Academic journal article Federal Reserve Bulletin

Order Approving the Formation of a Bank Holding Company, the Acquisition of a Bank Holding Company, and Determination on a Financial Holding Company Election: FRB Order No. 2015-28 (October 7, 2015)

Academic journal article Federal Reserve Bulletin

Order Approving the Formation of a Bank Holding Company, the Acquisition of a Bank Holding Company, and Determination on a Financial Holding Company Election: FRB Order No. 2015-28 (October 7, 2015)

Article excerpt

Royal Bank of Canada

Montreal, Canada

Royal Bank of Canada ("RBC"), Montreal, Canada, a foreign banking organization and bank holding company that has elected to be a financial holding company within the meaning of the Bank Holding Company Act of 1956 ("BHC Act"), (1) and its subsidiary, RBC USA Holdco Corporation ("RBC USA Holdco," and together with RBC, "Applicants"), New York, New York, have requested the Board's approval under section 3 of the BHC Act (2) to acquire City National Corporation ("City National") and thereby indirectly acquire its subsidiary bank, City National Bank, both of Los Angeles, California. As part of the proposal, RBC USA Holdco will become a bank holding company. RBC USA Holdco also has filed with the Board an election to become a financial holding company pursuant to sections 4(k) and (l) of the BHC Act and section 225.82 of the Board's Regulation Y. (3)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (80 Federal Register 16010 (March 26, 2015)). (4) The time for submitting 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.

RBC, with consolidated assets of approximately $832 billion, is the second largest bank in Canada by asset size. (5) RBC provides retail and commercial banking, wealth management, insurance, investment banking, and transaction-processing services on a global basis. Internationally, RBC operates on six continents. In the United States, RBC controls RBC Bank (Georgia), National Association ("RBC Bank Georgia"), Atlanta, Georgia. RBC Bank Georgia operates only in Georgia. RBC Bank Georgia is the eighth largest depository institution in Georgia, controlling deposits of approximately $2.7 billion, which represent 1.4 percent of the total deposits of insured depository institutions in that state. (6) RBC operates branches in New York; a state-licensed agency in Texas; and representative offices in California, Delaware, Texas, and Washington. RBC 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 the Board's Regulation K. (7)

City National, with consolidated assets of approximately $33.8 billion, is the 52nd largest insured depository organization in the United States, controlling approximately $28.5 billion in deposits. City National controls City National Bank, which operates in California, Georgia, Nevada, New York, and Tennessee. City National Bank is the 214th largest insured depository institution in Georgia, controlling deposits of approximately $47 million, which represent less than 1 percent of the total deposits of insured depository institutions in that state.

On consummation of this proposal, RBC's U.S. operations would have approximately $172 billion in consolidated assets, which represent less than 1 percent of the total assets of insured depository institutions in the United States. RBC USA Holdco would control total deposits of approximately $28.1 billion, which represent less than 1 percent of the total amount of deposits of insured depository institutions in the United States. In Georgia, RBC would remain the eighth largest depository organization, controlling deposits of approximately $2.8 billion, which represent 1.4 percent of the total deposits of insured depository institutions in that state.

Interstate and Deposit Cap Analysis

Section 3(d) of the BHC Act generally provides that, if certain conditions are met, the Board may approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of the bank holding company without regard to whether the transaction is prohibited under state law. (8) Under this section, the Board may not approve an application that would permit an out-of-state bank holding company to acquire a bank in a host state if the bank has not been in existence for the lesser of the state statutory minimum period of time or five years. …

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