For immediate release

The Federal Reserve Board today announced its approval of the application by Crédit Agricole Indosuez, Paris, France, to establish state-licensed branches in New York, New York, and Chicago, Illinois, and representative offices in Houston, Texas, and San Francisco, California. Attachment

Crédit Agricole Indosuez Paris, France Order Approving Establishment of Branches and Representative Offices

Crédit Agricole Indosuez, Paris, France ("Bank"), a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under sections 7(d) and 10(a) of the IBA (12 U.S.C. §§ 3105(d) and 3107(a)) to establish state-licensed branches in Chicago, Illinois, and New York, New York; and representative offices in Houston, Texas, and San Francisco, California. 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 branch or 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 Chicago (Chicago Tribune, July 3, 1997); New York (The New York Times, July 10, 1997); Houston (Houston Chronicle, July 2, 1997); and San Francisco (San Francisco Chronicle, July 2, 1997). The time for filing comments has expired, and the Board has considered the application and all comments received. Bank has total assets equivalent to approximately $88 billion.1 Caisse Nationale de Crédit Agricole, Paris, France ("CNCA"), a foreign bank, holds 100 percent of the shares of Bank.2 Bank engages in a wide range of banking and capital market activities worldwide directly and through subsidiaries. Bank currently operates a state-licensed branch in New York, New York. In addition, Bank operates a number of U.S. subsidiaries engaged in, among other activities, securities and futures trading, leasing, financing, brokerage, and financial consulting activities. In the United States, CNCA operates branches in Chicago, Illinois, and New York, New York; and representative offices in Houston, Texas, and San Francisco, California. Bank proposes to acquire through merger the U.S. banking operations of CNCA as part of a restructuring of the worldwide operations of CNCA and Bank. After the restructuring and the establishment of the proposed offices by Bank, CNCA and Bank would remain qualifying foreign banking organizations within the meaning of Regulation K. (12 C.F.R. 211.23(b)). CNCA acquired 53 percent of Bank on July 1, 1996.3 CNCA's home state under the IBA and Regulation K is Illinois and Bank's home state is New York. Collectively, CNCA and Bank are entitled to only one home state under Regulation K.4 On approval of the proposed offices by the Board and the relevant state banking authorities, CNCA would change its home state to New York.5 Bank proposes to establish a branch in Illinois, which is outside of Bank's home state.6 Under section 5(a)(2) of the IBA,7 a foreign bank, with the approval of the Board and the appropriate state banking supervisor, may establish and operate a state-licensed branch outside the home state of the foreign bank to the extent a state bank with the same home state as the foreign bank could do so under section 44 of the Federal Deposit Insurance Act ("FDI Act").8 Bank proposes to acquire through the proposed merger all of the U.S. banking operations of CNCA, a transaction that would constitute an interstate merger transaction as defined in the FDI Act.9 Section 44(a) of the FDI Act permits the Board to approve a merger transaction under the Bank Merger Act between state banks with different home states provided neither of the states has elected to prohibit interstate merger transactions pursuant to section 44(a)(2) of the FDI Act. New York and Illinois both permit interstate merger transactions.10 Accordingly, the proposed interstate merger transaction would be permitted under section 44 of the FDI Act and the Board is permitted to approve the establishment by Bank of the branch outside its home state of New York provided the remaining criteria of section 5(a) of the IBA are met, including the criteria for establishment of a branch or agency. In order to approve an application by a foreign bank to establish a branch or agency in the United States, the IBA and Regulation K require the Board to determine that the foreign bank applicant 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 generally must determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1)).11 The Board may also take into account additional standards as set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Section 5(a)(3) of the IBA also establishes additional criteria that must be met in order for the Board to approve the establishment of branches outside a foreign bank's home state under section 5(a)(2) of the IBA. As noted above, CNCA and Bank engage directly in the business of banking outside the United States through banking operations in France and elsewhere. Bank also has provided the Board with the information necessary to assess the application through submissions that address the relevant issues. Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on the foreign bank's worldwide operations, including the relationship of the foreign bank to any affiliate, to assess the overall financial condition of the foreign bank and its compliance with law and regulation (12 C.F.R. 211.24(c)(1)).12 With respect to supervision by home country authorities, the Board has considered the following information. The Board previously has determined that CNCA is subject to comprehensive, consolidated home country supervision.13 No material changes have occurred in the manner of CNCA's supervision since that time that would alter the Board's previous determination. In this case, Bank is supervised on the same terms and conditions as CNCA. Based on all facts of record, the Board has determined that CNCA and Bank are subject to comprehensive supervision on a consolidated basis by their home country supervisors. 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)). In this regard, the Banque de France has approved the establishment of the proposed offices. France is a signatory to the Basle risk-based capital standards, and French risk-based capital standards meet those established by the Basle Capital Accord ("Accord"). Bank's capital is in excess of the minimum levels required by the Accord and can be considered equivalent to capital that would be required of a U.S. banking organization. Managerial and other financial resources of Bank also are considered consistent with approval, and Bank appears to have the experience and capacity to support the proposed offices. The Board has reviewed the restrictions on disclosure in certain jurisdictions where Bank and CNCA operate and has communicated with appropriate governmental authorities regarding access to information. Bank and CNCA have committed to make available to the Board such information on their operations and the operations of their 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 may be prohibited by law, Bank and CNCA have committed to cooperate with the Board in obtaining any consents or waivers that might be required from third parties for disclosure. In addition, subject to certain conditions, the Commission Bancaire may share information on Bank's and CNCA'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 concludes that Bank has provided adequate assurances of access to any necessary information the Board may request. Finally, with respect to the proposed establishment by Bank of a branch outside its home state pursuant to section 5(a)(2) of the IBA, the Board has determined that the additional conditions specified in section 5(a)(3) of the IBA are satisfied. The Board finds, pursuant to section 5(a)(3)(B) of the IBA, that the financial resources of Bank are equivalent to those required for a domestic bank to receive approval for interstate branching under section 44 of the FDI Act. The Board has consulted with the Department of the Treasury concerning capital equivalency. Additionally, the Board finds that all applicable requirements under section 5(a)(3)(C) of the IBA have been met. On the basis of all the facts of record, and subject to the commitments made by Bank and CNCA, as well as the terms and conditions set forth in this order, the Board has determined that Bank's application to establish branches and representative offices 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 this application is also specifically conditioned on compliance by Bank and CNCA with the commitments made in connection with this application, and with the conditions in this order.14 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, its offices, and its affiliates.

