<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-5801
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 24, 1996)
$300,000,000
[HSBC LOGO]
HSBC AMERICAS, INC.
Member HSBC Group
7.00% SUBORDINATED NOTES DUE NOVEMBER 1, 2006
------------------
The Subordinated Notes (the "Notes") will mature on November 1, 2006. Interest
on the Notes will be payable semi-annually in arrears on May 1 and November 1 of
each year, beginning May 1, 1997. The Notes will be unsecured and subordinated
as set forth under "Description of the Notes". The Notes are not redeemable
prior to maturity and are not subject to any sinking fund. Payment of principal
of the Notes may be accelerated only in the case of certain events of
bankruptcy, insolvency or reorganization of HSBC Americas, Inc. (the
"Corporation") or receivership of the Corporation's principal subsidiary, Marine
Midland Bank (the "Bank"). There is no right of acceleration upon a default in
the payment of principal or interest or in the performance of any covenant in
the Notes or the Indenture dated as of October 24, 1996, between the Corporation
and Bankers Trust Company (the "Indenture").
The Notes will be represented by global securities (the "Global Securities")
registered in the name of the nominee of the Depository Trust Company ("DTC").
Interest in the Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by DTC and its participants. Except
as provided herein, Notes in definitive form will not be issued. The Notes will
trade in DTC's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Notes will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Corporation in immediately available funds. See "Description of the Notes"
herein and "Description of Debt Securities" in the accompanying Prospectus (the
"Prospectus").
------------------
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
OR NONBANK SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY
OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) CORPORATION(1)(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note........................... 99.16% 0.65% 98.51%
- ---------------------------------------------------------------------------------------------------------
Total.............................. $297,480,000 $1,950,000 $295,530,000
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from November 4, 1996.
(2) The Corporation has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Corporation estimated at $460,000.
</TABLE>
------------------
The Notes are offered by the several Underwriters, subject to prior sale, when,
as and if issued to and accepted by them, subject to certain conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Notes in
book-entry form will be made through the facilities of DTC on or about November
4, 1996. This Prospectus Supplement and the Prospectus may be used by HSBC
Securities, Inc., an affiliate of the Corporation, or other affiliates of the
Corporation in connection with offers and sales related to market-making
activities. HSBC Securities, Inc. or such affiliates may act as principal or
agent in any such transactions which will be made at negotiated prices related
to the prevailing market prices at the time of sale.
------------------
HSBC SECURITIES, INC. MERRILL LYNCH & CO.
J.P. MORGAN & CO. SMITH BARNEY INC.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 29, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED IN THE OVER THE COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CORPORATION
HSBC Americas, Inc. (the "Corporation"), formerly Marine Midland Banks,
Inc., is a New York State-based bank holding company registered under the Bank
Holding Company Act of 1956, as amended. At September 30, 1996, the Corporation,
together with its subsidiaries, had assets of $22.2 billion, deposits of $17.2
billion and shareholders' equity of $1.9 billion.
The Corporation is an indirect wholly-owned subsidiary of HSBC Holdings plc
("HSBC"). HSBC, with assets of approximately $352 billion at December 31, 1995
and net income of approximately $3.9 billion for the year ended December 31,
1995, is one of the world's largest banking groups. HSBC, the ultimate parent
company of the Hongkong and Shanghai Banking Corporation Limited and Midland
Bank plc, is an international banking and financial services organization with
major commercial and investment banking franchises operating under long
established names in Asia, Europe, North America and the Middle East. The
principal executive offices of HSBC are located in London.
The Corporation's principal subsidiary, the Bank, which had assets of $22.0
billion and deposits of $18.4 billion at September 30, 1996, is supervised and
routinely examined by the Superintendent of Banks of the State of New York (the
"Superintendent of Banks") and the Board of Governors of the Federal Reserve
System (the "Board of Governors"). The Bank is a regional bank with 330 branches
creating a distinctive geographic franchise which encompasses the entire State
of New York. The Bank has a presence in each of the upstate New York markets, as
well as in New York City. Selected banking products, including credit cards and
asset based lending, are offered on a national basis. The Bank is engaged in a
general commercial banking business, offering a full range of banking products
and services to individuals, corporations, institutions and governments. Through
its affiliation with HSBC, the Bank offers its customers access to global
markets and services. In turn, the Bank plays a role in the delivery and
processing of other HSBC products.
RECENT DEVELOPMENTS
On August 28, 1996, the Corporation announced that it had reached agreement
on August 21, 1996 with CT Financial Services Inc., a federal corporation
organized under the laws of Canada (the "Seller") to purchase from the Seller
all of the issued and outstanding common shares of CTUS Inc. ("CTUS"), a unitary
thrift holding company. CTUS owns approximately 99% of the issued and
outstanding shares of First Federal Savings and Loan Association of Rochester
("First Federal"), a thrift institution which, at June 30, 1996, had
approximately $7.2 billion in assets and approximately $4.4 billion in deposits
and operated 80 branches across New York State including 31 branches in Monroe
and Erie counties. The purchase price to be paid by the Corporation to the
Seller is $620 million in cash, subject to certain upward or downward
adjustments. It is contemplated that simultaneously with the purchase of the
common shares of CTUS by the Corporation, First Federal will be merged with and
into the Bank. The acquisition of CTUS is expected to expand the scope of the
Bank's operations to a wider retail customer base as well as its existing
mortgage origination network. After the closing of the purchase of the CTUS
common shares, the Seller will continue to hold certain securities of CTUS for
the sole purpose of providing to the Seller the amount of the net recovery, if
any, by First Federal (or the Bank as its successor) resulting from the pending
action in the United States Court of Claims by First Federal against the United
States government alleging breaches by the government of contractual
undertakings to First Federal following passage of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989.
S-2
<PAGE> 3
Completion of the acquisition is subject to certain conditions, including
receipt of necessary regulatory approvals, including approval of the Board of
Governors and the Superintendent of Banks, as well as notification of the Office
of Thrift Supervision. The transaction, when completed, will be accounted for as
a purchase, and the results of CTUS's operations will be included in the
Corporation's financial statements from the date of acquisition.
On August 13, 1996, the Bank announced that it had entered into an
agreement to acquire the institutional United States dollar clearing activity of
Morgan Guaranty Trust Company of New York. This transaction is also subject to
regulatory approval. Additionally, prior to June 30, 1996, the Corporation
acquired two New York City branches of the Hang Seng Bank, an affiliate of the
Corporation, and selected assets and liabilities of East River Savings Bank.
USE OF PROCEEDS
The net proceeds to be received by the Corporation from the sale of the
Notes, estimated to be $295.1 million after deducting offering expenses and
underwriting commissions, will be added to the general funds of the Corporation
and will be available for general corporate purposes, including the funding of
investments in or extensions of credit to subsidiaries. Pending such
application, the net proceeds will be invested in short-term investments
including deposits with subsidiary banks.
