Academic journal article Federal Reserve Bulletin

Order Issued under Section 3 of the Bank Holding Company Act

Academic journal article Federal Reserve Bulletin

Order Issued under Section 3 of the Bank Holding Company Act

Article excerpt

Hana Financial Group Inc.

Seoul, Republic of Korea

Order Approving Acquisition of Shares of a Bank Holding Company FRB Order No. 2013-4 (August 14, 2013)

Hana Financial Group Inc., Seoul, Republic of Korea ("HFG"), a foreign banking organization subject to the provisions of the Bank Holding Company Act, as amended ("BHC Act"), (1) has requested the Board's approval under section 3 of the BHC Act to acquire up to 71.4 percent of the voting shares of BNB Financial Services Corporation ("BNB"), New York, New York, and indirectly acquire BNB Bank, National Association, Fort Lee, New Jersey, pursuant to section 3(a)(1) of the BHC Act. (2)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (77 Federal Register 48984, August 15, 2012). 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.

HFG, with total assets of approximately $260.4 billion, is the third largest banking organization in Korea. (3) HFG, through its subsidiaries, Hana Bank and Korea Exchange Bank ("KEB"), both of Seoul, engages in a broad range of banking and financial services throughout the world, including retail and commercial banking, corporate and investment banking, asset management, insurance-related activities, leasing, foreign exchange, and trade finance.

Internationally, HFG operates through its branches and subsidiaries in five continents, including Asia, Australia, Europe, and North and South America. In the United States, Hana Bank operates an uninsured New York state-licensed agency. HFG also maintains nonbanking subsidiaries in the United States. (4)

HFG is a qualifying foreign banking organization and, upon consummation of the proposal, would continue to meet the requirements for a qualifying foreign banking organization under Regulation K. (5)

BNB, with total consolidated assets of $320.1 million, owns BNB Bank and a non-bank subsidiary, BNB Statutory Trust I ("BNB Trust"), also of New York, New York. (6) BNB Bank provides general commercial banking services to individuals and small--and medium-sized businesses through its three branches, two in New Jersey and one in New York. The bank also has two loan production offices in New Jersey.

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 communities to be served, including the records of performance of the insured depository institutions involved in the transaction under the Community Reinvestment Act ("CRA"); (7) the effects of the acquisition on financial stability; 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 Hana Bank, whether the foreign bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor. (8)

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or would be in furtherance of any attempt to monopolize the business of banking in any relevant banking market. The BHC Act also prohibits the Board from approving a proposal that would substantially lessen competition in any relevant banking market, unless the anticompetitive effects of the proposal clearly are outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. …

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