For immediate release

The Federal Reserve Board announced today its approval of the application of ABSA Bank Limited, Johannesburg, Republic of South Africa, to establish a representative office in New York, New York. A copy of the Board's Order is attached.

ABSA Bank Limited Johannesburg, Republic of South Africa Order Approving Establishment of a Representative Office

ABSA Bank Limited ("Bank"), Johannesburg, Republic of South Africa, 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. � 3107(a)) to establish a representative office in New York, New York. The Foreign Bank Supervision Enhancement Act of 1991, 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 comment, has been published in a newspaper of general circulation in New York (The New York Times, April 19, 1995). The time for filing comments has expired, and the Board has considered the application and all comments received. Bank, with assets of $28 billion as of March 31, 1997, is a wholly owned subsidiary of Amalgamated Banks of South Africa Limited ("Amalgamated"), the controlling company of the largest banking and financial services group in South Africa.1 Bank provides banking services throughout South Africa and has investments in a number of banks and nonbank companies. Outside South Africa, Bank operates branches in the United Kingdom and Singapore, and representative offices in the People's Republic of China and the Federal Republic of Germany, and owns subsidiaries in Hong Kong and Germany. The activities of Bank's proposed representative office would include acting as liaison between Bank's home office and customers in the United States, soliciting financial services business on behalf of Bank, and providing information and advice on economic conditions and investment opportunities in South Africa. The representative office would not execute contracts on behalf of Bank, approve loans, disburse funds, or accept deposits or loan repayments. 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 of 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 (12 U.S.C. � 3107(a)(2); 12 C.F.R. 211.24(d)). The Board may also take into account additional standards as set forth in the IBA (12 U.S.C. � 3105(d)(3)-(4)) and Regulation K (12 C.F.R. 211.24(c)). The Board previously has stated that the standards that apply to the establishment of a branch or agency need not in every case apply to the establishment of a representative office, because representative offices do not engage in a banking business and cannot take deposits or make loans.2 In evaluating an application to establish a representative office under the IBA and Regulation K, the Board will take into account the standards that apply to the establishment of branches and agencies, subject generally to the following considerations. With respect to supervision by home country authorities, a foreign bank that proposes to establish a representative office should be subject to a significant degree of supervision by its home country supervisor.3 A foreign bank's financial and managerial resources will be reviewed to determine whether its financial condition and performance demonstrate that it is capable of complying with applicable laws and has an operating record that would be consistent with the establishment of a representative office in the United States. Finally, all foreign banks, whether operating through branches, agencies or representative offices, will be required to provide adequate assurances of access to information on the operations of the bank and its affiliates necessary to determine compliance with U.S. laws. The Board has considered the following information with respect to home country supervision of Bank. The South African Reserve Bank (the "Reserve Bank") is the primary bank supervisory authority in South Africa and, as such, is the home country supervisor of Bank. The Reserve Bank has authorized Bank to establish the proposed representative office. The Board previously has determined, in connection with an application involving another bank from South Africa, Standard Bank of South Africa, ("Standard Bank"), that Standard Bank was subject to a significant degree of supervision by the Reserve Bank.4 The Board has determined that Bank is supervised by the Reserve Bank on substantially the same terms and conditions as Standard Bank. Based on all the facts of record, the Board concludes that factors relating to the supervision of Bank by its home country supervisor are consistent with approval of the proposed representative office. The Board also has determined that, for purposes of the IBA and Regulation K, Bank engages directly in the business of banking outside of the United States through its operations in South Africa. Bank has provided the Board with the information necessary to assess the application through submissions that address relevant issues. The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. � 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, the Reserve Bank has authorized Bank to establish the proposed representative office. Taking into consideration Bank's record of operations in its home country, its overall financial resources, and its standing with its home country supervisors, the Board also has determined that financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the experience and capacity to support the proposed representative office and also has established controls and procedures for the proposed representative office to ensure compliance with U.S. law. With respect to access to information about Bank's operations, the Board has reviewed the restrictions on disclosure in South Africa and has communicated with the relevant authorities about access to information. Bank and its parents have committed to make available to the Board such information on the operations of Bank and any of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board may be prohibited or impeded by law, Bank and its parents have 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 such information. In light of these commitments and other facts of record, and subject to the condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information the Board may request. On the basis of all the facts of record, and subject to the commitments made by Bank, as well as the terms and conditions set forth in this order, the Board has determined that Bank's application to establish a representative office should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Bank or any of its affiliates subsequently interfere with the Board's ability to determine the compliance by Bank or its affiliates with applicable federal statutes, the Board may require termination of any of Bank's direct or indirect activities in the United States. Approval of the application is also specifically conditioned on compliance by Bank with the commitments made in connection with the application and with the conditions in this order.5 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. � 1818 against Bank and its affiliates.

By order of the Board of Governors,6 effective July 30, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 Amalgamated is controlled directly and indirectly by a number of South African companies engaged in insurance and other businesses. 2 See 58 Federal Register 6348, 6351 (1993). 3 See Citizens National Bank, 79 Federal Reserve Bulletin 805 (1993). 4 See Standard Bank of South Africa, 81 Federal Reserve Bulletin 517 (1995). 5 The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the State of New York to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of New York and its agent, the New York State Banking Department (the "Department"), to license the proposed representative office of Bank in accordance with any terms or conditions that the Department may impose. 6 Voting for this action: Chairman Greenspan, Vice Chair Rivlin and Governors Meyer and Phillips. Absent and not voting: Governor Kelley.

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1997 Orders on banking applications