Fed to liberalize anti-tying rules; Fleet receives a specific exemption.

WASHINGTON -- The Federal Reserve Board Wednesday announced plans to liberalize anti-tying regulations, which limit a bank's ability to offer discounts to its best customers.

The Fed also approved a specific exemption from the antitying rules for Fleet Financial Group. The Providence, R.I., company may waive monthly fees for customers who hold $10,000 in a brokerage account, a mutual fund, on a credit card, or in a checking or savings account.

The Fed said Fleet's offer does not violate the spirit of the antitying laws because it allows customers to choose which products they use, rather than dictating where the people must place their money to get the discount.

The central bank has been slowly easing anti-tying restrictions since 1990 when it allowed Norwest Corp. and NCNB Corp. to offer a price reduction on credit cards issued to bank customers. The Fed went a step further in February when First Union Corp. was allowed to offer brokerage discounts to bank customers.

Rather than requiring banks to apply individually for exemptions from anti-tying rules, the central bank proposed a general exemption Wednesday.

Out for public comment, the Fed's proposal would allow any institution to offer breaks to customers who buy multiple products from it.

Separately, the Fed on Wednesday implemented a provision of the Foreign Bank Supervision Enhancement Act that limits what state-chartered foreign bank affiliates can do. The rule prohibits a state-chartered operation of a foreign bank from engaging in any business not available to federally chartered affiliates unless it gets approval from the Fed first.

The rule also notes that the Fed will give its permission only if the new activity does not impact safety and soundness, and if the Federal Deposit Insurance Corp. determines that the activity poses no risk to the insurance fund.

Finally, the rule states that the U.S. affiliate of a foreign bank may switch from a federal to a state charter without central bank approval.

One foreign banker said the changes were "not that big of a deal." She said most foreign banks do not have deposit insurance, so the FDIC provisions do not apply.

The rule will affect only a tiny handful of state-chartered, foreign bank affiliates that engage in real estate development or other activities that federally chartered banks cannot conduct, she said.

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