[Federal Register Volume 60, Number 86 (Thursday, May 4, 1995)]
[Notices]
[Pages 22066-22067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11038]



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FEDERAL RESERVE SYSTEM


Deutsche Bank AG, Frankfurt, Germany; Application to engage in 
Nonbanking Activities

    Deutsche Bank AG, Frankfurt, Germany (Deutsche Bank), has applied 
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 
1843(c)(8)) (BHC Act) and Sec.  225.23(a)(3) of the Board's Regulation 
Y (12 CFR 225.23(a)(3)), through a newly-formed wholly-owned 
subsidiary, Deutsche Bank Futures Corporation, New York, New York 
(Futures), to engage in the following activities: 1) acting as a 
futures commission merchant (FCM) for nonaffiliated persons in 
executing and clearing, executing without clearing, and clearing 
without executing, on the Chicago Board of Trade and the Chicago 
Mercantile Exchange with respect to certain futures and options 
contracts, 2) acting as an FCM for nonaffiliated persons in executing 
and clearing, and clearing without executing, through omnibus trading 
accounts with affiliated and nonaffiliated futures commission merchants 
or brokers with respect to certain futures and options contracts, 3) 
providing related investment advisory services, 4) providing securities 
brokerage services on the American Stock Exchange, the Chicago Board 
Options Exchange and the Philadelphia Stock Exchange, and 5) providing 
related data processing services. Deutsche Bank would engage in these 
activities on a worldwide basis.
    Section 4(c)(8) of the BHC Act provides that a bank holding company 
may, with Board approval, engage in any activity which the Board, after 
due notice and opportunity for hearing, has determined (by order or 
regulation) to be so closely related to banking or managing or 
controlling banks as to be a proper incident thereto. This statutory 
test requires that two separate tests be met for an activity to be 
permissible for a bank holding company. First, the Board must determine 
that the activity is, as a general matter, closely related to banking. 
Second, the Board must find in a particular case that the performance 
of the activity by the applicant bank holding company may reasonably be 
expected to produce public benefits that outweigh possible adverse 
effects.
    A particular activity may be found to meet the ``closely related to 
banking'' test if it is demonstrated that banks generally have provided 
the proposed activity, that banks generally provide services that are 
operationally or functionally similar to the proposed activity so as to 
equip them particularly well to provide the proposed activity, or that 
banks generally provide services that are so integrally related to the 
proposed activity as to require their provision in a specialized form. 
National Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 (D.C. 
Cir. 1975). In addition, the Board may consider any other basis that 
may demonstrate that the activity has a reasonable or close 
relationship to banking or managing or controlling banks. Board 
Statement regarding Regulation Y, 49 FR 806 (1984).
    Deutsche Bank states that the Board previously has determined by 
regulation that certain of the proposed activities, when conducted 
within limitations established by the Board in its regulations and in 
related interpretations and orders, are closely related to banking for 
purposes of section 4(c)(8) of the BHC Act. See 12 CFR 
225.25(b)(15)(full-service securities brokerage); 12 CFR 
225.25(b)(4)(investment advisory services); 12 CFR 
225.25(b)(18)(futures commission merchant services);12 CFR 
225.25(b)(7), Citicorp, 72 Federal Reserve Bulletin 497 (1986), and 
Citicorp, 68 Federal Reserve Bulletin 505 (1982)(data processing 
services).
    Deutsche Bank also maintains that the Board has determined by order 
that several of the other proposed activities, when conducted within 
the limitations established by the Board in previous orders, are 
closely related to banking. See Sakura Bank, Limited, 79 Federal 
Reserve Bulletin 723 (1993)(providing execution-only, clearing-only, 
and investment advisory services, and buying and selling contracts 
through omnibus accounts, with respect to financial futures and options 
on futures); Northern Trust Corporation, 79 Federal Reserve Bulletin 
723 (1993)(providing execution-only, clearing-only, and investment 
advisory services, and buying and selling contracts through omnibus 
accounts, with respect to financial futures and options on futures); 
Commerzbank Aktiengesellschaft, 79 Federal Reserve Bulletin 961 
(1993)(providing execution-only, clearing-only, and investment advisory 
services, and buying and selling contracts through omnibus accounts, 
with respect to [[Page 22067]] financial futures and options on 
futures); and Societe Generale, 76 Federal Reserve Bulletin 776 (1990). 
Deutsche Bank maintains that Futures would conduct these previously 
approved activities in conformance with the conditions and limitations 
established by the Board in prior cases.
    In order to approve the proposal, the Board must determine that the 
proposed activities to be conducted by Deutsche Bank and Futures ``can 
reasonably be expected to produce benefits to the public, such as 
greater convenience, increased competition, or gains in efficiency, 
that outweigh possible adverse effects, such as undue concentration of 
resources, decreased or unfair competition, conflicts of interests, or 
unsound banking practices.'' 12 U.S.C. 1843(c)(8). Deutsche Bank 
believes that the proposal will produce public benefits that outweigh 
any potential adverse effects. In particular, Deutsche Bank maintains 
that the proposal will enhance competition and enable Deutsche Bank to 
assist its customers in lowering financing costs, contributing to 
greater market stability, increasing efficiency and reducing portfolio 
risk. In addition, Deutsche Bank states that the proposed activities 
will not result in adverse effects such as an undue concentration of 
resources, decreased or unfair competition, conflicts of interest, or 
unsound banking practices.
    In publishing the proposal for comment, the Board does not take a 
position on issues raised by the proposal. Notice of the proposal is 
published solely to seek the views of interested persons on the issues 
presented by the application and does not represent a determination by 
the Board that the proposal meets, or is likely to meet, the standards 
of the BHC Act.
    Any comments or requests for hearing should be submitted in writing 
and received by William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, Washington, D.C. 20551, not later than May 18, 
1995 . Any request for a hearing on this application must, as required 
by Sec.  262.3(e) of the Board's Rules of Procedure (12 CFR 262.3(e)), 
be accompanied by a statement of the reasons why a written presentation 
would not suffice in lieu of a hearing, identifying specifically any 
questions of fact that are in dispute, summarizing the evidence that 
would be presented at a hearing, and indicating how the party 
commenting would be aggrieved by approval of the proposal.
    This application may be inspected at the offices of the Board of 
Governors or the Federal Reserve Bank of New York.
    Board of Governors of the Federal Reserve System, April 28, 1995.

Jennifer J. Johnson
Deputy Secretary of the Board.
[FR Doc. 95-11038 Filed 5-3-95; 8:45 am]
BILLING CODE 6210-01-F