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the historical capitalization of the
Corporation as of September 30, 1996 and as adjusted to give effect to the
issuance of the Notes offered hereby.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
($ IN THOUSANDS)
<S> <C> <C>
LONG TERM DEBT
8 5/8% Subordinated Capital Notes due 1997......................... $ 125,000 $ 125,000
Floating Rate Subordinated Capital Notes due 1999.................. 100,000 100,000
Floating Rate Subordinated Notes due 2000.......................... 200,000 200,000
Floating Rate Subordinated Notes due 2009.......................... 124,320 124,320
Subordinated Notes due 2006 offered hereby......................... 0 300,000
---------- ----------
549,320 849,320
Other notes payable................................................ 216 216
Obligations under capital leases................................... 33,613 33,613
---------- ----------
Total long term debt............................................... 583,149 883,149
---------- ----------
SHAREHOLDERS' EQUITY
$5.50 Cumulative Preferred Stock, 49,158 shares authorized, 22,154
shares outstanding............................................... 2,216 2,216
Adjustable Rate Cumulative Preferred Stock, 10,000,000 shares
authorized, 1,916,950 shares outstanding......................... 95,847 95,847
Common Stock, $5 par value, 1,100 shares authorized, 1,001 shares
outstanding...................................................... 5 5
Capital surplus.................................................... 1,803,274 1,803,274
Retained earnings.................................................. 37,926 37,926
Net unrealized gain on securities available for sale, net of
taxes............................................................ 3,389 3,389
---------- ----------
Total shareholders' equity......................................... 1,942,657 1,942,657
---------- ----------
TOTAL CAPITALIZATION............................................... $2,525,806 $2,825,806
========== ==========
</TABLE>
S-4
<PAGE> 5
RECENT FINANCIAL RESULTS
The Corporation reported net income for the nine months ended September 30,
1996 of $276 million, up from $219 million for the comparable period in 1995.
Return on average common equity was 21.20% for the first nine months of the
year, compared to 17.37% for the same period in 1995, while return on average
assets was 1.78% compared to 1.56% during the same period last year.
Net interest income during the first nine months of 1996 was $706 million,
which was $43 million above the level for the same period in 1995. On a taxable
equivalent basis, net interest income during the first nine months of 1996 was
$709 million, which was $43 million, or 6.4%, above the level for the same
period in 1995. Net interest margin was 4.58% during the first nine months of
1996, compared to 4.75% for the comparable period in 1995. The increase in net
interest income was attributable to higher average earning asset balances, which
increased 11.4% from the nine-month period ended September 30, 1995.
The provision for loan losses of $50 million was $108 million lower than in
the comparable period in 1995. Net charge-offs for the first nine months of 1996
were at a level of 0.7% of average outstanding loans, as compared to 1.2% a year
earlier.
Non-performing assets were $449 million at September 30, 1996, or 3.10% of
total loans and other real estate. This was a $129 million decrease from the
December 31, 1995 level, which was 4.16% of total loans and other real estate.
The allowance for loan losses was $441 million at September 30, 1996, or 98% of
non-performing assets.
Other operating income, excluding gains and losses, decreased by 1.2% to
$225 million in the first nine months of 1996, as compared to $228 million for
the same period in 1995.
Total assets on September 30, 1996 were $22.2 billion, an increase of $2.3
billion or 11.3% from September 30, 1995. The increase reflected growth in the
Bank's retail businesses, higher investment in money market assets and the
acquisitions of branches of the Hang Seng Bank and East River Savings Bank in
the first two quarters of 1996. See "Recent Developments."
Earning assets totaled $20.8 billion on September 30, 1996, an increase of
$2.4 billion, or 12.7%, over the total on September 30, 1995. Loans, the largest
category of earning assets, represented 69.5% of earning assets, as compared to
72.4% a year earlier. Total loans were $14.4 billion on September 30, 1996, an
increase of 8.1% as compared to September 30, 1995.
Funding sources, consisting of deposits and borrowed funds, increased by
$2.4 billion, or 14.4%, from September 30, 1995 to $19.3 billion on September
30, 1996. Total deposits were $17.2 billion, an increase of $2.4 billion, or
16.4%, over total deposits one year earlier.
Shareholders' equity totaled $1.9 billion at September 30, 1996, an
increase of $246 million and $111 million over shareholders' equity at December
31, 1995 and September 30, 1995, respectively. Total equity as a percent of
total assets amounted to 8.77% at September 30, 1996. Under risk-based capital
rules, Tier 1 and total capital ratios were 11.19% and 15.61%, respectively, of
risk-adjusted assets at September 30, 1996. The Corporation's leverage ratio as
of September 30, 1996 was 8.54%.
S-5
<PAGE> 6
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated historical
financial information for the Corporation for each of the years in the five-year
period ended December 31, 1995 and for the nine-month periods ended September
30, 1995 and 1996. Such information has been derived from, should be read in
conjunction with, and is qualified in its entirety by, the consolidated
financial statements of the Corporation, including the notes thereto,
incorporated by reference in the Prospectus. The financial information for the
five years ended December 31, 1995 has been derived from the audited
consolidated financial statements of the Corporation. The unaudited financial
information for the nine-month periods ended September 30, 1995 and 1996 have
been derived from the unaudited consolidated financial statements of the
Corporation. In the opinion of management, such unaudited financial information
contains all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the nine-month
periods ended September 30, 1995 and 1996 are not necessarily indicative of
results which may be expected for any other period or for the fiscal year as a
whole.
The Corporation's reported results have been restated to include the
results of Concord Leasing, Inc. ("Concord") and Oleifera Investments, Ltd.
("Oleifera"). Concord was merged with the Corporation on January 1, 1995, and
Oleifera was merged with the Corporation on January 1, 1996. Both Concord and
Oleifera were indirect wholly owned subsidiaries of HSBC prior to their
respective mergers with the Corporation, and each transaction was accounted for
as a transfer of assets between companies under common control. Concord and
Oleifera had tax loss carryforwards, but the transfers necessitated the
restatement of the Corporation's financial results to include the accounts and
results of operations of Concord and Oleifera as if the transactions had
occurred as of the beginning of the earliest period presented. This restatement
reduced the Corporation's net income by $266 million in 1994, $363 million in
1993 and $167 million in 1992, and increased net income by $16 million in 1991.
Prior to this restatement, the Corporation reported net income of $229 million,
$173 million and $109 million for the years ended December 31, 1994, 1993 and
1992, respectively, and a net loss of $190 million for the year ended December
31, 1991. The data in the following table has been restated to include the
accounts and results of operations of Concord and Oleifera.
