[Federal Register Volume 62, Number 65 (Friday, April 4, 1997)]
[Notices]
[Pages 16214-16215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8573]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY
[Docket No. 97-06]


Operating Subsidiary Notice

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice and request for comment on an operating subsidiary.

-----------------------------------------------------------------------

SUMMARY: The Office of the Comptroller of the Currency (OCC) requests 
comment concerning an application filed by NationsBank, National 
Association, Charlotte, North Carolina, to engage in real estate lease 
financing through an operating subsidiary of the bank.

DATES: Comments should be submitted on or before May 5, 1997.

ADDRESSES: Written comments regarding the application should be sent to 
the Office of the Comptroller of the Currency, Communications Division, 
250 E Street, SW., Third Floor, Washington, DC 20219, Attn: Docket No. 
97-06. In addition, comments may be sent by facsimile transmission to 
fax number (202) 874-5274 or by internet mail to 
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="d486919387fa979b9999919a8087949b9797fa8086919587fa939b82fa">[email protected]</a> A copy of the application will be 
available for inspection and copying at the OCC's Public Reference 
Room, 250 E Street, SW., Washington, DC 20219, through the OCC's 
Information Line at (202) 479-0141, or through the OCC's web site at 
HTTP://WWW.OCC.TREAS.GOV. Appointments for inspection of comments or 
the application can be made by calling (202) 874-5043.

FOR FURTHER INFORMATION CONTACT: William B. Glidden, Assistant 
Director, Bank Activities and Structure Division, (202) 874-5300, or 
Robert Sihler, Senior Bank Structure Analyst, Bank Organization and 
Structure, (202) 874-5060.

SUPPLEMENTARY INFORMATION: A national bank may establish or acquire 
an operating subsidiary to conduct, or may conduct in an existing 
operating subsidiary, activities that are part of or incidental to 
the business of banking, as determined by the OCC pursuant to 12 
U.S.C. 24(Seventh), and other activities permissible for national 
banks or their subsidiaries under other statutory authority. 
Section 5.34(d) of 12 CFR part 5 authorizes the OCC to permit a 
national bank to conduct an activity through its operating 
subsidiary that is different from that permissible for the parent 
national bank, subject to the additional requirements specified in 
12 CFR 5.34(f). For activities not previously approved by the OCC, 
the OCC provides public notice and opportunity for comment on the 
application by publishing notice of the application in the Federal 
Register.

    NationsBank, National Association, Charlotte, North Carolina, has 
applied to the OCC pursuant to 12 CFR 5.34(f) to establish an operating 
subsidiary. NationsBank's application generally describes the 
activities in which the operating subsidiary will engage as follows:
    The subsidiary will engage in real estate lease financing 
transactions on a nationwide basis, subject to the safeguards specified 
in 12 CFR 5.34(f) and certain limitations designed to minimize the risk 
to the subsidiary and the bank. In particular, the transactions will be 
on a ``nonoperating'' basis and for an initial term of at least 90 
days. The leases will be ``full payout'' leases designed to yield a 
return that will compensate the subsidiary for not less than its full 
investment in the real property plus the estimated total cost of 
financing the property over the term of the lease from rental payments, 
estimated tax benefits, and the estimated residual value of the 
property at the expiration of the initial term. For purposes of 
determining whether a given lease is a full payout lease, the estimated 
residual value of the property will not exceed 25 percent of the 
acquisition cost of the property to the subsidiary. The subsidiary will 
acquire real property only in connection with a proposed leasing 
transaction. Thus, it will not acquire real property in anticipation of 
leasing the property at a later date. If upon termination or expiration 
of the lease the lessee does not acquire the real property, the 
subsidiary either will enter into a new lease agreement with the lessee 
or with a third party or will reclassify the property as OREO and 
dispose of the property in accordance with OCC OREO

[[Page 16215]]

guidelines. NationsBank states that in its opinion when the real estate 
lease financing transactions are conducted as described they will be 
the functional equivalent of mortgage loans made by the subsidiary.
    The OCC reviews operating subsidiary applications to determine 
whether the proposed activities are legally permissible for an 
operating subsidiary and to ensure that the proposal is consistent with 
safe and sound banking practices and OCC policy and does not endanger 
the safety or soundness of the parent national bank. In publishing 
notice of the application, the OCC does not take a position on issues 
raised by the proposal. Notice is published solely to seek the views of 
interested persons on the issues presented and does not represent a 
determination by the OCC that the proposal meets, or is likely to meet, 
the criteria outlined above. Interested parties are invited to comment 
on any aspect of the application.

    Dated: March 31, 1997.
Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 97-8573 Filed 4-3-97; 8:45 am]
BILLING CODE 4810-33-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/d07b1474/cloudflare-static/email-decode.min.js"></script></body>
</html>