Orders Issued Under International Banking Act - Banco BBA-Creditanstalt S.A. to open representative office in New York, New York - Statistical Data Included

Federal Reserve Bulletin, July, 1999

Banco BBA-Creditanstalt S.A. Sao Paulo, Brazil

Order Approving Establishment of a Representative Office Banco BBA-Creditanstalt S.A. ("Bank"), Sao Paulo, Brazil, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. [sections] 3107(a)) to stablish a representative office in New York, New York. 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 representative office in the United States.

Notice of the application, affording interested persons an opportunity to submit comments, has been published in a newspaper of general circulation in New York, New York (New York Post, February 13, 1998). The time for filing comments has expired, and the Board has considered the application and all comments received.

Bank, with assets of approximately $6.8 billion,(1) was incorporated in Brazil in 1988. Bank engages in a full range of commercial and investment banking activities. In addition, through subsidiaries, Bank provides consumer loans and private banking services. Bank operates five banking offices in Brazil, a branch in Nassau, the Bahamas, and a representative office in Buenos Aires, Argentina. Bank recently received approval from the U.K. Financial Services Authority to establish a representative office in London, England.

Bank is a subsidiary of BBA Participacoes S.A. ("Participacoes"), Sao Paulo, Brazil, a holding company, and Bank Austria Aktiengesellschaft ("Bank Austria"), Vienna, Austria. Participacoes owns a registered brokerdealer, BBA Securities Corp., in New York, New York. Bank Austria operates branches in Greenwich, Connecticut, and New York, New York; representative offices in Atlanta, Georgia, Chicago, Illinois, and San Francisco, California; and owns several U.S. subsidiaries that engage in nonbanking activities in accordance with the Bank Holding Company Act ("BHC Act") and Regulation Y.(2)

The proposed representative office would solicit new business, conduct research, and act as a liaison between Bank's head office in Brazil and customers in the United States.

In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages directly in the business of banking outside 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 is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. [sections] 3107(a)(2); 12 C.F.R. 211.24(d)(2)).(3) In addition, the Board may take into account additional standards 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)). The Board previously has stated that the standards that apply to the establishment of a branch or agency need not in every case apply to the establishment of a representative office, because representative offices do not engage in a banking business and cannot take deposits or make loans.(4)

With respect to home country supervision of Bank, the Board has considered the following information. Bank is subject to the regulatory and supervisory authority of the Central Bank of Brazil ("Central Bank"), which has primary responsibility for the regulation of financial institutions in Brazil. The Central Bank has no objection to Bank's establishment of the proposed representative office. The Board has previously determined that the Central Bank exercises a significant degree of supervision over the activities of two other Brazilian banks, both of which were approved to establish representative offices in the United States.(5) The Board has determined that Bank is supervised by the Central Bank on substantially the same terms and conditions as the other Brazilian banks.

Bank Austria is subject to the supervisory authority of the Austrian Federal Ministry of Finance ("Ministry") and the Austrian National Bank. The Board has previously determined that the Austrian supervisors exercise a significant degree of supervision over the activities of Bank Austria in connection with the establishment of a representative office in Chicago, Illinois.(6)

Based on all the facts of record, the Board has determined that factors relating to the supervision of Bank and Bank Austria by their respective home country supervisors are consistent with approval of the proposed representative office.

The Board also has determined that for the purposes of the IBA and Regulation K, Bank and Bank Austria engage directly in the business of banking outside of the United States. Bank and its parent companies have provided the Board with information necessary to assess the application through submissions that address the relevant issues.

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)). As noted above, the Central Bank has no objection to Bank's establishment of the proposed representative office. The Board also has determined that financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the experience and capacity to support the proposed representative office and has established controls and procedures for the proposed representative office to ensure compliance with U.S. law.