Orders Issued Under International Banking Act - Bank Austria Aktiengesellschaft receives approval to establish a federally licensed branch in Greenwich, Connecticut

Federal Reserve Bulletin, Jan, 2000

Bank Austria Aktiengesellschaft Vienna, Austria

Order Approving Establishment of a Branch and Representative Offices

Bank Austria Aktiengesellschaft ("Bank"), Vienna, Austria, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. 3105(d)) to establish a federally licensed branch in Greenwich, Connecticut. Bank has also applied under section 10(a) of the IBA (12 U.S.C. [sections] 3107(a)) to establish representative offices in Atlanta, Georgia; and San Francisco, California. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a branch or representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, was published on November 27, 1998, in a newspaper of general circulation in Greenwich, Connecticut (Greenwich Time); Atlanta, Georgia (Atlanta Journal and Constitution); and San Francisco, California (San Francisco Chronicle). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with total consolidated assets of $130 billion, is the largest bank in Austria.(1) Anteilsverwaltung-Zentralsparkasse ("AV-Z"), an Austrian holding company, is Bank's largest shareholder.(2) Bank engages directly and indirectly in a number of banking, financial, and other activities in Europe, Asia, and the United States. In the United States, Bank operates a federal branch in New York, New York; a representative office in Chicago, Illinois; and several nonbank subsidiaries. Bank is a qualifying foreign banking organization within the meaning of Regulation K (12 C.F.R. 211.23(b)).

In September 1998 Bank merged with Creditanstalt Aktiengesellschaft, Vienna, Austria, which, up until the merger, operated a branch in Greenwich, Connecticut; and representative offices in Atlanta, Georgia; and San Francisco, California. Bank has requested authority to retain and operate these offices through this application. Pursuant to Regulation K, the Board allowed the merger to proceed before an application to establish the offices was filed and acted on by the Board.(3)

In order to approve an application by a foreign bank to establish a branch or representative office in the United States, the IBA and Regulation K require the Board to determine that the foreign bank applicant engages directly in the business of banking outside of the United States, and has furnished to the Board the information it needs to assess the application adequately. The Board also shall take into account whether the foreign bank and any foreign bank parent are subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [subsections] 3105(d)(2), 3107(a)(2); 12 C.F.R. 211.24(d)(2), 211.24(c)(1)).4 The Board may also take into

account additional standards as set forth in the IBA and Regulation K (12 U.S.C. [sections] 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)-(3)).

As noted above, Bank engages directly in the business of banking outside the United States. Bank also has provided the Board with information necessary to assess the application through submissions that address the relevant issues. With respect to supervision by home country authorities, the Board previously has determined, in connection with applications involving other banks in Austria, that those banks were subject to home country supervision on a consolidated basis.(5) Bank is supervised by the Austrian Federal Ministry of Finance (the "Ministry") and the Austrian National Bank on substantially the same terms and conditions as those other banks. Based on all the facts of record, the Board has determined that Bank is subject to comprehensive supervision on a consolidated basis by its home country supervisor.

The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. [sections] 3105(d) (3)-(4); 12 C.F.R. 211.24(c)(2)-(3). The ministry has no objection to the establishment of the proposed branch and representative offices.

With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board has also determined that financial and managerial factors are consistent with approval of the proposed branch and representative offices. Bank appears to have the experience and capacity to support the proposed branch and representative offices and has established controls and procedures for the proposed offices to ensure compliance with U.S. law.

With respect to access to information about Bank's operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities regarding access to information. Bank and its parent have committed to make available to the Board such information on the operations of Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited by law, Bank and its parent have committed to cooperate with the Board to obtain an), necessary consents or waivers that might be required front third parties for disclosure of such information. In addition, subject to certain conditions, the Ministry may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information that the Board may request.