Orders issued under Bank Holding Company Act - Legal Developments - acquisition of RBC Centura Bank by Royal Bank of Canada

Federal Reserve Bulletin, August, 2002 by Robert DeV. Frierson

(10.) One commenter noted a news article that stated that Royal Bank refunded $17 million to some of its Visa cardholders due to confusion by the company on how to treat the calculation of interest charges accruing to new purchases when an account is paid in full by the cardholder. RBC stated that it voluntarily refunded the money after the matter came to its attention and confirmed that the company amended the cardholder agreement to eliminate any confusion.

The commenter also referred to a general news article on taxpayers' evasion of U.S. taxes through the misuse of offshore credit cards. The commenter stated that Royal Bank issues credit cards from some jurisdictions discussed in the news article, but provided no evidence of improper or illegal behavior by Royal Bank. Royal Bank has indicated that it maintains strict "source of funds" guidelines and "know your client" rules and makes clear to any potential client participating in Royal Bank's international private banking operations that clients are obligated to declare income in their home countries and may be liable for tax. Royal Bank also has cooperated with the Internal Revenue Service in its investigation of these practices.

(11.) One commenter alleged that an insurance company subsidiary of RBC, Liberty Life Insurance Co. of Greenville, South Carolina ("Liberty Life"), discriminated against African American clients by charging them higher premiums than white clients. This matter is currently under review before the Administrative Law Judge Division of the South Carolina Department of Insurance. The Board will monitor the proceeding and take whatever action might be appropriate based on the determinations of Liberty Life's primary regulator in any final adjudication.

(12.) The Atlanta banking market is defined as the counties of Bartow, Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Hall (excluding the town of Clermont), Henry, Newton, Paulding, Rockdale and Walton; and the towns of Auburn and Winder in Barrow County.

(13.) Tucker's deposits are weighted at 50 percent before and 100 percent after the merger.

(14.) Under the Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is between 1000 and 1800 is considered to be moderately concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal thresholds for an increase in the HHI when screening bank mergers and acquisitions for anticompetitive effects implicitly recognize the competitive effects of limited-purpose and other nondepository financial entities.

(15.) In response, Bank noted that banks and other companies that provide payday lending services maintain ordinary deposit accounts with Bank. However, Bank stated that it does not engage in payday lending activities directly, does not offer or have agency arrangements with any third-party payday lenders, and has not made loans to payday lenders.