Orders issued under Bank Holding Company Act - Legal Developments - Allied Irish Banks P.L.C. to acquire share of M&T's subsidiary banks

Federal Reserve Bulletin,  May, 2003  by Robert DeV. Frierson

• E-mail
• Print
• Link

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly. The BHC Act also prohibits the Board from approving a proposed bank acquisition that would substantially lessen competition in any relevant banking market unless the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. (9) This proposal represents an internal reorganization of existing operations and would not result in either an expansion of operations or an acquisition of an additional bank in the United States. Based on all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market.

Financial and Managerial Considerations

The Board has carefully considered the financial and managerial resources and future prospects of Wakashio, SMBC, and Bank and the effect the proposed transaction would have on such resources in light of all the facts of record, which include the examination records of Bank. The Board has also consulted with the FSA. The transaction confers some accounting and regulatory benefits in Japan under standards applied by the FSA.

No expansion or restructuring of existing U.S. operations would result from the proposed reorganization. In addition, the proposal would not materially affect the management of SMBC's operations, including its subsidiary insured depository institution, in the United States. The corporate reorganization would be effected through the exchange of shares. No debt would be issued by Wakashio, SMBC, or any of its subsidiaries as part of the transactions that would effect the reorganization. This transaction results in no substantive change in the capital of SMBC.

In this light, and based on all the facts of record, the Board concludes that the financial and managerial resources and future prospects of Wakashio, SMBC, and Bank are consistent with approval.

Convenience and Needs Factor

The Board has carefully considered the effects of the proposal on the convenience and needs of the communities to be served in light of all the facts of record, including a comment received on the proposal, information on the performance under the CRA of the relevant subsidiary insured depository institution received from the Federal Deposit Insurance Corporation ("FDIC"), publicly available data, and information submitted by Wakashio. As noted above, the U.S. operations of SMBC and Bank would remain unaffected by the proposed reorganization.

The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the CRA. As provided in the CRA, the Board evaluates an institution's record of performance in light of examinations by the appropriate federal supervisor. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor. (10)