Magazine article American Banker

Fla. Bank Says Fed's Ruling Forced It to Deep-Six Deal

Magazine article American Banker

Fla. Bank Says Fed's Ruling Forced It to Deep-Six Deal

Article excerpt

A bank owned by Ecuadorans and based in Miami claims the Federal Reserve improperly classified it as a foreign bank, forcing it to drop a planned acquisition.

Republic National Bank of Miami squelched its deal to acquire Family Bank of Hallandale, Fla., two weeks ago because the foreign-bank classification would have meant at least a year-long wait for Federal Reserve approval - about three times as long as domestic banks must wait, said Oscar Bustillo Jr., chief executive of the $1.3 billion-asset bank.

"This puts us out of the playing field," he said. "The OCC regulates us and does not consider us a foreign institution, but when we want to buy a bank, we're considered a foreign bank."

However, Bobbie McCrackin, a spokeswoman at the Federal Reserve Bank of Atlanta, contradicted Mr. Bustillo's claim. She said the Fed did not consider Republic National a foreign bank. Its application process might take longer than usual because of a required background check of the bank's foreign owners, she said.

Mr. Bustillo nevertheless said that such a long application process creates anxiety among the target bank's personnel and customers, making a deal not feasible.

Mr. Bustillo visited the Federal Reserve in Washington last November to request a waiver from the Foreign Bank Supervision Enhancement Act of 1991. The law applies to all foreign-owned banks, requiring, among other things, approval from the Federal Reserve for any acquisition of at least 5% of a U. …

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