FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Institutional Trust Company
Denver, Denver County, Colorado
Application for Deposit Insurance (Bank Insurance Fund)
and Consent to Exercise Full Trust Powers
ORDER
The undersigned, acting under delegated authority, has fully considered all facts
and information relevant to the factors of Section 6 of the Federal Deposit Insurance Act
relating to the applications for Federal deposit insurance and for consent to exercise
full trust powers for Institutional Trust Company, an operating uninsured trust company
located at 7800 East Union Avenue, Denver, Denver County, Colorado, and has concluded that
the applications should be approved.
Accordingly, it is hereby ORDERED, for the reasons set forth in the attached
Statement, that the applications submitted by Institutional Trust Company, for Federal
deposit insurance and for consent to exercise full trust powers, be and the same hereby
are, approved subject to the following conditions:
1. That the Tier 1 capital to assets ratio as defined in Part 325 of the FDIC's Rules
and Regulations at the time of application be maintained at not less than eight percent
during the first three years of operation;
2. That prior to commencing operations as an insured bank, the directorate will have at
least five directors and any new directors must be approved by the Regional Director;
3. That prior to commencing operations as an insured bank, the directorate will
formally appoint a Security Officer in accordance with Part 326 of the FDIC Rules and
Regulations;
4. That until the conditional commitment for deposit insurance and trust powers herein
granted becomes effective, the FDIC shall have the right to alter, suspend, or withdraw
said commitment should any interim development be deemed by the FDIC to warrant such
action;
5. That there will be no transactions with non-U.S. financial affiliates without prior
written approval by the Regional Director of the FDIC. At the Regional Director's
discretion, such approval may be for individual transactions, a series of transactions, or
types of transactions, subject to appropriate limitations. Such approval does not exempt
the Applicant from the applicable limitations of Sections 22(g), 22(h), 23A, and 23B of
the Federal Reserve Act, as made applicable to insured state nonmember banks by section
18(j) of the FDI Act, or other applicable Federal or State restrictions or
limitations;
6. That prior to receiving deposit insurance, the Applicant's ultimate parent,
AMVESCAP, will establish a registered agent in the United States for service of process
and will enter into a written agreement with the FDIC whereby AMVESCAP agrees to be
subject to United States Court Jurisdiction on domestic banking issues;
7. That prior to entering into any transaction with a non-U.S. financial affiliate that
has been approved by the Regional Director, Institutional Trust Company will obtain and
maintain current financial information on all financial institution affiliates of ITC
domiciled outside the U.S. and make this information available for examiner review at ITC,
including an annual income statement and balance sheet, expressed in U.S. Dollars and in
English, audited by a reputable accounting firm (such information will at all times be no
older than 18 months).
8. That Institutional Trust Company shall operate within the parameters of the business
plan submitted to the FDIC. Furthermore, during the first three years of operations,
Institutional Trust Company shall notify the Regional Director of any proposed major
deviation or material change from the submitted plan before consummation of the change
9. That if deposit insurance and trust powers have not become effective within twelve
months from the date of the ORDER, or unless, in the meantime a request for an extension
of time has been approved by the FDIC, the consent granted shall expire at the end of the
said twelve-month period.
Dated at Washington, D.C., this 30th day of March, 2000.
FEDERAL DEPOSIT INSURANCE CORPORATION
John M. Lane, Associate Director
Division of Supervision
FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Institutional Trust Company
Denver, Denver County, Colorado
Application for Deposit Insurance (Bank Insurance Fund)
Application for Consent to Exercise Full Trust Powers
STATEMENT
Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C.
1815), an application for Federal deposit insurance with membership in the Bank Insurance
Fund has been filed on behalf of Institutional Trust Company ("ITC") an
operating uninsured trust company located at 7800 East Union Avenue, Denver, Denver
County, Colorado. Additionally, the institution has filed an application for consent to
exercise full trust powers.
ITC's ultimate parent is AMVESCAP PLC ("AMVESCAP"), London, England. AMVESCAP
is a global investment management company. Assets under management at December 31, 1999
were over $357 billion. At September 30, 1999, total assets of AMVESCAP were $2.9 billion
and stockholders equity was $709 million. AMVESCAP also owns a bank in Germany - INVESCO
Bank OHG - and a bank in Austria - INVESCO Bank Osterreich AG. INVESCO Retirement and
Benefit Services, Inc., ITC's direct parent and a fifth level subsidiary of AMVESCAP, is
headquartered in Atlanta, Georgia.