S-6
<PAGE> 7
HSBC AMERICAS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
($ IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY INCOME STATEMENT(a):
Net interest income.................... $ 706 $ 663 $ 892 $ 782 $ 727 $ 716 $ 747
Provision for loan losses.............. 50 158 175 169 108 289 345
Other operating income................. 232 239 315 296 117 421 389
Other operating expense................ 488 512 696 820 944 907 938
------- ------- ------- ------- ------- ------- -------
Income (loss) before taxes, the
cumulative effect of change in
accounting principle and
extraordinary item................... 400 232 336 89 (208) (59) (147)
Applicable income tax expense.......... 124 13 52 126 22 29 27
------- ------- ------- ------- ------- ------- -------
Income (loss) before the cumulative
effect of change in accounting
principle and extraordinary item..... 276 219 284 (37) (230) (88) (174)
Cumulative effect of change in
accounting principle and
extraordinary item (b)............... -- -- -- -- 40 30 --
------- ------- ------- ------- ------- ------- -------
Net income (loss) (a).................. $ 276 $ 219 $ 284 ($ 37) ($ 190) ($ 58) ($ 174)
======= ======= ======= ======= ======= ======= =======
SELECTED PERIOD END BALANCES(a):
Total assets........................... $22,158 $19,909 $20,553 $19,120 $20,323 $19,251 $19,931
Loans.................................. 14,426 13,341 13,772 13,134 12,521 12,678 14,377
Allowance for loan losses.............. 441 530 478 531 524 701 727
Deposits............................... 17,235 14,803 15,330 13,781 12,979 13,104 13,568
Long term debt......................... 583 710 710 713 1,704 2,201 1,731
Preferred shareholders' equity......... 98 98 98 98 98 98 98
Common shareholder's equity............ 1,845 1,734 1,599 1,559 1,602 1,528 1,462
Total shareholders' equity............. 1,943 1,832 1,697 1,657 1,700 1,626 1,560
SELECTED FINANCIAL RATIOS:
Return on average total assets......... 1.78% 1.56% 1.50% -0.20% -0.99% -0.31% -0.84%
Return on average common equity........ 21.20 17.37 16.53 -2.72 -12.48 -4.33 -14.02
Average total shareholders' equity to
average total assets................. 8.75 9.33 9.37 9.00 8.68 8.34 6.72
Allowance for loan losses as a % of
total loans at period end............ 3.06 3.97 3.47 4.05 4.19 5.53 5.06
Nonaccruing loans as a % of total
loans, at period end................. 2.65 4.39 3.40 8.08 8.95 15.87 15.30
Nonaccruing loans, other real estate
and other owned assets as a % of
total assets at period end........... 2.03 3.91 2.81 6.34 6.74 12.43 11.98
<FN>
- ---------------
(a) The consolidated financial information for each of the years in the
five-year period ended December 31, 1995 and for the nine-month period ended
September 30, 1995 have been restated to include the results of Concord and
Oleifera. Prior to such restatement, the Corporation reported net income of
$229 million, $173 million and $109 million for the years ended December 31,
1994, 1993 and 1992, respectively, and a net loss of $190 million for the
year ended December 31, 1991.
(b) Includes the cumulative effect of a change in the method of accounting for
income taxes in 1993 and an extraordinary item relating to the utilization
of operating loss carryforwards in 1992.
</TABLE>
S-7
<PAGE> 8
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Subordinated Securities
(as defined in the Prospectus) set forth in the Prospectus, to which description
reference is hereby made. Capitalized terms not otherwise defined herein have
the meanings set forth in the Prospectus.
GENERAL
The Notes will be obligations of the Corporation limited to $300,000,000
aggregate principal amount at maturity, will mature on November 1, 2006 (the
"Maturity Date") and will be issued under an Indenture (the "Indenture") dated
as of October 24, 1996, between the Corporation and Bankers Trust Company, as
trustee (the "Trustee"). The Indenture is more fully described in the
Prospectus.
The Notes will be direct and unsecured subordinated obligations of the
Corporation and will rank pari passu among themselves, without any preference
one over the other by reason of priority of date of issue or otherwise. The
Notes will also rank pari passu in right of payment with Indebtedness Ranking on
a Parity with the Debt Securities (as defined in the Indenture). There is no
Indebtedness Ranking on a Parity with the Debt Securities outstanding on the
date hereof in addition to the Indebtedness Ranking on a Parity with the Debt
Securities listed in the Prospectus. See "Description of Debt Securities --
Subordinated Securities -- Subordination" in the Prospectus. The rights of
Holders of the Notes will, in the case of any bankruptcy, insolvency,
receivership, reorganization or similar proceedings in respect of the
Corporation or any liquidation or winding up of or relating to the Corporation
as a whole, whether voluntary or involuntary, be subordinated in right of
payment to all obligations of the Corporation to holders of Senior Indebtedness.
The aggregate amount of Senior Indebtedness (which does not include the Bank's
deposits) on September 30, 1996 was $2.1 billion. There are no limitations on
the issuance or incurrence by the Corporation of additional Senior Indebtedness.
INTEREST
Interest on the Notes will be payable from November 4, 1996 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on May 1 and November 1 in each year
(each an "Interest Payment Date"), commencing May 1, 1997, at the rate of 7.00%
per annum, to the persons in whose names the Notes are registered at the close
of business on the fifteenth day next preceding such Interest Payment Date until
the principal thereof is paid or made available for payment.
The Notes will be sold in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The Notes are not redeemable prior to
maturity. See "Description of Debt Securities -- Subordinated
Securities -- Redemption" in the Prospectus. The Notes are not subject to any
sinking fund. Provisions of the Indenture relating to Defeasance will be
applicable to the Notes. Defeasance of the Corporation's obligations with
respect to the Notes is subject to the prior written approval of the Board of
Governors and the Bank of England. See "Description of Debt
Securities -- Defeasance and Covenant Defeasance" in the Prospectus.
If the Corporation does not pay any installment of interest on the Notes on
the applicable Interest Payment Date or all or any part of the principal thereof
on the Maturity Date, the obligation to make such payment and such Interest
Payment Date or Maturity Date, as the case may be, shall be deferred until (i)
in the case of a payment of interest, the date upon which a dividend is paid on
any class of share capital of the Corporation and (ii) in the case of a payment
of principal, the first Business Day after the date that falls six months after
the original Maturity Date. Each payment so deferred will accrue interest at the
rate per annum shown on the front cover of this Prospectus Supplement. Any
payment so deferred shall not be treated as due for any purpose. Any such
deferral shall take place only once with respect to any payment of interest or
principal.
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<PAGE> 9
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in same-day funds and all payments of
principal and interest will be made by the Corporation in same-day funds. The
Notes will trade in the Same-Day Funds Settlement System of DTC until maturity,
and secondary market trading activity for the Notes will therefore settle in
immediately available funds.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully registered Global
Securities. The Global Securities will be deposited with or on behalf of DTC and
registered in the name of DTC's nominee. Except as set forth below, the Global
Securities may be transferred, in whole and not in part, only by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any nominee to a successor depositary or any nominee of such depositary.
DTC has advised the Corporation that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds securities for
persons that have accounts with it ("Participants") and to facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations (including the Underwriters). DTC is
owned by a number of its Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Indirect access to the DTC system also is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). Beneficial owners of the Notes that are not
Participants or Indirect Participants but desire to purchase, sell or otherwise
transfer ownership of, or other interest in, the Notes may do so only through
Participants and Indirect Participants. The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
DTC has advised that, pursuant to procedures established by it (i) upon
issuance of the Global Securities by the Corporation, DTC will credit the
accounts of the Participants designated by the Underwriters with the principal
amount of the Notes purchased by the Underwriters and (ii) ownership of
beneficial interests in the Global Securities will be shown on, and the transfer
of that ownership will be effected only through, records maintained by DTC (with
respect to Participants' interests), the Participants and the Indirect
Participants (with respect to owners of beneficial interests in such Global
Securities).
