Question
(redacted)
October 18, 1999
VIA HAND DELIVERY
Marian Bruno, Esq.
Premerger Notification Office
Room 303
Federal Trade Commission
6th and Pennsylvania Avenue, NW
Washington, D.C. 20580
Re:Reportability of a Foreign Bank Acquisition
Dear Marian:
Thisletter will summarize our telephone conversation of October 13, in which youtentatively concurred that the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a, as amended,would not require notification in the following circumstances.
Theproposed transaction is a purchase of one foreign bank by another foreign bank.The acquiror owns several U.S. banks. The acquired person has one branch and tworepresentative offices in the United States, which were established pursuant tothe International Banking Act of 1978 (?IBA?) (12 U.S.C. 3101 et seq.); the acquired person also has several U.S. affiliates, whichare engaged in permissible non-banking activities and which were establishedpursuant to section 4 of the Bank Holding Company Act (BHCA?) (12 U.S.C. 1843) and section 25(a) of the Federal reserve Act (?FRA?) (12 U.S.C. 611et seq.). Pursuant to each of these banking statues, the entire transactionmust be notified to and approved by Board of Governors of the Federal Reserve system(?Federal Reserve?). All information and documentary material filed with theFederal Reserve in connection with the proposed transaction will becontemporaneously filed with the Federal Trade Commission and with the JusticeDepartment pursuant to section 7A(c)(8) of the HSR Act.
Certainprovisions of the HSR Act and its enabling regulations specifically exemptbanking transactions from reporting, at least insofar as notification to theFederal Reserve is mandated by sections 3 or 4 of the BHCA (12 U.S.C. 1842,1843) and sections 25 or 25(a) of the FRA (12 U.S.C. 601-604a, 611-31.). See Sections 7A(c)(7) and 7A(c)(8) of theHSR Act; see also 16 C.F.R. 802.53. Most of the U.S. part of the proposed transaction falls withingsection 4 of the BHCA and section 25(a) of the FRA and, for this reason, woulde exempt from HSR reporting. The question is whether HSR compliance is requiredwith respect to the small part of this transaction that does not fall withinone of these specific exemptions. In particular, the proposed acquisition ofthe U..S. branch and representative offices of the foreign bank must benotified to and approved by the Federal Reserve pursuant to 12 U.S.C. 3102 et seq, which provision is not include in the banking exemptions of theHSR Act and HSR Rules.
Commentaryto interpretation Number 36 suggests that HSR compliance is required in thesecircumstances only ?as to that portion of the transaction that [does] notrequire Fed approval if it is valued at more than $15 million.? See ABA, PremergerNotification Practice Manual (1991), Interpretation No, 36. In this case,the entire transaction, including the proposed acquisition of a US branchand representative offices of the foreign bank, is required by statues to besubmitted to and approved by the Federal Reserve. If the ABAcommentary is correct , then no separate HSR notification should be required.
Inour conversation, you agreed that the ?common sense? approach would be toconsider the entire transaction exempt from HSR notification requirements. Fullcopies of all Federal Reserve notifications regarding the transaction will becontemporaneously filed with the antitrust enforcement agencies, which makesyour common sense approach particularly compelling. We also believe thisapproach to be commonly accepted understanding of banking practitioners. Afterspeaking with you last week, we also spoke informally with members of theFederal Reserve staff, who advised us that to their knowledge no HSR filing hastake place with respect to any of the banking transactions ? structurallyidentical to the subject transaction ? which have been reviewed by the FederalReserve in recent years.
Pleasecontact me to confirm that the Premerger Notification Office does not considerthis transaction to be subject to HSR reporting requirements. Many thanks foryour time and attention.
Bestregards,
(redacted)
cc: (redacted)