Stanley F. Farrar, Esq.
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067-1725

Dear Mr. Farrar:

This is in response to your letter dated May 9, 2001, and related correspondence requesting, on behalf of Zions Bancorporation, Salt Lake City, Utah ("Zions"), an opinion on whether certain activities that Zions proposes to conduct would be within the scope of data processing and data transmission activities as defined in section 225.28(b)(14) of Regulation Y (12 C.F.R. 225.28(b)(14).

Zions proposes to design and market software programs (the "Products") that assist companies and governmental entities with workflow automation and document management. The Products would allow users to create electronic forms, efficiently transfer data from one form to another, store and retrieve forms, and transmit forms within organizations and between organizations. Zions also proposes to combine the Products with the digital certification service currently offered by Zions.¹ The digital certification service allows customers to identify themselves reliably to counterparties in electronic transactions. The combined package offered by Zions (the "Combined Products") would allow customers to create electronic forms, input data into forms, transfer data between forms, and reliably sign forms before sending them to their recipients.²

Zions expects approximately 65 percent of its customers for the Combined Products to be banks, thrifts, securities firms, insurance companies, and other companies engaged in financial activities permissible for financial holding companies under the Gramm-Leach-Bliley Act. Zions also expects that 80-90 percent of the transactions facilitated by the Combined Products would involve the processing or transmission of financial, banking, or economic data. In addition, Zions estimates that approximately 80 percent of its customers for the Combined Products would use the digital certification aspect of the Combined Products.

The Board has determined, in section 225.28(b)(14) of Regulation Y, that it is permissible for bank holding companies to engage in providing to any person "data processing and data transmission services, facilities (including data processing and data transmission hardware, software, documentation, or operating personnel), data bases, advice, and access to such services, facilities or data bases by any technological means," if, among other things, the data to be processed or transmitted are "financial, banking, or economic" data.³ The Board also has concluded that providing data processing and data transmission services to financial institutions and, in some circumstances, affiliates of financial institutions generally is permissible financial data processing and data transmission activity under Regulation Y.⁴ In addition, the Board has determined that a bank holding company may conduct data processing and data transmission activities with respect to data that is not financial, banking, or economic if the total annual revenue derived from such activities does not exceed 30 percent of the company's total annual revenues derived from data processing and data transmission activities.⁵

In this case, as noted above, Zions expects approximately 65 percent of its customers to be financial companies and expects that 80-90 percent of the transactions facilitated by the Products would involve the processing or transmission of financial, banking, or economic data. Zions anticipates that revenues from uses of the Combined Products for the processing or transmission of data that is not financial, banking, or economic would account for less than 30 percent of the company's total data processing and data transmission revenues.

In light of all the facts of record, we believe that the proposed activities described in this letter are within the scope of permissible data processing and data transmission activities under section 225.28(b)(14) of Regulation Y. Staff expects that Zions will maintain records with respect to sales of the Combined Products that allow Zions to monitor its compliance with Regulation Y.

This opinion is limited solely to the proposed activities described above and does not address the treatment of any other activities or authorize Zions to engage in any other activities. Any material change in the proposed activities described above may result in the reconsideration of this opinion and should be communicated immediately to Board staff.

Sincerely,

(Signed) J. Virgil Mattingly

J. Virgil Mattingly

cc: Federal Reserve Bank of San Francisco