Brazilian Firm to Invest in NY Bank First Women's Venture Marks Brasilinvest's First US Move Ms. Mello is no stranger to Brazil. Before coming to First Women's, she formed and headed for six years Marine Midland's Brazilian operations in Rio de Janeiro. Ms. Mello has known the officers of Brasilinvest "for years." She speaks Portuguese, and her husband, who has no connection with the group, is Brazilian. "My next job is to teach the the board Portuguese," she quipped. Sarah S. Kovner, chairperson of the bank, said that the new investor represents "an expected source for new business opportunities for the bank.". First Women's considers itself a boutique-type institution and has tried to serve smaller businesses and professional people. The Brazilian investors will help the bank form business ties with Brasilinvest's shareholding companies here and with Brazilian companies doing business in the United States, Ms. Mello said. Eventually, First Women's may do business in Brazil, she added. "It can mean a whole new specialization for our bank," said Ms. Mello. The new partners will allow First Women's to "accelerate our own marketing plan" and will work with them to "develop a whole new range of services." No Changes in Focus Ms. Kovner emphasized that "this action in no way changes the character and philosophy of the bank, which was formed in 1975 to provide banking services and employment opportunities to all persons in a non-discriminatory manner." She added that Brasilinvest is committed not only to this philosophy but to the present board and management of the bank. Ms. Mello said the new investors at first will have "a couple of seats on the board." Brasilinvest will file the applications for the necessary regulatory approval. First Women's has 372,000 outstanding shares held by about 7,200 shareholders. The stock is thinly traded from $5 to $8 per share with a book value of about $6. First Women's earned $358,832 or 96 cents per share, five times greater than the year earlier $71,750 or 24 cents per share. THE NEW YORK TIMES, FRIDAY, OCTOBER 15, 1982 Counteroffer Considered for First Women's Bank higher bidder, Mr. Alenstein said. Both the executives of Brasilinvest Brasilinvest's directors have said When it first opened on 57th Street lose its special status. Why the wallflower, the First Women's 50% owned by women, and so would Bank, has not one, but two suitors. N Any port in a storm By Janet Bamford a EW YORK'S First Women's Bank has hardly been runaway success. Founded in 1975, it only narrowly escaped going under a few years ago, and the first nine months' profits were a paperthin $130,000, off 53% from the same period last year. So it's something of a surprise to find not one, but two suitors trying to buy control. Even more surprising is the fact that whoever gains control of First Women's will be getting the bank in even worse shape than it is today. That's because the First Women's Bank is classified as a "minority bank" under 1971 and 1979 executive orders. To qualify, a bank must meet certain conditions: Over 50% of the stock must be owned by women, over half the directors must be women and a "significant percentage" of senior management positions must be held by women. Because of this minority status, the bank gets special consideration for federal agency deposits, which it otherwise wouldn't have first crack at. This meant big money for First Women's in previous years. Last year some 40% of the bank's $2.8 That could be quite a problem. According to the prospectus, the loss of that status "could have a materially adverse effect on the bank's financial position. " Still, the bank directors have recommended that the shareholders accept Brasilinvest's offer of $15 a share on a book value of $6 a share (before the tenders, the stock was selling as low as $4 a share). After all, that's not only a good offer, Brasilinvest has said it has no intention of dismissing any of the bank's directors for at least two years. Why would Brasilinvest want to pay a high premium for a marginal bank that's going to suffer badly as a direct result of the takeover? That's easy. "The key is to get a foothold in New York," says Fred Puorro, a banking analyst with Keefe, Bruyette & Woods. "Maybe this is the only way to establish a major U.S. chartered bank. What are you going to do, buy Irving Trust?" The U.S. is the best place in the world to have a bank and the best place for South Amencans anxious to get their money into a safe, dollar-denominated haven. The $5.6 million that it could cost Brasilinvest to buy First Women's is a cheap admission price. 