Richmond Fed Sets Limits on First American
WASHINGTON -- The Federal Reserve Bank of Richmond has imposed tough operating restrictions on First American Bankshares Inc. and its parent, First American Corp.
In an attempt to ensure that the companies maintain adequate capital, the Richmond bank stipulated that it must approve any dividend declaration or payment.
7 Banks Affected
The agreement affects seven First American banks in Virginia, the District of Columbia, and Maryland, which have combined assets of about $10.5 billion.
Other terms include:
* Within 60 days, the companies must submit a written plan for maintaining current capital levels and for raising additional capital, should that become necessary.
* The companies must give the Richmond Fed 10 days' notice of transactions for more than $100,000.
* Legal fees exceeding $25,000 a month must be reviewed by a bank director and senior auditor.
* The banking companies and their affiliates must "cooperate fully" with the Federal Reserve's investigation into the Bank of Credit and Commerce International, which controlled First American without the Fed's knowledge.
* The companies must further restrict "upstream transactions" without prior written approval between holding companies based in Amsterdam and the Netherlands Antilles.
The Richmond Fed made the agreement Sept. 10 and released it Friday, the day after top Fed officials testified before the House Banking Committee on Luxembourg-based BCCI.