So long as DTC's nominee is the registered owner of the Global Securities,
such nominee will for all purposes be considered the sole owner of the Notes
represented by the Global Securities for all purposes under the Indenture. None
of the Corporation, the Trustee or the Security Registrar has any responsibility
or liability for the payment of principal or interest on the Notes to owners of
beneficial interests in the Global Securities. DTC has advised that upon receipt
of any payment of principal or interest in respect of the Global Securities, it
will immediately credit the accounts of the Participants with such payment in
amounts proportionate to their respective beneficial interests in such Global
Securities as shown on the records of DTC. Payments by Participants and Indirect
Participants to owners of beneficial interests in the Global Securities will be
governed by standing instructions and customary practices, and will be the
responsibility of the Participants or Indirect Participants.
The Corporation understands that under existing industry practices, if it
requests any action of Holders of Notes or if a beneficial owner of a Note
desires to give or take any action that a Holder is entitled to give or take
under the Indenture, DTC would authorize the Participants owning the relevant
Notes to give or take such action, and such Participants would authorize
Indirect Participants to give or take such action or would otherwise act upon
the instructions of owners holding through them.
S-9
<PAGE> 10
A Global Security will be exchangeable for certificated Notes registered in
the names of persons other than DTC or its nominee only if (i) DTC notifies the
Corporation that it is unwilling or unable to continue as depositary for such
Global Security or if at any time DTC ceases to be a clearing agency registered
under the Exchange Act at a time when DTC is required to be so registered in
order to act as such depositary or (ii) the Corporation executes and delivers to
the Trustee a Company Order (as defined in the Indenture) that such Global
Security shall be so exchangeable.
A further description of DTC's procedures with respect to the Global
Securities is set forth in the Prospectus under "Description of Debt
Securities -- Global Securities."
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") among the Corporation and HSBC Securities, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc.
and Smith Barney Inc. (the "Underwriters"), the Corporation has agreed to sell
to the Underwriters, and the Underwriters have severally agreed to purchase, the
principal amount of Notes set forth after their names below. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters will be obligated to
purchase all of the Notes if any are purchased. In the event of default by any
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
purchase commitments by nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
HSBC Securities, Inc............................................. $ 75,000,000
Merrill Lynch, Pierce, Fenner & Smith............................ 75,000,000
Incorporated
J.P. Morgan Securities Inc....................................... 75,000,000
Smith Barney Inc................................................. 75,000,000
------------
Total.......................................................... $300,000,000
============
</TABLE>
The Underwriters have advised the Corporation that they propose initially
to offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of 0.40% of the principal amount of the Notes.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of 0.25% of the principal amount of the Notes on sales to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The Notes have no established trading market. The Corporation has been
advised by the Underwriters that the Underwriters intend to make a market in the
Notes, but they are not obligated to do so, and may discontinue market-making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
The Underwriting Agreement provides that the Corporation will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute payments the Underwriters
may be required to make in respect of such liabilities.
Because HSBC Securities, Inc., an affiliate of the Corporation, is an
Underwriter, the offering of the Notes is being conducted in accordance with the
applicable provisions of Rules 2710 and 2720 of the Conduct Rules (the "Conduct
Rules") of the National Association of Securities Dealers, Inc. (the "NASD"). In
accordance with the Conduct Rules, no NASD member participating in the
distribution of the Notes is permitted to confirm sales to accounts over which
it exercises discretionary authority without prior specific written consent.
This Prospectus Supplement and the Prospectus may be used by HSBC
Securities, Inc. in connection with offers and sales related to market-making
activities. HSBC Securities, Inc. may act as principal or agent
S-10
<PAGE> 11
in any such transactions. Such sales will be made at negotiated prices related
to prevailing market prices at the time of sale.
Certain of the Underwriters are customers of, or engage in transactions
with, and from time to time have performed services for, the Corporation or its
subsidiaries in the ordinary course of business.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Corporation by Cleary, Gottlieb, Steen & Hamilton, special counsel to the
Corporation and for the Underwriters by Brown & Wood LLP.
S-11
<PAGE> 12
PROSPECTUS
LOGO
------------------
DEBT SECURITIES
PREFERRED STOCK
HSBC Americas, Inc. (the "Corporation") intends to issue from time to time
in one or more series up to $500,000,000 in aggregate initial offering price of
(i) debt securities, which may be either senior (the "Senior Securities") or
subordinated (the "Subordinated Securities"; and collectively with the Senior
Securities, the "Debt Securities") and (ii) shares of preferred stock (the
"Preferred Stock"). The Debt Securities and Preferred Stock offered hereby
(collectively, the "Securities") may be offered, separately or as units with
other Securities, in separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in an accompanying supplement
to this Prospectus (a "Prospectus Supplement").
------------------
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Corporation. The Subordinated Securities will be
subordinate to all existing and future Senior Indebtedness of the Corporation
(as defined herein). The maturity of the Subordinated Securities will be subject
to acceleration only in the event of certain events of bankruptcy, insolvency or
reorganization of the Corporation or receivership of the Corporation's principal
subsidiary, Marine Midland Bank (the "Bank").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in a Prospectus Supplement, together with the
terms of the offering of the Securities and the initial price and net proceeds
to the Corporation from the sale thereof. The Prospectus Supplement will include
the following information with respect to the Securities, where applicable: (i)
in the case of Debt Securities, the specific designation, aggregate principal
amount, ranking, denomination, maturity, priority, rate of interest (which may
be variable or fixed), time of payment of interest, terms for optional
redemption or repayment by the Corporation or any holder, the initial public
offering price, any stock exchange listings, any special provisions related to
Debt Securities issued as medium-term notes, original issue discount securities
or other special terms and the designation of the Trustee, Security Registrar
and Paying Agent, (ii) in the case of Preferred Stock, the specific title and
stated value, number of shares or fractional interests therein, terms of any
dividend, liquidation, redemption, voting and other rights, any stock exchange
listings, and the initial public offering price and (iii) in the case of all
Securities, whether such Securities are being offered separately or as a unit
with other Securities. The Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to the Securities covered by the Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE CORPORATION AND WILL NOT BE
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"), BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
------------------
The Securities may be sold by the Corporation directly to purchasers,
through agents designated from time to time, through underwriting syndicates led
by one or more managing underwriters or through one or more underwriters. The
Corporation expects that any such agents, managing underwriters or underwriters
in the United States may include HSBC Securities, Inc. or other affiliates of
the Corporation. If underwriters or agents are involved in any offering of the
Securities, the names of the underwriters or agents will be set forth in the
applicable Prospectus Supplement. If an underwriter, agent or dealer is involved
in any offering of the Securities, the underwriter's discount, agent's
commission or dealer's purchase price will be set forth in, or may be calculated
from the information set forth in, the applicable Prospectus Supplement, and the
net proceeds to the Corporation from such offering will be the public offering
price of such Securities less such discount in the case of an offering though an
underwriter or such commission in the case of an offering through an agent, and
less, in each case, the other expenses of the Corporation associated with the
issuance and distribution of such Securities.
