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

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Allfirst, with total consolidated assets of $18.3 billion, is the 46th largest commercial banking organization in the United States, controlling less than 1 percent of total banking assets. The banks owned by Allfirst operate in Delaware, the District of Columbia, Maryland, Pennsylvania, and Virginia. Allfirst is the second largest banking organization in Maryland, controlling deposits of $7.5 billion, representing approximately 10.6 percent of state deposits, and the eighth largest banking organization in Pennsylvania, controlling deposits of $3.6 billion, representing approximately 1.9 percent of state deposits.

After consummation of the proposal, M&T would become the 22nd largest commercial banking organization in the United States, with total consolidated assets of $52.4 billion, representing less than 1 percent of total banking assets. M&T would remain the sixth largest banking organization in Pennsylvania, controlling deposits of $8.1 billion, representing approximately 4.3 percent of state deposits, and the second largest banking organization in Maryland, controlling deposits of approximately $8 billion, representing approximately 11.3 percent of state deposits. (6)

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to 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 if certain conditions are met. The Board may not approve a proposal subject to section 3(d) if, after consummation, the applicant would control more than 10 percent of the total deposits of insured depository institutions in the United States. (7) In addition, the Board may not approve a proposal if, after consummation of the proposal, the applicant would control 30 percent or more of the total deposits of insured depository institutions in any state in which both the applicant and the organization to be acquired operate an insured depository institution, or such higher or lower percentage as established by state law. (8)

For purposes of the BHC Act, the home state of M&T is New York, the home state of Allfirst is Maryland, and Allfirst's subsidiary banks are located in Delaware, the District of Columbia, Maryland, Pennsylvania, and Virginia. (9) On consummation of the proposal, M&T would control less than 1 percent of the total deposits of insured depository institutions in the United States. (10) M&T would control less than 30 percent of total deposits held by insured depository institutions in Maryland or Pennsylvania, the only states in which both M&T and Allfirst operate banks. (11)

All other requirements of section 3(d) of the BHC Act are met. M&T is adequately capitalized and adequately managed, as defined by applicable law. In addition, Allfirst's subsidiary banks have been in existence for the minimum age requirements established by applicable state law. (12) Based on a review of all the facts of record, including a review of relevant state statutes, the Board finds that all conditions for an interstate acquisition enumerated in section 3(d) are met in this case. In light of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.