[Federal Register Volume 59, Number 171 (Tuesday, September 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21819]
[[Page Unknown]]
[Federal Register: September 6, 1994]
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FEDERAL RESERVE SYSTEM
The Bank of New York Company, Inc.; Notice of Applications to
Engage de novo in Permissible Nonbanking Activities; Correction
This notice corrects a notice (FR Doc. 94-16672) published on page
35347 of the issue for Monday, July 11, 1994.
Under the Federal Reserve Bank of New York heading, the entry for
The Bank of New York Company, New York, New York, et al. is revised to
read as follows:
1. The Bank of New York Company, Inc., New York, New York;
BayBanks, Inc., Boston, Massachusetts; The Chase Manhattan Corporation,
New York, New York; Chemical Banking Corporation, New York, New York;
Citicorp, New York, New York; Fleet Financial Group, Inc., Providence,
Rhode Island; HSBC Holdings PLC, London, England; HSBC Holdings BV, The
Netherlands; Marine Midland Banks, Inc., Buffalo, New York; Banco de
Santander, S.A., Madrid, Spain; The Bank of Boston Corporation, Boston,
Massachusetts; First Fidelity Bancorporation, Lawrenceville, New
Jersey; Shawmut National Corporation, Hartford, Connecticut; National
Westminster Bank PLC, London, England; and NatWest Holdings, Inc., New
York, New York (collectively, Applicants), have applied pursuant to
section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 1843(c)(8))
(BHC Act) and Sec. 225.23(a) of the Board's Regulation Y (12 CFR
225.23(a)) to engage through InfiNet Payment Services, Inc.,
Hackensack, New Jersey (Company), in data processing and related
nonbanking activities. Company will be formed through the merger of
NENI Corporation, which operates a retail electronic funds transfer
(EFT) network under the tradename Yankee 24, and The New York Switch
Corporation, which operates the NYCE EFT network under various
tradenames.
In particular, Applicants propose to engage through Company in
operating a retail EFT network, including the provision of automated
teller machine (ATM) services that will permit customers to make
withdrawals, obtain cash advances from lines of credit and credit card
accounts, make deposit account inquiries, make transfers between
accounts, and make deposits to the extent permitted by applicable law.
These ATM services also would include the processing and transmission
of data for bank participants in the network in connection with
financial products offered to customers of such participants that would
allow those customers to transfer funds, by ``sweep'' arrangements or
otherwise, among their deposit accounts at the bank or other securities
accounts maintained with affiliated or unaffiliated mutual fund
companies or securities brokers. Applicants also propose to engage in
various additional activities through Company, including the following:
(1) point of sale (POS) services that will permit customers to use
their ATM cards to purchase goods and services;
(2) point of banking (POB) services that will permit customers to
conduct transactions similar to those available at ATM terminals, but
with the help of a third party;
(3) scrip services, in which a customer receives a voucher (scrip)
that is redeemable for cash at a retail register;
(4) gateway services, by which Company will provide routing of
transaction requests between Company's network and other EFT networks
for participants in Company's network;
(5) group purchasing, in which Company will purchase EFT-related
supplies, such as signage, statement stuffers, and terminals, for the
benefit of the financial institution participants in Company's network;
(6) ownership of ATM terminals to the extent permitted by
applicable state and federal law;
(7) terminal driving services, such as routine database management
and maintenance, problem resolution, telecommunications, help desk
services, hardware maintenance, and currency provision;
(8) card production and issuance, including ordering and embossing
cards, establishing cardholder records, and assigning personal
identification numbers;
(9) electronic benefit transfer (EBT) services, in which recipients
of government benefits such as food stamps and other recurring types of
government transfer payments could access their benefits at ATM and POS
machines through use of a card issued by a government agency;
(10) home banking and bill payment services, in which customers
could use devices such as the telephone, personal computer, or
interactive cable television to conduct a variety of banking
transactions such as transferring money between accounts, opening and
closing accounts, and paying bills, as well as accessing banking,
financial and economic databases from the home or office;
(11) providing certain additional services not generally available
at ATM machines, such as printing full account statements and
dispensing travelers checks and postage stamps;
(12) providing services in connection with stored value cards,
including farecards used by public transportation systems, which are
capable of having value assigned to them by use of a magnetic strip or
computer chip;
(13) check verification services for retailers;
(14) purchasing and reselling or renting electronic equipment used
to perform EFT services; and
(15) electronic data capture and electronic data interchange
services, in which merchants are provided with information relating to
inventory and the buying patterns of customers.
Applicants propose to engage in these activities worldwide. In this
regard, Applicants propose to permit foreign bank affiliates of
domestic banking participants in the network, as well as other foreign
banks, to participate in the network.