The Corporation or one or more of its subsidiaries may from time to time
purchase or acquire a position in the Securities and may at its option, hold,
resell, cancel or exercise, if applicable, such Securities. HSBC Securities,
Inc. expects to offer and sell previously issued Securities in the course of its
business as a broker-dealer and may act as principal or agent in such
transactions. In addition, this Prospectus may be used by HSBC Securities, Inc.
or other affiliates of the Corporation in connection with offers and sales
related to market-making activities. HSBC Securities, Inc. or such affiliates
may act as principal or agent in any such transactions which will be made at
negotiated prices related to the prevailing market prices at the time of sale.
This Prospectus may not be used to consummate sales of the Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is October 24, 1996.
<PAGE> 13
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR ANY UNDERWRITER OR
AGENT. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY TIME
DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
UNLESS OTHERWISE INDICATED, CURRENCY AMOUNTS IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT ARE STATED IN U.S. DOLLARS ("$," "DOLLARS," "U.S.
DOLLARS," OR "U.S. $").
AVAILABLE INFORMATION
The Corporation is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information filed
by the Corporation can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained upon written request to the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission, including
the Corporation. Certain securities of the Corporation are listed on the New
York Stock Exchange ("NYSE"), and such reports and other information concerning
the Corporation also may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Corporation has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Securities. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement and to the exhibits thereto. Statements contained herein
concerning the provisions of certain documents are not necessarily complete, and
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Commission pursuant to
Sections 12 or 13 of the Exchange Act:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "1995 10-K").
2. The Corporation's Report on Form 10-Q for the quarter ended March
31, 1996.
3. The Corporation's Report on Form 10-Q for the quarter ended June
30, 1996.
4. The Corporation's Report on Form 8-K dated June 5, 1996 (the "June
5th 8-K").
2
<PAGE> 14
5. The Corporation's Report on Form 8-K dated August 29, 1996.
6. The Corporation's Report on Form 8-K dated August 30, 1996.
7. The Corporation's Report on Form 8-K dated October 22, 1996 (the
"October 22nd 8-K").
8. The description of the Corporation's Preferred Stock contained in
the Corporation's registration statements filed under Section 12
of the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering of the Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in the accompanying Prospectus Supplement, or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
THE CORPORATION WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROSPECTUS IS DELIVERED A COPY OF ANY OR ALL OF THE FOREGOING
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE). WRITTEN
REQUESTS SHOULD BE DIRECTED TO MANAGER, TREASURY TRANSACTIONS, HSBC AMERICAS,
INC., ONE MARINE MIDLAND CENTER, 21ST FLOOR, BUFFALO, NEW YORK 14203. TELEPHONE
REQUESTS MAY BE DIRECTED TO MANAGER, TREASURY TRANSACTIONS AT (716) 841-2577.
THE CORPORATION
HSBC Americas, Inc. (the "Corporation"), formerly Marine Midland Banks,
Inc., is a New York State-based bank holding company registered under the Bank
Holding Company Act of 1956, as amended. At September 30, 1996, the Corporation,
together with its subsidiaries, had assets of $22.2 billion, deposits of $17.2
billion and shareholders' equity of $1.9 billion.
The Corporation is an indirect wholly-owned subsidiary of HSBC Holdings plc
("HSBC"). HSBC, with assets of approximately $352 billion at December 31, 1995
and net income of approximately $3.9 billion for the year ended December 31,
1995, is one of the world's largest banking groups. HSBC, the ultimate parent
company of The Hongkong and Shanghai Banking Corporation Limited and Midland
Bank plc, is an international banking and financial services organization with
major commercial and investment banking franchises operating under long
established names in Asia, Europe, North America and the Middle East. The
principal executive offices of HSBC are located in London.
The Corporation's principal subsidiary, the Bank, which had assets of $22.0
billion and deposits of $18.4 billion at September 30, 1996, is supervised and
routinely examined by the Superintendent of Banks of the State of New York and
the Board of Governors of the Federal Reserve System (the "Board of Governors").
The Bank is a regional bank with 330 branches creating a distinctive geographic
franchise which encompasses the entire State of New York. Selected banking
products, including credit cards and asset based lending, are offered on a
national basis. The Bank is engaged in a general commercial banking business,
offering a full range of banking products and services to individuals,
corporations, institutions and governments. Through its affiliation with HSBC,
the Bank offers its customers access to global markets and services. In turn,
the Bank plays a role in the delivery and processing of other HSBC products.
3
<PAGE> 15
The Corporation's reported results are consolidated with Concord Leasing,
Inc. ("Concord") and Oleifera Investments, Ltd. ("Oleifera"). Concord, which
provides equipment financing through secured loan and finance lease
transactions, had assets of $1.5 billion at December 31, 1994. Concord was
merged with the Corporation on January 1, 1995 through the contribution of
Concord's outstanding common stock held by HSBC Holdings, B.V., an indirect
wholly owned subsidiary of HSBC, to the Corporation. The merger transaction was
accounted for as a transfer of assets between companies under common control,
with the assets and liabilities of Concord combined with those of the
Corporation at their historical carrying values. Oleifera had assets of $183
million at December 31, 1995. The assets of Oleifera were transferred to the
Corporation on January 1, 1996 through a transaction involving the contribution
of common stock held by HSBC Holdings, B.V. to the Corporation. The transaction
was accounted for as a transfer of assets between companies under common
control. The Corporation's consolidated financial statements set forth in the
June 5th 8-K reflect a restatement of all prior periods to include the accounts
and results of operations of Oleifera as if the transaction had occurred as of
the beginning of the earliest period presented.
On August 13, 1996, the Bank announced that it had entered into an
agreement to acquire the institutional United States dollar clearing activity of
Morgan Guaranty Trust Company of New York. On August 21, 1996, the Corporation
entered into an agreement with CT Financial Services Inc. for the purchase of
all of the outstanding shares of CTUS Inc., the parent company of First Federal
Savings and Loan Association of Rochester.
A more complete description of these pending acquisitions, including pro
forma and other financial information relating thereto, is set out in the
October 22nd 8-K.
COMPETITION AND INDUSTRY CONSOLIDATION
The Corporation and its subsidiaries face competition in all of the markets
they serve, competing with other major financial institutions, including
commercial banks, investment banks, savings and loan associations, credit
unions, consumer finance companies, money market funds and other non-banking
institutions, such as insurance companies, major retailers, brokerage firms, and
investment companies in New York, throughout the United States, and
internationally. One of the principal methods of competing effectively in the
financial services industry is to improve customer service through the quality
and range of services available, easing access to facilities and pricing. One
outgrowth of this competitive environment has been a significant number of
consolidations in the banking industry both on a national and regional level,
partially in response to changes in the regulatory framework governing banks'
interstate activities. See "Supervision and Regulation". The Corporation engages
on an ongoing basis in reviewing and discussing possible acquisitions of
financial institutions, as well as banking and other assets in order to expand
its business. The Corporation intends to continue to explore acquisition
opportunities as they arise in order to take advantage of the continuing
consolidation in the banking industry.
