Orders Issued Under Bank Holding Company Act

Federal Reserve Bulletin, August, 2000 by Robert Dev. Frierson

Orders Issued Under Section 3 of the Bank Holding Company Act

Banco Comercial Portugues, S.A. Oporto, Portugal

Banco Portugues do Atlantico, S.A. Oporto, Portugal

BCP-IF S.G.P.S., Lda Lisbon, Portugal

BPA Internacional, S.G.P.S. Sociedade Unipessoal Lda Funchal, Madeira, Portugal

Banco Portugues do Atlantico (USA), Inc. Newark, New Jersey

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

Banco Comercial Portugues, S.A. ("Banco Comercial"), Banco Portugues do Atlantico, S.A. ("Atlantico"), BCP-IF S.G.P.S., Lda, BPA Internacional, S.G.P.S. Sociedade Unipessoal Lda, and Banco Portugues do Atlantico (USA), Inc. ("BPA-USA") (collectively, "Applicants"), have requested the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Act") (12 U.S.C. [sections] 1842(a)(1)) to become bank holding companies by acquiring up to 100 percent of the voting shares of BPABank, National Association, Newark, New Jersey ("Bank"), a de novo national bank to be established by Atlantico.(1) BPA-USA would be the direct parent company of Bank.

Notice of the application, affording interested persons an opportunity to comment, has been published (64 Federal Register 53,390 (1999)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors enumerated in section 3 of the BHC Act.

Banco Comercial, with consolidated assets of $62 billion, is the largest banking organization in Portugal.(2) Atlantico, a Banco Comercial subsidiary, operates internationally through numerous branches and agencies, including a state-licensed branch in New York, New York, and a state-licensed agency in Miami, Florida. Through their subsidiaries and affiliates, Banco Comercial and Atlantico also engage in and outside Portugal in a variety of nonbanking activities, including asset management, real estate and equipment leasing, and investment banking.

Competitive and Convenience and Needs Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly. The BHC Act also prohibits the Board from approving a proposed acquisition that would substantially lessen competition or tend to create a monopoly in any relevant banking market, unless the anticompetitive effects of the proposal clearly are outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served.(3)

Consummation of the proposed transaction would result in the establishment of a de novo bank in the relevant banking market and thereby would increase the number of alternative sources of banking products and services available to customers. In addition, the Board previously has noted that the establishment of a de novo bank enhances competition in affected banking markets and reflects positively on competitive considerations in an application under section 3 of the BHC Act.(4) Moreover, there is no evidence that the proposed transaction would create or further a monopoly or lessen competition in any relevant banking market. Accordingly, the Board concludes 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.(5)

The BHC Act also requires the Board to consider the effect of the transaction on the convenience and needs of the communities to be served, and the Board has reviewed the information presented by Banco Comercial related to the convenience and needs factor. The Board concludes, based on all the facts of record, that the considerations relating to the convenience and needs of the communities to be served are consistent with approval.

Financial, Managerial, and Supervisory Considerations

The BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in a bank acquisition proposal. In assessing the financial and managerial strength of Banco Comercial. Atlantico, and their affiliates, the Board has reviewed information provided by Applicants, confidential supervisory and examination information, and publicly reported and other financial information. The capital ratios of Banco Comercial and Atlantico exceed the minimum levels that would be required under the Basle Capital Accord and are considered equivalent to the capital ratios that would be required of a U.S. banking organization. In light of these and all the facts of record, the Board concludes that the financial and managerial resources and future prospects of Applicants and Bank are consistent with approval.

Section 3 of the BHC Act also provides that the Board may not approve an application involving a foreign bank unless the bank is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country."(6) The home country supervisor of Banco Comercial is the Bank of Portugal. In approving applications under the BHC Act and the IBA, the Board has determined that other Portuguese banks were subject to comprehensive consolidated supervision by the Bank of Portugal.(7) In this case, the Board finds that the Bank of Portugal supervises Banco Comercial in substantially the same manner as it supervises those other banks. Based on this finding and all the facts of record, the Board concludes that Banco Comercial is subject to comprehensive supervision on a consolidated basis by their home country supervisor.