Piraeus Bank S.A. ("Piraeus"), a foreign bank, has applied under section 3 of the Bank Holding Company Act (the "BHC Act") (12 U.S.C. § 1842) to become a bank holding company within the meaning of the BHC Act by acquiring 56 percent of the voting shares in Marathon Banking Corporation ("MBC"), and thereby acquiring Marathon National Bank of New York ("Bank"), both in Astoria, New York.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 37,116 (1998)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act.

Piraeus, with consolidated assets equivalent to approximately $4.6 billion, is a commercial bank organized under the laws of Greece.¹ Piraeus engages in the business of banking in Greece through branches and subsidiary banks.² Piraeus also engages through subsidiaries in several nonbanking activities in Greece. Piraeus does not currently have any banking or nonbanking operations in the United States. Bank is the 100th largest commercial banking organization in New York, controlling deposits of $89 million, representing less than 1 percent of all deposits in commercial banking organizations in the state.³

Comprehensive Consolidated Supervision and Access to Information
In order to approve an application by a foreign bank to acquire a U.S. bank or bank holding company, the BHC Act and Regulation Y require the Board to determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisors.⁴ The Board also must determine that the foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with applicable law.⁵

The Board considers a foreign bank to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that its home country supervisor receives sufficient information on the foreign bank's worldwide operations, including the bank's relationship to any affiliate, to assess the bank's overall financial condition and compliance with law and regulation.⁶

Supervision of Greek credit institutions, such as Piraeus, is the responsibility of the Supervision Department of the Bank of Greece. The Bank of Greece conducts general on-site examinations of Piraeus that cover areas such as asset quality, compliance, and internal controls. During these examinations, the examiners commonly review the bank's internal audit reports. In addition, the Bank of Greece conducts more frequent targeted examinations that focus on specific areas, such as foreign exchange, reconciliation of accounts, and anti-money laundering procedures. Piraeus also is required to have an audit conducted annually by qualified external auditors. The external auditors focus on Piraeus's internal controls, and their comments and findings are provided to the Bank of Greece as part of the bank's required assessment of its internal controls.

Piraeus is required to submit a number of financial reports to the Bank of Greece, including semiannual reports concerning, among other things, profit and loss, capital adequacy, liquidity, asset quality, large exposures, currency positions, loans and guarantees to affiliates and insiders, investments in other financial and nonfinancial institutions, and 10-percent shareholders. Piraeus also must submit semiannual bank-only and consolidated financial statements. In addition, Piraeus is required to publish annual audited financial statements, including balance sheets and income statements. Piraeus also must submit daily reports on its foreign exchange transactions and foreign currency positions.

The Bank of Greece also has promulgated regulations for credit institutions on loans to one borrower, a limit on aggregate "large exposures" (amounts equal to 10 percent of regulatory capital), and reserves. In addition, the Bank of Greece has imposed capital-based limits on the amounts that a credit institution may invest in nonfinancial companies.⁷

With respect to affiliate transactions, the Bank of Greece requires credit institutions, such as Piraeus, to report the value of each credit exposure to a subsidiary or affiliate that exceeds 10 percent of the credit institution's regulatory capital. The Bank of Greece also requires a credit institution to report on a semiannual basis loans and guarantees by the credit institution to its affiliates or between the credit institution's affiliates. In addition, a credit institution's exposure to a subsidiary or affiliate may not exceed 30 percent of the credit institution's regulatory capital. It is anticipated that the exposure limit will be reduced to 20 percent in 1999.

The Bank of Greece has statutory authority to terminate the operating license of a credit institution for, among other things, maintaining insufficient capital, impeding supervision by any means, or violating legal provisions, decisions, or regulations set out by the banking supervisory authorities. In addition, the Bank of Greece also may restrict the business activities of a credit institution for violations of law and for liquidity or solvency problems. The Bank of Greece also may impose fines and other sanctions on credit institutions and their legal representatives and managers for violations of banking statutes and regulations.

Piraeus also is subject to supervision by other Greek government entities. Piraeus's insurance agent subsidiaries are subject to the supervision of the Ministry of Development, the Greek insurance supervisory authority. In addition, Piraeus and certain of its subsidiaries are monitored by the Capital Markets Commission because their stock is listed on the Athens Stock Exchange. The prior approval of the Monopolies and Mergers Commission also is required for a merger or acquisition involving a Greek bank. There is a high degree of cooperation between the Bank of Greece and the other supervisory authorities.

Based on all the facts of record, the Board concludes that Piraeus is subject to comprehensive supervision on a consolidated basis by its home country supervisor.

The BHC Act also requires the Board to determine that the foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with the BHC Act and the International Banking Act ("IBA") (12 U.S.C. § 3101 et seq.). The Board has reviewed restrictions on disclosure in jurisdictions where Piraeus has material operations and has communicated with relevant banking authorities concerning access to information. Piraeus has committed that, to the extent not prohibited by law, it will make available to the Board such information on the operations of Piraeus and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal law. Piraeus also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable Piraeus to make any such information available to the Board. In light of these commitments and other facts of record, the Board has concluded that Piraeus has provided adequate assurances of access to any appropriate information that the Board may request.

For these reasons, and based on all the facts of record, the Board has concluded that the supervisory factors it is required to consider under section 3(c) of the BHC Act are consistent with approval.

Financial, Managerial, Competitive, and Convenience and Needs Considerations
The Board also has carefully considered the financial and managerial resources and future prospects of the banks and companies involved, the convenience and needs of the communities to be served, and certain supervisory factors. Piraeus's capital levels exceed the levels required under Greek capital guidelines and under the Basle Capital Accord, and are considered equivalent to the capital levels that would be required of a U.S. banking organization under similar circumstances. The Board also has reviewed supervisory information concerning Piraeus's condition and the proposal from Piraeus's home country authority, confidential financial information from Piraeus, and supervisory information concerning MBC and Bank assessing the financial and managerial resources of the organizations.

Based on all the facts of record, the Board has concluded that the financial and managerial resources and future prospects of the organizations are consistent with approval, as are the other supervisory factors that the Board must consider under section 3 of the BHC Act. In addition, based on all the facts of record, including the fact that Piraeus does not currently have any banking operations in the United States, the Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market, and that competitive considerations are consistent with approval. Considerations related to the convenience and needs of the communities to be served, including the performance record of Bank under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), also are consistent with approval of the proposal.⁸

Conclusion
Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of Piraeus and any of its affiliates subsequently interfere with the Board's ability to determine the safety and soundness of Piraeus's U.S. operations or the compliance by Piraeus or its affiliates with applicable federal statutes, the Board may require termination of any of Piraeus's direct or indirect activities in the United States. The Board's approval of the proposal is expressly conditioned on Piraeus's compliance with all the commitments made in connection with the application. The commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The proposal may not be consummated before the fifteenth calendar day after the effective date of the order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors,⁹ effective June 14, 1999.

(signed) Robert deV. Frierson

Robert deV. Frierson