Ms. Ellen Richey
General Counsel
Providian Bancorp, Inc.
201 Mission Street
San Francisco, California 94105

Dear Ms. Richey:

This will respond to your recent letter requesting, on behalf of Providian Bancorp, Inc., San Francisco, California, a determination that Providian Bancorp would not lose certain grandfather rights that it maintains under the Bank Holding Company Act ("BHC Act") as a result of an impending transaction. Providian Bancorp is a wholly owned subsidiary of Providian Corporation, Louisville, Kentucky. Providian Bancorp owns all of the shares of First Deposit National Bank, Tilton, New Hampshire ("Bank"), an institution that became a bank upon the enactment of the Competitive Equality Banking Act of 1987. Providian Bancorp may retain its ownership of Bank and not be treated as a bank holding company if Providian Bancorp and Bank observe certain limitations.

According to your letter, Providian Corporation has entered into an agreement to merge certain of its operations with AEGON, N.V. Immediately prior to this merger, Providian Corporation will spin-off to its shareholders all of the shares of Providian Bancorp. This will be accomplished by means of a stock dividend, with each shareholder of Providian Corporation receiving one share of Providian Bancorp for each share of Providian Corporation owned. Providian Corporation is a widely held, publicly traded corporation. You report that based on your best information, as of December�31, 1996, the largest shareholder of Providian Corporation controlled 6.5 percent of the company's stock. Following the spin-off, Providian Bancorp shares will be publicly traded on the New York Stock Exchange. You also state that Providian Bancorp's ownership interest in Bank will not change as a result of the proposed spin-off.

Section 4(f) of the BHC Act (12 U.S.C.���1843(f)) permits a company like Providian Bancorp that, on March 5, 1987, controlled an institution that became a bank as a result of the enactment of CEBA and was not a bank holding company on the day before August 10, 1987, to continue to control the institution and not be treated as a bank holding company for purposes of the Act. The legislative history of CEBA clearly states that these grandfather rights may not be transferred to another organization, and will terminate if another company acquires, directly or indirectly, the bank involved. H.R. Conf. Rep. No. 100-261, at 125 (1987); S. Rep. No. 100-19, at 33 (1987).

In this case, the shares of Providian Bancorp will be transferred to the current shareholders of Providian Corporation. Thus, the proposed spin-off may be viewed as converting the indirect ownership of Bank by these shareholders to a direct ownership interest. As such, the transaction would not cause Providian Bancorp to lose its grandfather rights under section 4(f) of the BHC Act. Providian Bancorp and Bank must operate within the restrictions set forth in section 4(f) in order to continue to qualify for these grandfather rights. In addition, no company may acquire control of Providian Bancorp for purposes of the BHC Act without seeking the prior approval of the Board under the Act and conforming its activities to those permissible for a bank holding company under the Act.

This opinion is limited solely to the transaction described above and does not authorize any other transaction. Any material change in the facts stated above should be communicated to Board staff. If you have any questions, please contact Thomas Corsi (202/452-3275) of my staff.

Sincerely,

(signed) J. Virgil Mattingly

J. Virgil Mattingly