Orders issued under Bank Holding Company Act

Federal Reserve Bulletin, Wntr, 2005 by Robert De V. Frierson

Orders Issued Under Section 3 of the Bank Holding Company Act

Barclays PLC

London, England

Barclays Bank PLC

London, England

Barclays Group US Inc.

Wilmington, Delaware

Order Approving the Formation of Bank Holding Companies and Acquisition of a Bank Holding Company

Barclays PLC ("Barclays") and its subsidiaries, Barclays Bank PLC ("Barclays Bank") and Barclays Group US Inc. ("Barclays US") (collectively, "Applicants"), have requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") to become bank holding companies and to acquire Juniper Financial Corp. ("Juniper") and its subsidiary bank, Juniper Bank ("Juniper Bank"), both in Wilmington, Delaware. (1)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (69 Federal Register 56,067 (2004)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

Barclays, with total consolidated assets of approximately $901 billion, is the 11th largest banking organization in the world. (2) Barclays operates branches in New York and Miami and representative offices in New York, San Francisco, and Washington, D.C. Juniper Bank, with consolidated assets of approximately $437 million, is the 21st largest depository organization in Delaware, controlling $326.8 million in deposits. (3)

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or would be in furtherance of any attempt to monopolize the business of banking in any relevant banking market. 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 Board finds that 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. (4)

Applicants do not currently engage in retail banking activities in the United States and, therefore, do not compete with Juniper Bank in any relevant banking market. Accordingly, the Board concludes, based on all the facts of record, 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 and that competitive considerations are consistent with approval.

Financial, Managerial, and Supervisory Factors

Section 3 of the BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and depository institutions involved in the proposal and certain other supervisory factors. The Board has carefully considered these factors in light of all the facts of record, including confidential supervisory and examination information from the various U.S. banking supervisors of the institutions involved, publicly reported and other financial information, information provided by Applicants, and public comment on the proposal. (5) In addition, the Board consulted with the Financial Services Authority ("FSA"), which is responsible for the supervision and regulation of financial institutions in the United Kingdom.

In evaluating financial factors in expansion proposals by banking organizations, the Board reviews the financial condition of the organizations involved on both a parentonly and consolidated basis and the financial condition of the subsidiary banks and significant nonbanking operations. In this evaluation, the Board considers a variety of areas, including capital adequacy, asset quality, and earnings performance. In assessing financial factors, the Board consistently has considered capital adequacy to be especially important. The Board also evaluates the financial condition of the combined organization on consummation, including its capital position, asset quality, earnings prospects, and the impact of the proposed funding of the transaction. Based on its review of these factors, the Board finds that Applicants have sufficient financial resources to effect the proposal. The capital levels of Barclays Bank would continue to exceed the minimum levels that would be required under the Basel Capital Accord and its capital levels are considered equivalent to the capital levels that would be required of a U.S. banking organization. Furthermore, Juniper Bank is well capitalized and would remain so on consummation of the proposal. The proposed transaction is structured as a share purchase, and the consideration to be received by Juniper's shareholders would be funded from Applicants' existing cash resources.

The Board also has considered the managerial resources of Applicants, Juniper, and Juniper Bank, particularly the supervisory experience of the other relevant banking supervisory agencies with the organizations and their records of compliance with applicable banking laws. The Board has reviewed assessments by the relevant federal and state banking supervisory agencies of the organizations' management and of the risk-management systems of the Applicants' U.S. operations and of the operations of Juniper and Juniper Bank. The Board also has considered Applicants' plans to integrate Juniper and Juniper Bank and Applicants' proposed business plan for, and management structure of, Juniper Bank.