4
<PAGE> 16
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The Corporation's ratios of earnings to fixed charges and earnings to
combined fixed charges and preferred stock dividend requirements are set forth
below for the periods indicated, including restatement on a historic basis to
include the accounts and results of operations of Concord and Oleifera, which
were merged with the Corporation on January 1, 1995 and 1996, respectively (see
"The Corporation"):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
------------------ ------------------------------------
6/30/96 6/30/95 1995 1994 1993 1992 1991
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits...... 3.82 2.57 3.35 1.48 0.00 0.73 0.55
Including Interest on Deposits...... 1.80 1.40 1.55 1.17 0.58 0.90 0.85
Earnings to Combined Fixed Charges and
Preferred Stock Dividend
Requirements
Excluding Interest on Deposits...... 3.66 2.47 3.19 1.43 0.00 0.71 0.54
Including Interest on Deposits...... 1.78 1.38 1.53 1.16 0.57 0.89 0.84
</TABLE>
Fixed charges exceeded earnings by $212 million in 1993, $62 million in
1992, and $152 million in 1991. Fixed charges and Preferred Stock dividends
exceeded earnings by $218 million in 1993, $68 million in 1992, and $159 million
in 1991.
Management also believes that it is informative to view the coverage of
fixed charges for 1994 and prior years without such restatement since the
Concord and Oleifera mergers took place in 1995 and 1996. Without such
restatement, the Corporation's ratios of earnings to fixed charges and earnings
to combined fixed charges and preferred stock dividends were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992 1991
---- ---- ---- -----
<S> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............................. 4.33 2.30 2.25 -0.13
Including Interest on Deposits............................. 1.83 1.36 1.24 0.78
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits............................. 3.98 2.17 2.05 -0.12
Including Interest on Deposits............................. 1.80 1.34 1.21 0.78
</TABLE>
Fixed charges exceeded earnings by $183 million in 1991. Fixed charges and
preferred stock dividends exceeded earnings by $190 million in 1991.
For purposes of computing both the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include interest
expense (other than on deposits) and the proportion deemed representative of the
interest factor of rent expense, net of income from subleases. Fixed charges,
including interest on deposits, include all interest expense and the proportion
deemed representative of the interest factor of rent expense, net of income from
subleases. Pretax earnings required for preferred stock dividends were computed
using tax rates for the applicable year. No tax adjustments were made in loss
years.
5
<PAGE> 17
SUPERVISION AND REGULATION
Banks and bank holding companies are extensively regulated under both
federal and state law. Activities in which the Corporation and its subsidiaries
are presently engaged or which they may undertake in the future are subject to
certain statutory and regulatory restrictions.
The Corporation is subject to the supervision of, and to regular inspection
by, the Board of Governors. The Bank is subject to banking laws and regulations
which, among other things, require that reserves be maintained against deposits
and currently limit the establishment of branch banking offices in the U.S.
outside its home state. There are also various legal limitations upon the extent
to which the Bank can finance or otherwise supply funds to the Corporation or
certain of its affiliates and certain regulatory limitations on the payment of
dividends to the Corporation by the Bank. The Corporation is also prohibited,
with certain exceptions, from engaging, directly or indirectly, in activities
which are not closely related to banking. In addition, the Federal Reserve Act
restricts certain transactions between banks and their nonbank affiliates. Many
of the Corporation's competitors are not subject to the same laws and
regulations imposed on the Corporation and its subsidiaries.
The Riegel-Neal Interstate Banking and Branching Efficiency Act of 1994
("IBBEA") authorized interstate acquisitions of banks and bank holding companies
without geographic limitation beginning in 1995. In addition, beginning in 1997,
a bank may merge with a bank in another state as long as neither of the states
opts out of interstate branching. Also, IBBEA protects key provisions of state
law, establishes a mechanism for de novo interstate branching and includes
provisions relating to interstate branching by foreign banks. The enactment of
banking legislation such as the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") have affected the banking industry by, among
other things, broadening the regulatory powers of federal banking agencies.
Under FIRREA, the failure to meet capital guidelines could subject a financial
institution to a variety of regulatory actions, including the termination of
deposit insurance by the FDIC. Among other things, FDICIA set standards for:
addressing the safety and soundness of the deposit insurance system, supervision
of domestic and foreign depositary institutions, accounting, prompt regulatory
action and federal deposit insurance. Pursuant to FDICIA, a well capitalized
institution must have a Tier 1 risk-based capital ratio of at least 6%, a total
risk-based capital ratio of at least 10%, a leverage ratio of at least 5% and
not be subject to a capital directive order. The leverage ratio measures Tier 1
capital (essentially common equity, excluding net unrealized gain (loss) on
securities available for sale and goodwill, plus certain types of perpetual
preferred stock) against total non-risk weighted assets. The Bank's ratios at
June 30, 1996 exceeded the ratios required for the well capitalized category.
In connection with establishing standards to assure the safety and
soundness of financial institutions as required by FDICIA, the Federal Reserve
Board issued guidelines on operations, management and compensation. The Federal
Reserve Board has also proposed standards for asset quality and earnings. The
Corporation does not expect the guidelines and proposed regulations to have a
material effect on its operations.
6
<PAGE> 18
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the
Securities for general corporate purposes, which may include one or more of the
following: investments in and advances to the Corporation's subsidiaries,
including the Bank; financing future acquisitions of financial institutions, as
well as banking and other assets; and the redemption of certain of the
Corporation's outstanding securities. The precise amounts and timing of the
application of proceeds used for such corporate purposes will depend upon
funding requirements and the availability of other funds to the Corporation and
its subsidiaries.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of any Debt Securities and the extent, if any, to which such general provisions
may apply to such Debt Securities will be described in the Prospectus Supplement
relating to such Debt Securities.
The Senior Securities offered hereby are to be issued under an Indenture,
dated as of October 24, 1996 between the Corporation and Bankers Trust Company,
("Bankers Trust" or the "Trustee"), as Trustee (the "Senior Indenture") and the
Subordinated Securities offered hereby are to be issued under an Indenture,
dated as of October 24, 1996, between the Corporation and Bankers Trust, as
Trustee (the "Subordinated Indenture" and collectively with the Senior
Indenture, the "Indentures"). Copies of the Indentures are filed as exhibits to
the Registration Statement. The following summaries of certain provisions of the
Indentures do not purport to be complete and such summaries are qualified in
their entirety by reference to all of the provisions of the Indentures,
including the definitions therein of certain terms. Whenever particular
sections, articles or defined terms of the Indentures are referred to, such
provisions or definitions are incorporated herein by reference.
Because the Corporation is a holding company, its rights and the rights of
its creditors, including the Holders of the Debt Securities, to participate in
the assets of any subsidiary, including the Bank, upon the subsidiary's
liquidation or reorganization or otherwise would be subject to the prior claims
of the subsidiary's creditors, except to the extent that the Corporation may
itself be a creditor with recognized claims against the subsidiary.
