Mitsui Pulls Charter Request; Security Pacific Deal in Doubt
After a vigorous challenge by activists using the Community Reinvestment Act, giant Mitsui Taiyo Kobe Bank Ltd. of Tokyo has withdrawn an application to convert its New York trust company to a bank.
Although the bank denied it is buckling under to protests, it remains unclear whether its decision might affect a proposed venture with Security Pacific Corp.
As part of a strategic alliance, Security Pacific announced in July 1989 that it would buy 20% of Mitsui's Los Angeles-based bank.
When reinvestment-act protests erupted, the banks asked the Federal Reserve to hold off on that application.
Fed Lent Ear to Protesters
The Japanese bank's decision to withdraw its application for a banking charter in New York was announced by the Fed last week. The application would have allowed Taiyo Kobe Bank and Trust Co. to offer a full range of banking services.
In deliberations on the charter request, the Fed had agreed to take into consideration the reinvestment-act record of Mitsui's Los Angeles-based bank, Mitsui Manufacturers Bank.
Community groups mounted a challenge that culminated in a rare public hearing convened by regulators in March. In an all-day meeting at a community hall in the Watts section of Los Angeles, 19 speakers, including a Los Angeles City councilman, criticized Mitsui Manufacturers' reinvestment-act record.
But Mitsui Taiyo Kobe denied that the protests had anything to do with its recent decision to drop the request for a bank charter. "At this point, it is not favorable with our strategy," said Toshihite Nakanishi, a New York-based senior vice president of the Americas division of the Japanese bank.
Community groups were delighted by the news, but did not indicate the hard-fought battle was over.
"Now that Mitsui has withdrawn their application, community groups will be even more vigilant in monitoring the bank," warned Gilda Haas, spokeswoman for Communities for Accountable Reinvestment, a Los Angeles group that helped mount the reinvestment-act challenge.
William LaBelle, executive vice president of Mitsui Manufacturers in Los Angeles, said he could not comment on why the Japanese bank decided to withdraw the application.
"Our program to improve our CRA rating is on track," Mr. LaBelle said. "We have moved ahead aggressively to improve our CRA record."
Neither Los Angeles-based Security Pacific nor Mitsui Taiyo Kobe would comment on the future of their strategic alliance.