Stake in Hartford cleared as it becomes a bank to get help
Allianz’s could benefit from the US Treasury Department's $250bn (£170bn) capital injection program after the Federal Reserve allowed it to keep its stake in Hartford Financial Services Group.
The rescue program is designed for banks, but insurers with a federally regulated banking or thrift division are eligible to apply and Hartford is changing itself into a bank holding company to get at the money.
The Fed said it made the move "in light of the unusual and exigent circumstances affecting the financial markets."
An extract from the ruling:
Section 4 of the BHC Act requires a bank holding company to obtain the Board’s approval before acquiring more than 5% of the voting shares of a savings association, regardless of whether the acquisition would represent a controlling interest.
Allianz is subject to the BHC Act as a result of its ownership of Dresdner Bank AG (“Dresdner”), Frankfurt am Main, Germany, which operates a branch in New York, New York. Allianz owns 23.7% of the voting shares of The Hartford, a diversified financial services company. On November 14, 2008, The Hartford applied to the Office of Thrift Supervision (“OTS”) to acquire Federal Trust Corporation (“FTC”), the parent savings and loan holding company of Federal Trust, and thereby acquire control of Federal Trust.
Section 4(i)(4) of the BHC Act requires the Board to provide the director of OTS with notice of an application to acquire a savings association and to provide the director a period of time (normally 30 days) within which to submit views and recommendations on the proposal. The BHC Act also authorizes the Board to reduce or eliminate this notice period under certain circumstances.
In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the Board has determined that emergency conditions exist that justify expeditious action on this proposal in accordance with the provisions of the BHC Act and the Board’s regulations. The Board has provided notice to OTS, the primary federal supervisor of FTC and Federal Trust, and to the Department of Justice (“DOJ”). Those agencies have indicated they have no objection to approval of the proposal. For the same reasons, and because this transaction represents a minority, noncontrolling investment in The Hartford and its proposed subsidiary depository institution, the Board has waived public notice of the proposal.