By order of the Board of Governors,15 effective October 27, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 Financial data are as of December 31, 1996. 2 CNCA is a cooperative bank organized under the laws of France. CNCA coordinates the operations of 57 regional and 2,775 local credit cooperatives. CNCA, together with its affiliated regional and local credit cooperatives, comprise the Crédit Agricole Group ("CA Group"). The CA Group has total consolidated assets equivalent to approximately $477 billion. The CA Group is the largest retail banking organization in France and the eighth largest banking organization in the world. 3 CNCA acquired the remainder of Bank's shares on December 23, 1996. 4 See 12 C.F.R. 211.22(c)(1). However, in connection with the acquisition of Bank's shares by CNCA the Board gave CNCA and Bank a limited period of time within which to conform to the home state requirements of Regulation K. See letter dated June 26, 1996, from Jennifer J. Johnson, Deputy Secretary of the Board, to Michael Bradfield, Esq. 5 Under Regulation K, a foreign bank may change its home state once. 12 C.F.R. 211.22(b). 6 Upon consummation of this proposal, CNCA would continue to operate its Illinois branch for a limited period of time in order to wind down its business in accordance with applicable law. Bank would limit temporarily the deposit-taking of its Illinois branch to that authorized for an Edge corporation operating under section 25A of the Federal Reserve Act until the Illinois branch of CNCA surrenders its license. 7 12 U.S.C. § 3103(a)(2). 8 12 U.S.C. § 1831u. 9 See 12 U.S.C. § 1831u(f)(6)&(7); 12 U.S.C. § 1828(c). 10 N.Y. [Banking] Law § 223 (McKinney Supp. 1997); 205 Ill. Comp. Stat. 5/21(c) (West 1997). 11 In acting on an application to establish a representative office, the Board must take into account the standards applicable to the establishment of a branch, agency, or commercial lending company. 12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2). Because Bank has applied to establish branches and representative offices, the Board has made its findings with respect to the proposed representative offices in accordance with the stricter standards applicable to branch applications. 12 In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: (i) ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) receive from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination. 13 Caisse National de Crédit Agricole, 81 Federal Reserve Bulletin 1055 (1995). 14 The Board's authority to approve the establishment of the proposed offices parallels the continuing authority of the states of California, Illinois, New York, and Texas to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of those states to license the proposed offices of Bank in accordance with any terms or conditions that the states may impose. 15 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, and Meyer. Absent and not voting: Governor Phillips.

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1997 Orders on banking applications