Orders Issued under Bank Holding Company Act

Article excerpt

Orders Issued Under Section 3 of the Bank Holding Company Act

The Royal Bank of Scotland Group plc Edinburgh, Scotland

The Royal Bank of Scotland plc Edinburgh, Scotland

RBSG International Holdings Ltd. Edinburgh, Scotland

Citizens Financial Group, Inc. Providence, Rhode Island

Order Approving the Acquisition of Bank Holding Companies

The Royal Bank of Scotland Group plc ("RBS Group"), The Royal Bank of Scotland plc ("RBS"), RBSG International Holdings Ltd., and Citizens Financial Group, Inc. ("Citizens") (collectively, "Applicants") have requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (12 U.S.C. [section] 1842) to acquire all the voting shares of Port Financial Corp., Brighton, Massachusetts ("Port"), and thereby indirectly acquire Cambridgeport Bank; and up to 9.9 percent of Cambridge Bancorp ("Cambridge"), which controls Cambridge Trust Company, all in Cambridge, Massachusetts. (1)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (66 Federal Register 26,297 (2003)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

RBS Group, with total consolidated assets equivalent to approximately $663 billion, is the fifth largest banking organization in the world. (2) Citizens, with total consolidated assets of $67 billion, is the 20th largest commercial banking organization in the United States. (3) Citizens operates subsidiary depository institutions in Rhode Island, Massachusetts, Connecticut, New Hampshire, Delaware, and Pennsylvania that control approximately $45.7 billion in deposits, representing approximately 1 percent of total deposits in insured depository institutions in the United States ("total U.S. insured deposits"). (4)

Port operates one subsidiary depository institution in Massachusetts that controls $1.1 billion in deposits, representing less than 1 percent of total U.S. insured deposits. On consummation of this proposal, Citizens, with total consolidated assets of $68.5 billion, would remain the 20th largest commercial banking organization in the United States, controlling deposits of $46.8 billion. (5)

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank holding company or bank located in a state other than the home state of the applicant if certain conditions are met. The Board may not approve a proposal subject to section 3(d) if, after consummation, the applicant would control more than 10 percent of total U.S. insured deposits. (6) In addition, the Board may not approve a proposal if, after consummation, the applicant would control 30 percent or more of the total deposits in insured depository institutions in any state in which both the applicant and the organization to be acquired operate insured depository institutions, or such higher or lower percentage as established by state law. (7)

For purposes of the BHC Act, the home state of Citizens is Rhode Island and the home state of Port and Cambridge is Massachusetts. Based on a review of all the facts of record, including a review of relevant state statutes, the Board finds that all conditions for an interstate acquisition enumerated in section 3(d) are met in this case. (8) In light of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Factors Under the Bank Holding Company Act

The BHC Act sets forth the factors that the Board must consider when reviewing the formation of bank holding companies or the acquisition of banks. These factors are the competitive effects of the proposal in the relevant geographic markets; the convenience and needs of the community to be served, including the records of performance of the insured depository institutions involved in the transaction under the Community Reinvestment Act ("CRA"); (9) the financial and managerial resources and future prospects of the companies and banks involved in the proposal; the availability of information to determine and enforce compliance with the BHC Act and other applicable federal banking laws; and, in the case of applications involving a foreign bank such as RBS, whether the foreign bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. …