The Office of the Comptroller of the Currency has given its nod to a plan by Chemical Bank to form an investment-products company in partnership with Liberty Financial Services, provided strict disclosure practices are followed.
The joint venture, dubbed Chemical Investment Services, must clearly inform consumers of the risks associated with non-traditional bank products, the Comptroller's office said in an approval letter.
Industry observers said the nine-page letter, dated July 1, contained no surprises. It is similar in tone and content to one the Comptroller's office issued earlier this year, when it approved a joint venture between NationsBank Corp. and Dean Witter Financial Services.
Among the conditions:
* The partnership should explain to customers any relationships either party has to products, the letter stipulates.
* Chemical, through its subsidiary, must have veto power over any partnership activities.
The deal is structured so that Chemical and Liberty have a fifty-fifty stake in the partnership for an initial term of 20 year.
The last regulatory hurdle is approval by the National Association of Securities Dealers. Chemical Investment Services expects that will come in September.
Meanwhile, 60 Liberty representatives have been selling products in Chemical branches as part of an interimmarketing arrangement.