{{5-31-02 p.C-1785}}
[¶10,410A] In the Matter of Banco Santander Puerto Rico, San Juan, Puerto Rico,
Docket No. 91-408kk (12-19-91).
FDIC issues order conditionally granting approval for waiver of
cross-guaranty.
[.1] Cross-GuarantyWaiverPrior Notice of Acquisitions Required
[.2] Cross-GuarantyWaiverEffective Upon Obtaining Regulatory Approvals
for Purchase
[.3] Cross-GuarantyWaiverExpiration
[.4] Cross-GuarantyWaiverReasonable Losses
[.5] Cross-GuarantyWaiverCompliance with Federal Reserve Act
RestrictionsRequired
[.6] Cross-GuarantyWaiverRevocation for Non-Compliance
In the Matter of
BANCO SANTANDER PUERTO RICO
SAN JUAN, PUERTO RICO
and
SANTANDER FEDERAL SAVINGS BANK
BAYAMON, PUERTO RICO
(Commonly Controlled Insured Depository Institutions)
Which may become related to
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY
NEWARK, NEW JERSEY
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NORTH JERSEY
TOTOWA, NEW JERSEY
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, SOUTH JERSEY
BURLINGTON TOWNSHIP, NEW JERSEY
FIDELITY BANK, NATIONAL ASSOCIATION
PHILADELPHIA, PENNSYLVANIA
MERCHANTS BANK, NATIONAL ASSOCIATION
ALLENTOWN, PENNSYLVANIA
MERCHANTS BANK (NORTH)
WILKES-BARRE, PENNSYLVANIA
(Commonly Controlled Insured Depository Institutions)
ORDER CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY
FDIC-91-408kk
WHEREAS, Banco de Santander, Sociedad Anonima de Credito, Madrid,
Spain ("Banco de Santander" or "Applicant"), pursuant to an
agreement between Banco de Santander and First Fidelity Bancorporation,
Newark, New Jersey ("First Fidelity") dated March 18, 1991 (the
"Investment Agreement"), has expressed a willingness to purchase
warrants (the "Warrants") and 9,505,000 shares (the
"Shares") of newly issued shares of common stock of First
Fidelity for $220,991,250 that would result in Banco de Santander
owning approximately 14.0 percent of First Fidelity's common stock;
WHEREAS, Banco de Santander would hold an option pursuant to the
warrants to purchase up to an additional 9,505,000 shares of stock for
an additional infusion of up to $242,000,000, which if fully exercised
would result in Banco de Santander's ownership of approximately 24.0
percent of First Fidelity's common stock;
WHEREAS, First Fidelity is a bank holding company and presently owns
the following subsidiaries which are insured depository institutions:
First Fidelity Bank, National Association, New Jersey, Newark, New
Jersey; First Fidelity Bank, National Association, North Jersey,
Totowa, New Jersey; First Fidelity Bank, National Association, South
Jersey, Burlington Township, New Jersey; Fidelity Bank, National
Association, Philadelphia, Pennsylvania; Merchants Bank, National
Association, Allentown, Pennsylvania; and Merchants Bank (North),
Wilkes-Barre, Pennsylvania;
WHEREAS, Banco de Santander is a bank holding company and presently
owns the following subsidiaries which are insured depository
institutions: Banco Santander Puerto Rico, San Juan, Puerto Rico, and
Santander Federal Savings Bank, Bayamon, Puerto Rico;
WHEREAS, Banco de Santander and First Fidelity have been advised by the
Board of Governors of the Federal Reserve System that Banco de
Santander's investment in First Fidelity will provide Banco de
Santander with a "controlling influence" within the definition of
"control" as that term is defined in section 2(a)(2)(c) of the
Bank Holding Company Act ("BHC Act"), 12 U.S.C.
§1841(a)(2)(c);
WHEREAS, the respective subsidiaries of Banco de Santander and First
Fidelity could be construed as being commonly controlled pursuant to
section 5(e)(9) of the Federal Deposit Insurance Act ("Act"), 12
U.S.C. §1815(e)(9);
WHEREAS, Banco de Santander has requested pursuant to the
provisions of section 5(e)(5)(A) of the Act, 12 U.S.C.