40 FORBES, DECEMBER 6, 1982 Chicago Sun-Times 10/10/82 Arabs tied to failure of bank in suburb By Charles Nicodemus Arab investors who helped bankroll the purchase of the Tri-State Bank of Markham-and then forced the new owners into unsound practices-played a major role in the south suburban bank's collapse, federal sources disclosed Saturday. Investigators cooperating with the U.S. attorney's office said a criminal inquiry is under way of management and banking procedures pursued by the bank's three top directors, based on scrutiny of the bank's books by examiners from the Federal Deposit Insurance Corp. Markham Ald. Michael Hurley said, "We've been seeing long black limousines with smoked windows pulling up at the hank and with turhana and robes coming and going. We knew something was up." The state's commissioner of banks, William C. Harris, closed the $16 million institution Friday night and announced Saturday that its 7,000 depositors could start getting their money at 9 am. Tuesday. Harris said the nearby Interstate Bank of Oak Forest will provide temporary facilities outside the shuttered Markham bank, will rent the bank building once the FDIC's liquidation operation is completed, and probably will seek to buy the building and provide "limited service there." The facility was the fifth Illinois bank to go under in 1982, the largest one-year total since the Depression, Harris said. Harris told a press conference Saturday that the bank's three top directors had fostered "unsafe and unsound banking practices, which resulted in excessive loan and operating losses." However, "all the bank's accounts" were insured by the FDIC, which protects accounts of up to $100,000, Harris pointed out While the City of Markham and several other governmental agencies had much larger amounts on deposit, those accounts were secured by government securities held by the bank, "and so no money will DEPOSITORS stand outside the Tri-State Bank in south suburban Markham, wondering wat will happen to their accounts. The bank was closed by the state because of poor management. (Sun-Times Photo by Bob Black) be lost," Harris said. The federal probe reportedly is focusing on George-L Worling-and-Martin B. Schaffer, federal sources disclosed. The two, forced out by state and federal officials, owned 85 percent of the common stock and 35 percent of preferred stock. With a third director, Norman Suran, they reportedly controlled all major banking operations. The two bought the bank in March reportedly for $900,000-plus-from Central National Bank of Chicago, which had ' taken over the small, ailing facility and had run it for 14 months after two prior owners defaulted on the loan they used to buy the institution. Federal investigators said "Arab investors"-whom they declined to identify further-had helped provide Worling and Schaffer with financing to acquire the facility, which is the only bank in the suburb of 15,300 residents. "And their backers apparently started turning the screws," one federal aide said. "forcing international commitments and engaging in other improper business prac tices that ended up saddling the bank incredibly high liabilities." Schaffer, of Flossmoor, who is a Dow town architect, refused to answer q tions about the bank. Worling could act be reached for comment. Harris would neither confirm nor dey the reports of Arab influence in the bank, which had been listed in the commissioner for more than three years. of banks' records as a "troubled" faciky directors' dealings "had seriously impai But Harris acknowledged that the the bank's capitalization and were end gering its deposits.". It was learned that at least one of the top administrative officers of the basi disgusted at the policies and practices of the new owners, tipped off state officia's to irregularities in early June. Harris said his staff found evidence of the alleged irregularities during an "extessive supervisory inspection" in late Juze, top directors July 21. and began removal proceedings against the "But the bank's condition just deter rated too rapidly for us to save it," he said APPENDIX 4.-FEDERAL RESERVE BOARD REGULATION OF FOREIGN BANK HOLDING COMPANIES November 7, 1980 TO: Board of Governors FROM: Staff* SUBJECT: Nonbanking Activities of Foreign Banking Organizations. ACTION REQUESTED: Approval of the attached draft regulations (Attach ment A). BACKGROUND: Foreign institutions that conduct banking operations in the U.S. whether through branches, agencies, subsidiary banks or commercial lending companies, are subject to the nonbanking prohibitions of the Bank Holding Company Act ("BHCA"). Unless eligible for a specific exemption those prohibitions limit a foreign institution's nonbanking activities wherever those activities are conducted. Chiefly to limit the Act's extraterritorial effect, the BHC includes two exceptions that are available to foreign institutions. Section 4 (c) (9) authorizes the Board to exempt by regulation or order the investments or activities of a foreign banking institution the greater part of whose business is conducted outside the U.S. if the Board determines that the exemption would not be "substantially at variance with the purposes of [the] Act and would be in the public interest." The Board's 1971 regulations implementing this provision authorize a foreign bank holding company, more than half of whose consolidated assets or revenues are abroad, to engage directly or indirectly in any nonbanking activities outside the U.S. U.S. activities of a foreign nonbanking company may only be engaged in if they are incidental to that company's international or foreign business. The regulations ⭑ Legal Division (Mr. Hurley and Ms. O'Day); Division of Banking Supervision and Regulation (Messrs. Dahl and Martinson). (642) |