Closely Related to Banking Standard
Section 4(c)(8) of the BHC Act provides that a bank holding company
may, with Board approval, engage in any activity ``which the Board
after due notice and opportunity for hearing has determined (by order
or regulation) to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto....'' In
determining whether a proposed activity is closely related to banking
for purposes of the BHC Act, the Board considers, inter alia, the
matters set forth in National Courier Association v. Board of Governors
of the Federal Reserve System, 516 F.2d 1229 (D.C. Cir. 1975). These
considerations are (1) whether banks generally have in fact provided
the proposed services, (2) whether banks generally provide services
that are operationally or functionally so similar to the proposed
services as to equip them particularly well to provide the proposed
services, and (3) whether banks generally provide services that are so
integrally related to the proposed services as to require their
provision in a specialized form. See 516 F.2d at 1237. In addition, the
Board may consider any other basis that may demonstrate that the
activity has a reasonable or close relationship to banking or managing
or controlling banks. Board Statement Regarding Regulation Y, 49
Federal Register 806 (1984).
Applicants maintain that the Board has previously determined that
the majority of the proposed activities are closely related to banking
within the meaning of the BHC Act. Specifically, Applicants maintain
that the proposed ATM services; POS services; gateway services;
terminal driving services; card production and issuance services; home
banking and bill payment services; group purchasing activities; EBT
services; POB services; electronic data capture and interchange
services; scrip services; terminal ownership; and terminal sale,
rental, and maintenance services are data processing and transmission
activities that the Board has determined by regulation to be closely
related to banking. See 12 CFR 225.25(b)(7). See also Banc One
Corporation, et al., 79 Federal Reserve Bulletin 1158 (1993) (Banc
One); BayBanks, Inc., et al., 79 Federal Reserve Bulletin 547 (1993);
Banc One Corporation, et al., 79 Federal Reserve Bulletin 156-57
(1993); BankAmerica Corporation, 78 Federal Reserve Bulletin 299
(1992). Applicants further maintain that the Board also has previously
determined by regulation that the issuance and sale of travelers
checks, and the proposed check verification services, are closely
related to banking. See 12 CFR 225.25(b)(12) and (b)(22). In addition,
Applicants maintain that the Board has previously determined by order
that the proposed stored value card services are closely related to
banking within the meaning of the BHC Act. See Banc One, supra.
Applicants propose to conduct the foregoing activities in accordance
with the limitations set forth in Regulation Y and the Board's prior
orders.
Applicants also maintain that dispensing stamps and full statement
printing are activities closely related to banking because banks
conduct these activities. In this regard, Applicants state that
national banks may operate postal substations pursuant to rulings
issued by the Office of the Comptroller of the Currency. See 12 CFR
7.7482. Applicants further state that banks are required to deliver
periodic account statements to customers under regulations issued by
the Board. See 12 CFR 205.9 and 230.6. In addition, Applicants maintain
that the proposed farecard activities are closely related to banking
because farecards are a form of stored value card and serve as a medium
of exchange.
Proper Incident to Banking Standard
In order to approve the proposal, the Board also must determine
that the proposed activities to be conducted by Company ``can
reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices.'' 12 U.S.C. 1843(c)(8).
Applicants believe that the proposal will produce public benefits
that outweigh any potential adverse effects. In particular, Applicants
maintain that the proposal will enhance customer convenience and
efficiency. In addition, Applicants state that the proposed activities
will not result in adverse effects such as an undue concentration of
resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices.
In publishing the proposal for comment, the Board does not take a
position on issues raised by the proposal. Notice of the proposal is
published solely in order to seek the views of interested persons on
the issues presented by the application, and does not represent a
determination by the Board that the proposal meets or is likely to meet
the standards of the BHC Act.
Any comments or requests for hearing should be submitted in writing
and received by William W. Wiles, Secretary, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551, not later than
September 26, 1994. Any request for a hearing on this application must,
as required by Sec. 262.3(e) of the Board's Rules of Procedure (12 CFR
262.3(e)), be accompanied by a statement of the reasons why a written
presentation would not suffice in lieu of a hearing, identifying
specifically any questions of fact that are in dispute, summarizing the
evidence that would be presented at a hearing, and indicating how the
party commenting would be aggrieved by approval of the proposal.
This application may be inspected at the offices of the Board of
Governors, the Federal Reserve Bank of New York, the Federal Reserve
Bank of Boston, or the Federal Reserve Bank of Philadelphia.
Board of Governors of the Federal Reserve System, effective
August 29, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-21819 Filed 9-2-94; 8:45 am]
BILLING CODE 6210-01-F