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

where the tied product is to be provided to the bank and is
related to and usually provided in connection with a traditional
bank product (a “usually-connected product”). The Board has
extended this exception by regulation (12 C.F.R.
§ 225.7(b)(1)(ii)) to include situations where a bank requires
the customer to provide a usually-connected product to an
affiliate of the bank.
b. Facts that may be relevant in determining whether a bank’s
demand that a customer provide an additional product is
appropriate include (i) the relationship between the tied
product and the desired product, (ii) whether the practice
protects the value of the bank’s credit or other exposures,
(iii) whether the practice is usual in the banking industry in
connection with the type of product involved, and (iv) whether
the condition was imposed by the bank principally to reduce
competition or to allow it to compete unfairly in the market for
the tied product.
c. Examples of permissible usually-connected products include:
(i) A bank conditions the availability of secured credit on
a requirement that the customer obtain insurance, for
the benefit of the bank, that protects the value of the
bank’s security interest in the collateral.
(ii) A bank requires affiliated parties of a troubled
borrower to pay down their loans with the bank prior
to renewing or advancing additional credit to the
borrower, or requires the borrower’s owners to
guaranty the borrower’s debt.
d. The Proposed Anti-tying Interpretation noted that a reciprocity
arrangement involving a particular product does not violate
the Anti-tying Statute simply because the arrangement is not
frequently imposed in banking transactions, since contractual
agreements between banks and their customers often are
tailored to account for the characteristics of the individual
customer and the specific transaction at issue.
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