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. Debt Securities may be issued
thereunder in series up to the aggregate principal amount which may be
authorized from time to time by the Corporation (Section 301). The Debt
Securities will be unsecured obligations of the Corporation (Section 113). The
Senior Securities will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Corporation. The Subordinated Securities will
be subordinate in right of payment as described below under "Subordination."
The Debt Securities may be issued in one or more separate series of Senior
Securities and/or one or more separate series of Subordinated Securities.
Reference is made to the Prospectus Supplement relating to the particular series
of Debt Securities offered thereby for the terms of such Debt Securities,
including, where applicable (Section 301):
(1) the title of such Debt Securities (which shall distinguish such
Debt Securities from all other series of Debt Securities), which may
include medium-term notes;
(2) the limit, if any, on the aggregate principal amount or aggregate
initial offering price of the Debt Securities;
(3) the dates on which or periods during which such Debt Securities
will be issued, and the dates on, or the range of dates within, which the
principal of (and premium, if any, on) such Debt Securities will be
payable;
7
<PAGE> 19
(4) the rate or rates at which the Debt Securities will bear interest,
if any, which rate may be zero in the case of certain Debt Securities
issued at an issue price representing a discount from the principal amount
payable at maturity, or the method by which such rate or rates will be
determined, and the date or dates from which such interest, if any, will
accrue;
(5) the date or dates on which such interest, if any, on the Debt
Securities will be payable and the regular record date, if any, for such
Interest Payment Dates or the method by which such date or dates will be
determined;
(6) the place or places where (i) the principal of and premium, if
any, and any interest on the Debt Securities will be payable, (ii) Debt
Securities may be surrendered for registration of transfer, (iii) Debt
Securities may be surrendered for exchange, and (iv) notices to or upon the
Corporation in respect of the Debt Securities of the series and any
Indenture may be served;
(7) the period or periods within which, the price or prices at which,
the Debt Securities may, pursuant to any redemption provision, be redeemed,
in whole or in part, and the other detailed terms and provisions of any
such redemption provisions;
(8) if other than denominations of $1,000 and any integral multiples
thereof, the denominations in which any Debt Securities will be issuable;
(9) if other than the Trustee, the identity of each Security Registrar
and/or Paying Agent;
(10) if other than the principal amount, the portion of the principal
amount (or the method by which such portion will be determined) of Debt
Securities that will be payable upon declaration of acceleration of the
Maturity thereof;
(11) any index, formula or other method (including a method based on
changes in the prices of particular securities, currencies, intangibles,
goods, articles or commodities) used to determine the amount of payments of
principal of and premium, if any, and interest, if any, on the Debt
Securities;
(12) whether such Debt Securities are Senior Securities or
Subordinated Securities, or include both;
(13) whether provisions relating to defeasance and covenant defeasance
will be applicable to such series of Debt Securities;
(14) any provisions granting special rights to Holders of Debt
Securities upon the occurrence of specified events;
(15) any modifications, deletions or additions to the Events of
Default or covenants of the Corporation with respect to the Debt
Securities;
(16) whether any Debt Securities are issuable initially in temporary
or permanent global form and, if so (i) whether (and the circumstances
under which) beneficial owners of interests in permanent global Debt
Securities may exchange their interests for Debt Securities of like tenor
of any authorized form and denomination, and (ii) the identity of any
initial depositary for such global Debt Securities;
(17) the date as of which any temporary global Debt Security will be
dated if other than the original issuance date of the first Debt Security
of that series to be issued;
(18) the Person to whom any interest on any registered Debt Securities
will be payable, if other than the Registered Holder, and the extent to
which and manner that any interest payable on a temporary global Debt
Security will be paid if other than as specified in the Indentures;
(19) the form and/or terms of certificates, documents or conditions,
if any, for Debt Securities to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Debt Security of such
Series); and
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(20) any other terms, conditions, rights and preferences (or
limitations on such rights or preferences) relating to the Debt Securities
(which terms shall not be inconsistent with the provisions of the
applicable Indenture and the Trust Indenture Act).
If the amount of payments of principal of and premium, if any, or any
interest on Debt Securities is determined with reference to any type of index or
formula or changes in prices of particular securities, currencies, intangibles,
goods, articles or commodities, the Federal income tax consequences, specific
terms and other information with respect to such Debt Securities and such index
or formula, securities, currencies, intangibles, goods, articles or commodities
will be described in the Prospectus Supplement relating thereto.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Discount Securities"). Federal income tax
consequences and other special considerations applicable to any such Debt
Securities will be described in the Prospectus Supplement relating thereto.
REGISTRATION AND TRANSFER
Unless otherwise provided in the Prospectus Supplement, each series of Debt
Securities will be issued only in registered form ("Registered Securities")
(Section 302). Marine Midland Bank will serve as the initial Securities
Registrar. Unless otherwise provided in the Prospectus Supplement, Registered
Securities may be presented for transfer (duly endorsed or accompanied by a
written instrument of transfer, if so required by the Corporation or the
Security Registrar) or exchanged for other Debt Securities of the same series at
the Corporate Trust Office of the Trustee in New York City. Such transfer or
exchange shall be made without service charge, but the Corporation may require
payment of any tax or other governmental charge as described in the applicable
Indenture (Sections 301, 305, 1202).
Unless otherwise indicated in the Prospectus Supplement, Registered
Securities, other than Registered Securities issued in global form which may be
of any denomination, will be issued without coupons and in denominations of
$1,000 or integral multiples thereof (Section 302).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depositary or common depositary (the "Common
Depositary") identified in the applicable Prospectus Supplement. Global
Securities may only be issued in registered form and in either temporary or
permanent form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Common Depositary for such Global Security
to its nominee or another nominee or by a nominee to the Common Depositary or
another nominee or by the Common Depositary or any nominee to a successor Common
Depositary or any nominee of such successor (Sections 303, 305).
Principal and interest payments on the Global Securities registered in the
name of the Common Depositary or its nominee will be made to the Common
Depositary or its nominee, as the case may be, as the registered owner of such
Global Securities. Under the terms of the Indentures, the Corporation and the
Paying Agents will treat the persons in whose names the Global Securities are
registered as the owners of such Global Securities for the purpose of receiving
payment of principal and interest on such Global Securities and for all other
purposes whatsoever. Therefore, neither the Corporation nor the Paying Agents
has any direct responsibility or liability for the payment of principal of or
interest on the Global Securities to owners of beneficial interests in the
Global Securities.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium, if any, and interest, if any, on the Securities will
be made at the corporate trust office of the Trustee in New York City or at the
corporate offices of Marine Midland Bank in New York City, except that, at the
option of the
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Corporation, interest may be paid by mailing a check to the address of the
person entitled thereto as such address appears in the Security Register.
(Sections 301, 307, 1202).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Under each Indenture, the Corporation, without the consent of the Holders
of any of the Debt Securities outstanding under the applicable Indenture, may
consolidate with or merge into any other corporation or convey, transfer or
lease its properties and assets substantially as an entirety to any Person
provided that: (i) the successor is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the successor corporation expressly assumes, by an indenture supplemental
to the applicable Indenture, the Corporation's obligation for the due and
punctual payment of the principal of and premium, if any, and interest, if any,
on all of the Debt Securities under the applicable Indenture and the performance
of every covenant of the applicable Indenture; (iii) after giving effect to the
transaction, no Event of Default under the Senior Indenture and no Default under
the Subordinated Indenture, and no event which, after notice or lapse of time,
or both, would become an Event of Default or a Default, as the case may be,
shall have happened and be continuing; and (iv) certain other conditions are met
(Section 1001).
