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4000 - Advisory Opinions
Trustee's Notice of Change in Control Not Required Where
Appointment of New Trustee Will Not Alter Trusts' Ownership; Effect a
Change In Underlying Beneficial Interests; or the Power to Control the
Bank
FDIC--95--21
July 21, 1995
Sandra Comenetz, Counsel
This responds to your June 15, 1995 letter in which you seek the
FDIC's concurrence that notice under the Change in Bank Control Act of
1978 ("CBCA"), 12 U.S.C.
§ 1817(j), is not required with respect to a change in
trustee for Bank "A'', a state-chartered insured nonmember bank.
The facts, as we understand them, are as follows. All of the voting
shares of Bank A are held in trust with an individual serving as
trustee. The trust arrangement arose as part of the settlement of
litigation between Bank "B", a Colombian banking organization in
liquidation operating under the supervision of the Fondo de Garantias
Financiera, a Colombian government agency having responsibilities
similar to those of the FDIC, and a number of foreign persons,
regarding the ownership of the outstanding shares of the capital stock
of Bank A.
The trust arrangement reflects two separate settlements to the same
litigation. One settlement agreement governs the trustee's power to
vote 40% of Bank A's outstanding shares and provides that the trustee
has full discretion to vote this block of shares. The second agreement
governs the trustee's power to vote the other 60% of Bank A's
outstanding shares. This agreement provides that the trustee shall vote
these shares in accordance with instructions from the Fondo de
Garantias Financiera, in the case of 37.8% of the shares (63% of the
60% block), and the receiver in bankruptcy, in the case of 22.2% of
the shares (37% of the 60% block). This agreement further provides
that the trustee shall vote based upon a simple majority. Thus the
Colombian regulator, as the majority beneficial owner, effectively
controls 60% of the total shares of Bank A.
The present trustee has announced his intention to resign under both
settlement agreements, effective upon court approval of a replacement
trustee. Bank "C" has agreed to succeed the present trustee under
both agreements. 1
You contend that notice under the CBCA is not required because
appointment of a new trustee would not alter the trusts' ownership, or
effect a change in underlying beneficial interests or the power to
control Bank A. We concur.
In this case, the anticipated change in trustee does not appear to
affect control as the Colombian regulator will continue to control the
majority of voting shares of Bank A after the change in trustee. Under
these circumstances our view is that there is no need to file a change
in control notice.
This conclusion is based solely on the facts set forth in your June
15, 1995 letter. We reserve the right to amend our opinion should
additional facts come to our attention. The determination should not be
interpreted as an indication of our views on other issues pertaining to
the change in trustee or any other issue.
Thank you for writing to the FDIC.
{{2-29-96 p.4944}}
1 Your letter also discusses a proposed acquisition by Bank
"D", of all of the shares held in trust. Recently, you informed
the FDIC that the Federal Reserve Board denied Bank D's application to
acquire the shares. Since it is expected that there will still be a
change in trustee, you remain interested in the FDIC's opinion on that
issue. Go Back to Text
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