Securities Activities of Banks in the GLB Era - Cleary Gottlieb Steen ...

(B) in accordance with this policy, the bank
conducts a review of the overall profitability of
the customer’s relationships with the bank and
its affiliates and determines that the
profitability of the customer’s existing
relationships (e.g., a bank credit facility) does
not meet the hurdle rate; and
(C) in light of this review, the bank informs the
customer that the bank will not renew the
customer’s credit facility unless the customer
commits to provide the bank or its affiliates
sufficient additional business to allow the
customer’s overall relationships to meet the
hurdle rate (but under circumstances where the
bank does not tie renewal of the credit to the
purchase by the customer of any specific
products from the bank or its affiliates but
rather offers a “wide” variety of traditional
bank products, as well as underwriting services
and other non-traditional products);
the bank’s actions would be permissible under the
Anti-tying Statute if the customer could reasonably
obtain sufficient traditional bank products to permit the
customer to meet the hurdle rate.
The Proposed Anti-tying Interpretation indicated that a
bank would provide a customer a meaningful option
even though the customer had a long-standing
arrangement with another financial institution, so long
as the customer may legally transfer traditional bank
product business to the bank and the bank would be
able to satisfy the customer’s need for such a product.
While authorizing mixed product arrangements
essentially validates the principles of relationship
banking, a number of questions remain, and the Board
has been asked to:
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