§1815(e)(5)(A), that the Federal Deposit Insurance Corporation
("FDIC" or the "Corporation") grant an exemption from
liability for any losses the FDIC may incur or reasonably anticipates
incurring from any default of and/or assistance by the FDIC to any
insured depository institution subsidiary of First Fidelity;
WHEREAS, the Board of Directors ("Board") of the FDIC, having
fully considered the facts and information relating to the foregoing
request for exemption from liability, has concluded that an exemption
is in the best interest of the Bank Insurance Fund and the Savings
Association Insurance Fund and that approval of the application for
exemption should be and hereby is granted, subject to the conditions
and restrictions set forth below.
IT IS THEREFORE ORDERED:
[.1]1. That, subject to the terms and conditions of this ORDER
CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY (the
"ORDER"), there is hereby granted to the insured depository
institutions controlled by Applicant, whether in existence or hereafter
acquired, an exemption with respect to any liability that may arise
pursuant to section 5(e) of the Act with respect to any of the insured
depository institutions controlled by First Fidelity, whether in
existence or hereafter acquired; however, the exemption with respect to
any insured depository institutions hereafter acquired by either First
Fidelity or Banco de Santander shall not take effect unless and until
the Regional Director of the FDIC's New York Regional Office
("Regional Director") has received prior written notice of each
such acquisition of control.
[.2]2. This ORDER shall become effective upon obtaining the regulatory
approvals required to consummate the purchase by Banco de Santander of
the Shares and the Warrants under the Investment Agreement which
includes any approvals, consents, or waivers required by law from, or
any filing with, the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the Pennsylvania
Department of Banking, the New Jersey Department of Banking, and the
Puerto Rico Department of Banking.
[.3]3. Notwithstanding the foregoing, this exemption granted by this ORDER
shall expire upon the earlier of: (i) December 31, 1991, unless, prior
to such date, a minimum of $200,000,000 of the proceeds of the sale of
First Fidelity common stock to Banco de Santander is provided to some
of the insured depository institutions controlled by First Fidelity as
Part 325 Tier 1 capital, as that term is presently defined by section
325.2 of the FDIC's Rules and Regulations, 12 C.F.R. §325.2, in a
form acceptable to and allocated among those institutions in a manner
acceptable to, the Regional Director; (ii) the date on which Banco de
Santander, or any subsidiary of Banco de Santander, acquires actual
ownership or control of 25 percent or more of any class of voting
securities of First Fidelity or any insured depository institution
subsidiary institution of First Fidelity; (iii) the date on which the
FDIC's Board of Directors determines that Banco de Santander is
exerting, directly or indirectly, actual managerial or operational
control over First Fidelity or one or more of First Fidelity's insured
depository institution subsidiaries; or (iv) December 31, 1995, unless
in the meantime, the Corporation has approved a request for an
extension of such date. The Regional Director, or his designee, may
approve such requests for an extension in increments not to exceed one
year. The Applicant shall promptly notify the Regional Director in
writing upon the termination of the Investment Agreement, the amendment
or other modification of the Investment Agreement in any material
respect, and/or the occurrence of any event which would trigger an
expiration under this paragraph.
[.4]4. The exemption granted by this ORDER will apply only to losses
resulting from the default of, or Corporation assistance to, any
insured depository institution subsidiary of First Fidelity. Liability
for loss resulting from the default of, or Corporation assistance to,
any other insured depository institution controlled by the Applicant
will remain with all other commonly controlled insured depository
institutions.
[.5]5. During the period the exemption granted by this ORDER is in effect,
the Applicant and all insured depository institution subsidiaries of
the Applicant shall comply fully with the restrictions of section 23A
and 23B of the Federal Reserve Act without regard to section
23A(d)(1), 12 U.S.C. §371(d)(1), in connection with any transactions
between any of such subsidiaries and any insured depository institution
subsidiary of First Fidelity.
[.6]6. The FDIC shall have the right to revoke the exemption granted by
this ORDER after giving the Applicant written notice of said revocation
and a reasonable opportunity to be heard should the FDIC determine that
the Applicant, or any insured depository subsidiary of the Applicant,
ceases to comply with the aforesaid restrictions.
By order of the Board of Directors.
Dated at Washington, D.C., this 19th day of December, 1991.