[Federal Register Volume 60, Number 36 (Thursday, February 23, 1995)]
[Notices]
[Pages 10084-10085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4348]



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FEDERAL RESERVE SYSTEM

Swiss Bank Corporation, Basel, Switzerland; Application to Engage 
in Nonbanking Activities

    Swiss Bank Corporation, Basel, Switzerland (Applicant) has applied, 
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 
Sec.  1843(c)(8)) (BHC Act) and 225.23(a)(3) of the Board's Regulation 
Y (12 CFR 225.23(a)(3)), to acquire and retain indirect ownership, 
control and power to vote up to 100 percent of the voting shares of 
Brinson Partners, Inc. (Brinson Partners) and Brinson Trust Company 
(Brinson Trust) and to thereby to engage in the following nonbanking 
activities: (1) providing investment and financial advisory services; 
(2) providing investment advice to nonaffiliated persons with respect 
to (A) the purchase and sale of financial futures contracts and options 
on such futures contracts as set forth in 12 CFR 225.25(b)(19), and (B) 
the purchase and sale of those futures contracts and options on futures 
contracts based on bonds, interest rates and stock and bond indexes 
that the Board has approved previously; and (3) providing trust company 
services. Applicant proposes to provide investment advice to clients 
directly and through limited partnerships, for which Brinson Partners 
would act as investment advisor and in some cases as general partner.
    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, determines 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 
standard 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. 
[[Page 10085]] 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).
    The Board has previously approved, by regulation, providing 
investment and financial advisory services, 12 CFR 225.25(b)(4)(i)-(v) 
and (vi)(A)(1) and (2), providing investment advice to non-affiliated 
persons with respect to the purchase and sale of financial futures 
contracts and options on such futures contracts, 12 CFR 225.25(b)(19) 
and trust services, 12 CFR 225.25(b)(3). Applicant has stated that it 
would conduct these proposed activities subject to the requirements and 
limitations of the Board's Regulation Y.
    The Board also has previously determined by order that the 
provision of investment advisory services with respect to financial 
futures and options on futures contracts on bonds, interest rates and 
stock and bond indexes is a permissible activity pursuant to Section 
4(c)(8) of the BHC Act. See SR 93-27; National Westminster Bank PLC, 78 
Federal Reserve Bulletin 953 (1992); Manufacturers Hanover Corporation, 
76 Federal Reserve Bulletin 774 (1990); and The HongKong and Shanghai 
Banking Corporation, 76 Federal Reserve Bulletin 770 (1990). The Board 
has also approved the providing of investment advice through limited 
partnerships. See Meridian Bancorporation, 80 Federal Reserve Bulletin 
736 (1994). Applicant proposes to comply with commitments similar to 
those relied on by the Board in Meridian, but seeks, in the 
alternative, a determination that Brinson Partners does not control the 
limited partnerships for purposes of the Bank Holding Company Act, or, 
if it is deemed to control the partnerships, ``grandfather'' treatment 
for four existing limited partnerships that Brinson Partners serves as 
general partner.
     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 Company 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 providing access by customers of Applicant to the institutional 
asset management experience and expertise of Brinson Partners and by 
permitting Applicant to draw on such experience and expertise to 
enhance its investment advisory products and services. Applicant 
believes that competition will be fostered by enhancing the ability of 
Applicant to compete in the asset management arena with sophisticated 
competitors as a result of the combination of Applicant's existing 
institutional asset management business with that of Brinson Partners 
and Brinson Trust. Applicant further believes that the proposal will 
not result in 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 in order 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 March 8, 
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, February 16, 
1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-4348 Filed 2-22-95; 8:45 am]
BILLING CODE 6210-01-F