Academic journal article Federal Reserve Bulletin

Orders Issued under International Banking Act

Academic journal article Federal Reserve Bulletin

Orders Issued under International Banking Act

Article excerpt

Anglo Irish Bank Corporation plc Dublin, Ireland

Order Approving Establishment of a Representative Office Anglo Irish Bank Corporation plc ("Bank"), Dublin, Ireland, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. [sections] 3107(a)) to establish a representative office in Boston, Massachusetts. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in Boston, Massachusetts (The Boston Globe, March 29, 1999). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with assets of approximately $6.5 billion,(1) was incorporated in 1964, and became a publicly traded company in 1971. Bank's two largest shareholders, M&G Investments and Scottish Provident International, both institutional investors, own, respectively, 7.7 and 6.7 percent of Bank's shares. The remaining shares of Bank are widely held, with no single shareholder owning more than 5 percent of the shares.

Bank engages in traditional banking activities, serving personal, institutional, and corporate clients. Bank has five offices in Ireland, three offices in the United Kingdom, and one bank subsidiary in each of the Isle of Man and Austria. Operating through a number of subsidiaries, both foreign and domestic, Bank also offers financing, fund management, and trust services.

The proposed representative office would act as a liaison with existing and potential customers of Bank. It would market Bank's products to small and medium-sized corporations. It also would conduct due diligence, assemble credit information, make property inspections and appraisals, and negotiate terms. All transactions would be approved and booked at Bank's head office.

In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside the United States and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [sections] 3107(a)(2); 12 C.F.R. 211.24(d)(2)).(2) In addition, the Board may take into account additional standards set forth in the IBA and Regulation K (12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)).

As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. With respect to home country authorities, the Board previously has determined, in connection with applications involving other banks in Ireland, that those banks were subject to comprehensive home country supervision on a consolidated basis.(3) Bank is supervised by the Central Bank of Ireland on substantially the same terms and conditions as those banks. Based on all the facts of record, the Board has determined that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home country supervisor.

The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). In this regard, the Central Bank of Ireland has no objection to establishment of the proposed representative office. With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operation in its home country, its overall financial resources, and its standing with its home country supervisor, the Board also has determined that financial and managerial factors are consistent with approval of the proposed representative office. …

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