{{5-31-02 p.C-1785}}
[¶10,410B] In the Matter of First Fidelity Bank, National Association, New Jersey,
Newark, New Jersey, Docket No. 91-409kk (12-19-91).
FDIC issues order conditionally granting approval for waiver of
cross-guaranty.
[.1] Cross-Guaranty—Waiver—Prior Notice of Acquisitions Required
[.2] Cross-Guaranty—Waiver—Effective Upon Obtaining Regulatory Approvals
for Purchase
[.3] Cross-Guaranty—Waiver—Expiration
[.4] Cross-Guaranty—Waiver—Reasonable Losses
[.5] Cross-Guaranty—Waiver—Compliance with Federal Reserve Act
Restrictions—Required
[.6] Cross-Guaranty—Waiver—Revocation for Non-Compliance
In the Matter of
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)
Which may become related to
BANCO SANTANDER PUERTO RICO
SAN JUAN, PUERTO RICO
and
SANTANDER FEDERAL SAVINGS BANK
BAYAMON, PUERTO RICO
(Commonly Controlled Insured Depository Institutions)
ORDER GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY
FDIC-91-409kk
WHEREAS, First Fidelity Bancorporation, Newark, New Jersey (First
Fidelity" or "Applicant"), pursuant to an agreement between
Banco de Santander, Sociedad Anonima de Credito, Madrid, Spain
("Banco de Santander") and First Fidelity dated March 18, 1991
(the "Investment Agreement"), has expressed a willingness to sell
warrants (the "Warrants") and 9,505,000 shares (the
"Shares") of newly issued shares of common stock 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 would result in
Banco de Santander's ownership of approximately 24.0 percent of First
Fidelity's common stock if Banco de Santander fully exercised the
warrants;
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) of the Bank
Holding Company Act ("BHC Act"), 12 U.S.C. §1841(a)(2);
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, First Fidelity 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 Banco de Santander;
WHEREAS, the Board of Directors of the FDIC, having fully considered
the facts and information relating to the foregoing request for
exemption from liability and having determined that the injection of
capital by Banco de Santander constitutes solely an investment for
Banco de Santander without the establishment of common managerial or
operational control over the insured depository institution
subsidiaries of First Fidelity and Banco de Santander, 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 Banco de Santander, 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 Office of the
Delaware Bank Commissioner, the Pennsylvania Department of Banking, the
New Jersey Department of Banking, and the Puerto Rico Department of
Banking.
[.3]3. Notwithstanding the foregoing, the 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 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 Banco de Santander.
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 Banco de Santander.
[.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.
