[Federal Register Volume 59, Number 194 (Friday, October 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24880]
[[Page Unknown]]
[Federal Register: October 7, 1994]
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FEDERAL RESERVE SYSTEM
Bank South Corporation, Atlanta, GA, et al.
Bank South Corporation, Atlanta, Georgia; Barnett Banks, Inc.,
Jacksonville, Florida; SunTrust Banks, Inc., Atlanta, Georgia; Synovus
Financial Corp., Columbus, Georgia; TB&C Bancshares, Inc., Columbus,
Georgia; BB&T Financial Corporation, Wilson, North Carolina; First
Citizens Bancshares, Inc., Raleigh, North Carolina; First Union
Corporation, Charlotte, North Carolina; NationsBank Corporation,
Charlotte, North Carolina; Southern National Corporation, Lumberton,
North Carolina; and Wachovia Corporation, Winston-Salem, North Carolina
(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 expand the
data processing services provided by Southeast Switch, Inc., Maitland,
Florida (Company), which operates the Honor electronic funds transfer
(EFT) network pursuant to section 225.25(b)(7) of the Board's
Regulation Y.
Applicants currently engage through Company and its subsidiary,
Specialty Network Services, Inc., Maitland, Florida, in card production
and related services to entities that are members of the Honor EFT
network. Applicants now propose to provide card production and related
services to entities that are not members of the Honor EFT network. The
proposed card production services would include ordering magnetically
striped and integrated circuit plastic cards (including plastic cards
sometimes referred to as stored value cards) from card manufacturers,
embossing the cards with the name and account numbers of cardholders,
encoding information on the cards' magnetic strips, hot stamping cards,
and generating and assigning personal identification numbers.
Applicants propose to engage in this activity throughout the United
States.
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 FR 806 (1984).
Applicants maintain that the proposed activities are closely
related to banking within the meaning of the BHC Act. Specifically,
Applicants maintain that the Board has previously authorized bank
holding companies to provide data processing services to nonfinancial
customers. See, e.g., Citicorp, 72 Federal Reserve Bulletin 497 (1986).
In addition, Applicants maintain that the Board has authorized card
embossing and issuance functions with respect to medical benefits cards
issued by payer organizations. Banc One Corporation, 80 Federal Reserve
Bulletin 139 (1994). In addition, Applicants maintain that the Board
has authorized card embossing and encoding functions with respect to
stored value cards for nonfinancial institutions. Banc One Corporation,
79 Federal Reserve Bulletin 1158 (1993). Applicants further maintain
that the data embossed on the type of cards that are the subject of
this application are banking, economic, or financial data that permit
the cardholder to initiate or consummate a banking or financial
transaction, and that the identity of the customer does not change the
financial nature of the information being encoded and processed.
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, DC 20551, not later than November
1, 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 Atlanta, or the Federal Reserve
Bank of Richmond.
Board of Governors of the Federal Reserve System, October 3,
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-24880 Filed 10-6-94; 8:45 am]
BILLING CODE 6210-01-F