ITC is a trust company specializing in the administration of trust assets and
performing custodial functions for self-directed individual retirement accounts (IRAs)
with one teller window not accessible to the public. An affiliated company has subleased
office space to ITC. Deposits will be solicited from new and existing customers with the
primary target market being IRA accountholders. ITC will not make loans and will limit
non-fiduciary deposits to less than 1% of total deposits. Since ITC's principal focus will
be trust services, it has requested designation as a special purpose bank, which will be
exempt from the Community Reinvestment Act (CRA) performance criteria. Should the
applicant's request for such designation be denied, the applicant will have to submit a
Community Reinvestment Act Statement to conform with the Community Reinvestment Act
regulation.
For the purposes of this proposal, the investment in fixed assets is reasonable,
capital is adequate, future earnings prospects are favorable, and management is considered
satisfactory. The proposal would not increase the risk to the deposit insurance fund. No
formal objections to this application have been filed with the FDIC. Corporate powers to
be exercised are consistent with the purpose of the Federal Deposit Insurance Act. No
undue risk to the Bank Insurance Fund is apparent.
The proposed ownership structure has the potential to present supervisory concerns
similar to those posed by chain banking organizations. In chain banks, the proposed
structure could lead to a concentration of banking resources susceptible to common risks
without centralized supervision and regulation over the organization. In these types of
organizations, there is a concern that low quality assets and other funds may be shifted
between banks to avoid detection by regulators and auditors. Our concerns also include
risks that result because part of the "chain" is in another country and not
subject to U.S. supervision. This type of structure may make it difficult to obtain
information necessary to monitor the foreign affiliates. The parent company AMVESCAP is
not subject to the Bank Holding Company Act. Moreover, the parent company is not
considered a foreign banking organization1 for purposes of the International
Banking Act (IBA), and may not be subject to comprehensive consolidated supervision. The
concept of effective comprehensive consolidated supervision has been embraced by the FDIC
through its involvement in international bank supervisory bodies, such as the Basel
Committee on Banking Supervision.
Our concerns about the proposed structure are significantly mitigated in this case by
the parent's status as a publicly traded company. Moreover, the foreign bank affiliates
are located in countries which appear to have adequate supervisory regimes. The FDIC will
be able to monitor the parent company's consolidated financial condition and its impact on
the domestic bank by reviewing publicly available financial information. The Corporation,
by imposing certain nonstandard conditions, provides further safeguards. These include
AMVESCAP, the Applicant's ultimate parent domiciled in London, England, entering into an
agreement to be subject to United States jurisdiction on domestic banking issues.
Additionally, the Corporation is imposing a condition that there will be no transactions
with non-U.S. financial affiliates without prior written approval by the Regional Director
of the FDIC. Such approval does not exempt the Applicant from the applicable limitations
of Sections 22(g), 22(h), 23A, and 23B of the Federal Reserve Act. Moreover, prior to
entering into any transaction with a non-U.S. financial affiliate, ITC will obtain and
maintain current financial information on all financial institution affiliates of ITC
domiciled outside the U.S. and make this information available for examiner review at ITC,
including an annual income statement and balance sheet, expressed in U.S. Dollars and in
English, audited by a reputable accounting firm. The applicants have indicated that there
are no intentions at this time to engage in transactions with foreign bank affiliates.
Based upon a careful evaluation of all available facts and information, the Associate
Director, pursuant to delegated authority, has concluded that approval of the application
is warranted, subject to the conditions enumerated in the ORDER.
ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION
1 A foreign banking organization is a foreign bank, as
defined by § 1(b)(7) of the International Banking Act (12 U.S.C. 3101(7)), that operates
a branch, agency, or commercial lending company subsidiary in the U.S. or that controls a
bank in the U.S. and any company of which the foreign bank is a subsidiary (Federal
Reserve Board Regulation K). A foreign bank means any company organized under the laws of
a foreign country, a territory of the U.S., Puerto Rico, Guam, American Samoa, or the
Virgin Islands, which engages in the business of banking, or any subsidiary or affiliate,
organized under such law, of any such company. For the purposes of this Act, the term
foreign bank includes, without limitation, foreign commercial banks, foreign merchant
banks and other foreign institutions that engage in banking activities usual in connection
with the business of banking in the countries where such foreign institutions are
organized or operating (International Banking Act).
