[Federal Register Volume 60, Number 89 (Tuesday, May 9, 1995)]
[Notices]
[Pages 24632-24633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11347]



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FEDERAL RESERVE SYSTEM


The Chase Manhattan Corporation; Application to Engage in 
Nonbanking Activities

    The Chase Manhattan Corporation, New York, New York (Applicant); 
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)) to acquire U.S. Trust Corporation's 
wholly-owned direct subsidiary, Mutual Funds Services Company, Boston, 
Massachusetts (MF Services), and thereby engage in providing 
administrative services to mutual funds; and to acquire U.S. Trust 
Corporation's wholly-owned direct subsidiary U.S. Trust Company of 
Wyoming, Cody, Wyoming (UST-WY), and thereby engage in serving as an 
investment advisor pursuant to Sec.  225.25(b)(4)(ii) of the Board's 
Regulation Y. Applicant states that the proposed administrative 
services include, but are not limited to, with respect to any 
investment company customer, computing the investment company's net 
asset value and performance data, coordinating communications and 
activities between [[Page 24633]] its investment advisor and other 
service providers, accounting and recordkeeping, disbursing payments 
for the investment company's expenses, providing office space for the 
investment company, and preparing and filing tax and regulatory reports 
for the investment company. Applicant states that the proposed 
investment advisory activities include serving as the nominal 
administrator for closed-end investment companies established pursuant 
to Wyoming law. All of these activities are to be conducted throughout 
the United States.
    Section 4(c)(8) of the BHC Act provides that a bank holding company 
may, with prior 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 have generally 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). The Board also 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 (January 5, 1984).
    The Board previously has determined by order that providing 
administrative services to mutual funds and closed-end investment 
companies, when conducted within the limitations established by the 
Board in its previous orders, are closely related to banking. State 
Street Boston Corporation, 81 Federal Reserve Bulletin 297 (1995), 
Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 (1993). In 
addition, the Board previously has determined by regulation that 
investment advisory activities, when conducted within the 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)(4). Applicant 
maintains that it will conduct all of the proposed activities in 
conformity with the conditions and limitations established by the Board 
by regulation or in prior cases.
    In order to satisfy the proper incident to banking test, section 
4(c)(8) of the BHC Act requires the Board to find that the performance 
of the activities by Applicant 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 interest, or unsound banking practices. 
Applicant believes that the proposed activities will benefit the public 
by promoting competition and lowering costs. Applicant also believes 
that approval of this application will allow Applicant to provide a 
wider range of services and added convenience to its customers. 
Applicant believes that the proposed activities will not result in any 
unsound banking practices or other adverse effects.
    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 23, 
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, May 3, 1995.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 95-11347 Filed 5-8-95; 8:45 am]
BILLING CODE 6210-01-F