| November 26, 1997 |
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Eileen Meyer, Esq. Dear Ms. Meyer: This is in response to your letter, dated November 3, 1997, concerning the proposal by Transamerica Corporation to acquire, through various subsidiaries, Whirlpool Financial National Bank ("Bank"). Transamerica proposes to acquire Bank as part of a larger transaction that involves the acquisition of all the inventory financing, consumer financing, and international factoring businesses of Whirlpool Financial Corporation, the parent company of Bank.1 You have asked whether the transaction would be consistent with section 20 of the Glass-Steagall Act, which prohibits a member bank from becoming an affiliate of a company that is "engaged principally in the issue, flotation, underwriting, public sale, or distribution" of securities.2 Transamerica sponsors a family of open-end mutual funds, and two Transamerica subsidiaries act as principal underwriter and distributor for the funds. Transamerica also is engaged, through subsidiaries, in issuing variable annuities. We understand that in this case Transamerica proposes to acquire approximately $1.3 billion of receivables from Whirlpool. Bank, which will be sold to Transamerica as part of the transaction, will have approximately $70 million of assets at the time of the transaction, and will represent approximately 5 percent of the total assets being transferred by Whirlpool to Transamerica. To address concerns under section 20 of the Glass-Steagall Act, Transamerica has committed that within two years after Bank is acquired by Transamerica, Transamerica will either (1) enter into an agreement to transfer control of Bank to an unaffiliated third party, (2) cause Bank to become a state non-member bank, or (3) take other steps permitted by the Board to conform its holding of Bank to applicable law. Transamerica also has stated that there will be no officer, director, or employee interlock between Bank and the Transamerica subsidiaries primarily engaged in securities activities, and that Bank will not sell any securities. Bank is and would remain a special purpose bank engaged only in credit card operations as defined in section 2(c)(2)(F) of the Bank Holding Company Act. After the acquisition, Transamerica has indicated that Bank would serve the same function within the distribution finance business of Transamerica that Bank currently serves for Whirlpool. Bank's focus would remain the provision of credit card accounts to consumer customers of retail businesses within the selected industries served by its parent company (so-called "private label cards"). [Two sentences deleted.] In light of the facts outlined in this letter and in the other materials Transamerica has submitted to the Board, including the limited powers of Bank and the commitments made by Transamerica in this case, staff would not recommend that the Board object on the basis of section 20 of the Glass-Steagall Act to the proposed acquisition of Bank. This opinion is subject to receipt by Transamerica of approval from the OCC for this acquisition, and is limited to the question specifically addressed above. This opinion is based on the facts and representations you have provided, and any material change in these facts or representations could result in a different conclusion and should be communicated to Board staff. If you have any questions, please contact Tom Corsi, Senior Attorney (202/452-3275), or Gordon Miller, Attorney (202/452-2534), of my staff.
Sincerely,
(Signed) J. Virgil Mattingly
J. Virgil Mattingly
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Footnotes
1. Transamerica has sought approval of this transaction from the Office of the Comptroller of the Currency under the the Change in Bank Control Act. Return to text 2. 12 U.S.C. § 377. The Glass-Steagall Act defines a member bank to be any national bank, state bank, or bank or trust company that is a member of the Federal Reserve System. 12 U.S.C. §§ 221, 221a. Bank is a national bank, and is therefore a member of the Federal Reserve System. Return to text |
