Orders issued under Bank Holding Company Act

Federal Reserve Bulletin, Summer, 2004 by Robert DeV. Frierson

In evaluating the statutory factors under the BHC Act, the Board carefully considered the information and views presented by all commenters, including the testimony at the public meetings and the information and views submitted in writing. The Board also considered all the information presented in the applications, notices, and supplemental filings by JP Morgan and Bank One Corporation, various reports led by the relevant companies, publicly available information, and other reports. In addition, the Board reviewed confidential supervisory information, including examination reports of the bank holding companies and the depository institutions involved and information provided by other federal banking agencies, the Securities and Exchange Commission ("SEC"), and the Department of Justice ("DOJ"). After a careful review of all the facts of record, and for the reasons discussed in this order, the Board has concluded that the statutory factors it is required to consider under the BHC Act and other relevant banking statutes are consistent with approval of the proposal.

Interstate Analysis

The Board may not approve an interstate proposal under section 3(d) of the BHC Act if the applicant controls, or upon consummation of the proposed transaction would control, more than 10 percent of the total amount of deposits of insured depository institutions in the United States. On consummation of this proposal, JP Morgan would control approximately 6.7 percent of deposits nationwide. Accordingly, Board approval of this proposal is not barred by the nationwide deposit limitation in section 3(d).

Section 3(d) 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 bank holding company's home state if certain conditions are met. For purposes of the BHC Act, the home state of JP Morgan is New York, (9) and Bank One Corporation's subsidiary banks are located in Arizona, Colorado, Delaware, Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah, West Virginia, and Wisconsin. (10)

Based on a review of all the facts of record, including relevant state statutes, the Board finds that all the conditions for an interstate acquisition enumerated in section 3(d) are met in this case. (11) In light of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act. 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 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. (12)