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Intercontinental Bank


RE: Intercontinental Bank Miami, Florida

Application Pursuant To Section 24 For Consent To Indirectly Through A Subsidiary Continue To Engage As Principal In An Activity Which May Not Be Permissible For A Subsidiary Of A National Bank


Pursuant to the provisions of section 24 of the Federal Deposit Insurance Act, an application has been filed with the Federal Deposit Insurance Corporation ("FDIC") by Intercontinental Bank, Miami, Florida ("Intercon"). The application requests the Corporation's consent to continue to engage as principal through a wholly-owned subsidiary, Atico Financial Corporation ("Atico"), in an activity, the type of which may not be permissible for a subsidiary of a National bank. Namely, Atico seeks permission to continue to hold real estate acquired for investment purposes in order to liquidate the properties in an orderly manner.

Investment in a subsidiary engaging in real estate for investment purposes is not expressly authorized for National banks. State chartered, FDIC-insured banks may not engage as principal in an activity prohibited to nationally chartered banks unless they obtain consent from the FDIC. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund. The Florida State Authority allows an aggregate investment in subsidiaries engaging in these type activities of up to 10% of assets without prior approval; however, the State Authority may, at its discretion, further limit any investment in subsidiaries if it finds that such investment would constitute an unsafe and unsound practice.

Atico began operations in 1979 to engage as principal in real estate investment activities. Atico owns various real estate parcels (approximately 540 acres of undeveloped land and five lots) with a total book value of $355,000 as of December 31, 1994. Atico does not intend to expand its real estate activity nor engage in further development of the current inventory of properties; however, Atico requests permission to hold the real estate while it continues to liquidate the properties in an orderly manner. Given the nature of the assets (real estate), a definitive sell-out period is not known; however, because the potential exists that this process may extend past the December 19, 1996 date for required divestiture (absent FDIC approval to continue), approval is requested to hold the real estate assets at the subsidiary level for the sole purpose of effecting an orderly liquidation.

If Atico is not permitted to continue to hold the properties, the alternatives of §362.4 (d) (5) (ii) require that, no later than December 19, 1996, either Intercon divest itself of Atico or that Atico divest/cease the activity; the alternatives could result in deep discounts to liquidate in order to effect compliance by the December 19, 1996 deadline.

Intercon, which meets the definition of "well capitalized" within the meaning of Part 325 of the FDIC Rules and Regulations, is in compliance with applicable capital standards. In addition, the level of the.activity to be conducted and the manner in which Atico proposes to continue the activity do not pose a significant risk to the applicable deposit insurance fund nor safety and soundness concerns.

Accordingly, based upon careful evaluation of all available facts and information, the Associate Director, acting on behalf of the Corporation under delegated authority, has concluded that the application should be approved. Such approval should not be construed as a determination that any particular activity is not permissible for a National bank or a subsidiary of a National bank, and any action by the Corporation on the application is taken without prejudice as to whether or not an application was needed.