Orders Issued Under International Banking Act

Federal Reserve Bulletin, Sept, 2000 by Jennifer J. Johnson

Deutsche Hyp Deutsche Hypothekenbank Frankfurt-Hamburg AG Frankfurt, Germany

Order Approving Establishment of a Representative Office

Deutsche Hyp Deutsche Hypothekenbank Frankfurt-Hamburg AG ("Bank"), Frankfurt, Germany, 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 establish a representative office in New York, New York. The Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), 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 (The New York Times, March 15, 2000). The time for filing comments has expired, and all comments have been considered.

Bank, with total consolidated assets of $93 billion, is the 16th largest bank in Germany. Dresdner Bank AG, Frankfurt, Germany ("Dresdner") owns approximately 95 percent of the voting stock of Bank. A chartered mortgage bank, Bank engages primarily in real estate and public sector financing activities in Germany. Dresdner engages in a broad range of commercial and investment banking activities, directly and through subsidiaries, both foreign and domestic. In the United States, Dresdner operates branches in New York, New York; and Chicago, Illinois; an agency in Los Angeles, California; and a representative office in Miami, Florida. Dresdner's indirect U.S. operations include Dresdner Kleinwort Benson North America, LLC, New York, New York, a wholly owned securities broker-dealer, and the Miami agency of Dresdner Bank Lateinamerika AG, Frankfurt, Germany, a wholly owned subsidiary of Dresdner.

The proposed representative office is intended to facilitate Bank's long-term real estate financing activities in the United States, which to date have been conducted from the bank's head office in Frankfurt. All decisions on credit extended by Bank would continue to be made at the head office.

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.(1) The Board may take into account additional standards set forth in the IBA and Regulation K.(2)

As noted above, Bank engages directly in the business of banking outside the United States through its banking operations in Germany and elsewhere. Bank also has provided the Board with the information necessary to assess the application through submissions that address the relevant issues.

With respect to home country supervision of Bank, the Board has considered the following information. The German Federal Banking Supervisory Office is the principal supervisory authority of Bank and Dresdner. The Board previously has determined, in connection with applications involving other German banks, that those banks were subject to comprehensive consolidated supervision by the German Federal Banking Supervisory Office.(3) Bank and Dresdner are supervised by the German Federal Banking Supervisory Office in substantially the same manner as those other banks. Based on this finding and all the facts of record, the Board concludes that Bank and Dresdner are subject to comprehensive supervision on a consolidated basis by its home country supervisor.

The Board has taken into account the additional standards set forth in the IBA and in Regulation K.(4) The German Federal Banking Supervisory Office has granted Bank approval to establish the proposed office. With respect to the financial and managerial resources of Bank, taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisor, the Board has determined that financial and managerial considerations are consistent with approval. In addition, Bank appears to have the experience and capacity to support the proposed office and has established controls and procedures in the branch to ensure compliance with applicable U.S. law, as well as controls and procedures for its worldwide operations generally.

With respect to access to information, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates and has communicated with relevant government authorities about access to information. Bank has committed to make available to the Board such information on the operations of Bank and any affiliate of Bank that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act, and other applicable federal law. To the extent that the provision of such information may be prohibited or impeded by law or otherwise, Bank has committed to cooperate with the Board to obtain any necessary consents or waivers that might be required from third parties in connection with disclosure of certain information. In addition, subject to certain conditions, the German Federal Banking Supervisory Office may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of record, and subject to the condition described below, the Board has concluded that Bank has provided adequate assurances of access to any necessary information the Board may request.