driven equity derivative transactions that SunTrust enters into with,

and at the request of, an unaffihiated third party and that SunTrust is permitted to

enter into under Georgia and federal law. In addition, SunTrust has committed

that it will conduct its equity hedging activities in accordance with the

conditions and restrictions applicable to the equity hedging activities of national

banks, that it will not acquire equity securities for speculative or investment

purposes, and that it will not acquire in the aggregate more than 5 percent of any

class of stock of any issuer in connection with its equity hedging activities.

Federal law also prohibits a state member bank from underwriting and dealing in

any equity security (12 U.S.C. § 24 (Seventh), 335). Accordingly, SunTrust

may not, and has committed that it will not, hold itself out to the public as being

willing to purchase or sell any equity security or act as a marketmaker in any

security by continuously quoting "bid" and "ask" prices for the security.

In considering SunTrust's request, the Director has carefully

considered SunTrust's financial and managerial resources, including the bank's

overall risk-management policies, procedures, and systems. Also considered

were the policies, procedures, internal controls, and limits that SunTrust will use

to monitor and control the risks associated with its equity derivative and equity

hedging activities and to ensure that it complies with the limitations applicable

to the equity hedging activities of national and state member banks. In

evaluating these factors, the Director has carefully reviewed information

submitted by SunTrust concerning the proposed scope and conduct of its equity

hedging activities, and confidential examination and supervisory information

assessing the financial and managerial strength of SunTrust. This information

includes the confidential results of an on-site examination of the policies,

procedures, and systems that SunTrust will use to manage the risks associated

with its equity derivative and equity hedging activities and to ensure compliance

with the conditions and restrictions applicable to the bank's equity hedging

activities.

Based on all the facts of record, the Director, acting pursuant to

authority delegated by the Board, has approved SunTrust's request to purchase

equity securities solely for the purpose of hedging its exposure arising from

customer-driven equity derivative transactions that the bank is permitted to enter

into under Georgia and federal law.
3

This action is based on the commitments and representations set

forth in SunTrust's request and in related correspondence with Board staff.

These commitments and representations are deemed to be conditions imposed in

writing by the Board in connection with the findings and decision herein and, as

such, may be enforced under applicable provisions of law. Any change in the

facts or representations included in such correspondence should be reported to

Board staff immediately. SunTrust must conduct its equity hedging activities in

accordance with the restrictions and conditions discussed in this letter and the

Policy Statement. In addition, the Board retains the right to place additional

restrictions or limitations on the bank's equity derivative and equity hedging

activities if the Board concludes that such restrictions or limitations are

necessary or appropriate to ensure that such activities are conducted in

accordance with applicable law and do not present an undue risk to SunTrust or

the deposit insurance funds.

Furthermore, as noted in the Policy Statement, a state member bank

must have the authority under applicable state law to engage in any proposed

equity hedging activities and must comply with all applicable state notice or

approval requirements relating to such activities. We understand that the

Georgia Department of Banking and Finance has approved SunTrust's request to

engage in equity hedging activities.

Sincerely yours,

Ilj&/PICU

Robert deV. Frierson

Deputy Secretary of the Board

cc: Federal Reserve Bank of Atlanta