MODIFICATION AND WAIVER
Each Indenture provides that modification or amendments of the Indentures
may be made by the Corporation and the Trustee, with the consent of the Holders
of 66 2/3 percent in principal amount of the outstanding Debt Securities of each
series affected by such modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
outstanding Debt Security affected thereby: (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any Debt
Security; (b) reduce the principal amount of, or rate or amount of interest, if
any, on, or any premium payable upon the redemption of any Debt Security; (c)
reduce the amount of principal of any Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof or the amount
provable in bankruptcy; (e) adversely affect any right of repayment at the
option of any Holder of any Debt Security; (f) change the place or currency of
payment of principal of, or any premium or interest on, any Debt Security; (g)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security on or after the Stated Maturity thereof (or, in the
case of redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date); (h) reduce the percentage of principal
amount of outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indentures, or for
waiver of compliance with certain provisions of the Indentures or for waiver of
certain defaults and their consequences, or reduce the requirements for quorum
or voting by the Holders; or (i) modify certain provisions of the Indentures
except to increase the percentage of Holders required to consent thereon to
amendment or modification thereof or to provide that certain other Indenture
provisions cannot be modified or waived without the consent of the Holder of
each outstanding Debt Security affected thereby (Section 1102).
The Holders of 66 2/3 percent in principal amount of the outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Corporation with certain terms, conditions, or provisions of the Indentures
(Section 1205). The Holders of not less than a majority in principal amount of
the outstanding Debt Securities of any series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the applicable
Indentures with respect to Debt Securities of that series and its consequences,
except a default in the payment of principal or premium, if any, or interest, if
any, or in respect of a covenant or provision which under Article XI of each
Indenture cannot be modified or amended without the consent of the Holder of
each outstanding Debt Security of such series affected (Section 513).
Each Indenture provides that, in determining whether the Holders of the
requisite principal amount of the outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of Holders for quorum purposes, and for making
calculations required under Section 313 of the Trust Indenture Act: (a) the
principal amount of a Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be outstanding shall
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be the amount of principal thereof that would be due and payable as of the time
of such determination upon acceleration of the Maturity thereof; and (b) the
principal amount of any indexed Debt Security that may be counted in making such
determination or calculation and that shall be deemed outstanding for such
purpose shall be equal to the principal face amount of such indexed Debt
Security at original issuance, unless otherwise provided with respect to such
Debt Security (Section 101).
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that the Corporation may elect (a) to defease and be
discharged from its obligations with respect to any Debt Securities of or within
a series (except the obligations to register the transfer of or exchange such
Debt Securities; to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities; to maintain an office or agency in respect of such Debt
Securities; and to hold moneys for payment in trust) ("defeasance") or (b) with
respect to the Senior Indenture, to be released from its obligations with
respect to such Debt Securities under Section 1001 of the Senior Indenture or,
if provided pursuant to Section 301 of the applicable Indenture, its obligations
with respect to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an Event of Default under the
Senior Indenture with respect to such Debt Securities ("covenant defeasance"),
in either case by (a) depositing irrevocably with the Trustee as trust funds in
trust (i) money in an amount, or (ii) U.S. Government Obligations (as defined
below) in an amount which through the payment of interest and principal in
respect thereof in accordance with their terms will provide, not later than one
business day before the due date of any payment, money in an amount, or (iii) a
combination of dollars in cash and U.S. Government Obligations sufficient to pay
the principal of and premium, if any, and interest, if any, on the Debt
Securities of such series on the dates such installments of interest or
principal and premium and any similar payments applicable to such Debt
Securities are due and (b) satisfying certain other conditions precedent
specified in the Indentures. Such deposit and termination is conditioned among
other things upon the Corporation's delivery of an Opinion of Counsel that the
Holders of the Debt Securities of such series will have no U.S. federal income
tax consequences as a result of such deposit and termination and an Officer's
Certificate that all conditions precedent to the defeasance have been met
(Article XIV).
Defeasance of the Corporation's obligations with respect to Subordinated
Securities is subject to the prior written approval of the Board of Governors
and the Bank of England (Subordinated Indenture, Section 1402).
If the Corporation exercises its covenant defeasance option with respect to
any series of Senior Securities and such Senior Securities are declared due and
payable because of the occurrence of any Event of Default other than with
respect to a covenant as to which there has been covenant defeasance as
described above, the money and U.S. Government Obligations on deposit with the
Trustee will be sufficient to pay amounts due on such Senior Securities at their
Stated Maturity but may not be sufficient to pay amounts due on such Senior
Securities at the time of acceleration relating to such Event of Default.
However, the Corporation would remain liable to make payment of such amounts due
at the time of acceleration.
The Prospectus Supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within any particular series.
Unless otherwise specified in the Prospectus Supplement, "U.S. Government
Obligations" means securities that are (i) direct obligations of the United
States government or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States government, the
timely payment of which is unconditionally guaranteed by such government, which,
in either case, are full faith and credit obligations of such government payable
in dollars and are not callable or redeemable at the option of the issuer
thereof, and also includes a depositary receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depositary
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the
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custodian in respect of the U.S. Government Obligation or the specific payment
of interest or principal of the U.S. Government Obligation evidenced by such
depositary receipt (Section 1402).
REGARDING THE TRUSTEE
Bankers Trust, the Trustee under the Indentures, has its principal
corporate trust office at 4 Albany Street, 4th Floor, New York, New York 10006.
The Corporation and its banking subsidiaries maintain banking relationships with
the Trustee.
SENIOR SECURITIES
The Senior Securities will be direct unsecured obligations of the
Corporation and will constitute Senior Indebtedness (as defined below under
"Subordinated Securities -- Subordination") ranking on a parity with the other
Senior Indebtedness of the Corporation.
EVENTS OF DEFAULT
The following will be Events of Default under the Senior Indenture with
respect to Senior Securities of any series: (a) failure to pay principal or
premium, if any, on any Senior Security of that series at Maturity; (b) failure
to pay any interest on any Senior Security of that series when due and payable,
continued for 30 days; (c) failure to perform any covenant or warranty of the
Corporation in the Senior Indenture (other than a covenant or warranty included
in the Senior Indenture solely for the benefit of series of Senior Securities
other than that series), continued for 60 days after written notice as provided
in the Senior Indenture; (d) default under any bond, debenture, note, mortgage,
indenture, other instrument or other evidence of Indebtedness for Money Borrowed
in an aggregate principal amount exceeding $5 million by the Corporation or the
Bank or its successors (including a default with respect to Senior Securities of
another series) under the terms of the instrument or instruments by or under
which such indebtedness is evidenced, issued or secured, which default results
in the acceleration of such indebtedness, if such acceleration is not rescinded
or annulled, or such indebtedness is not discharged, within ten days after
written notice as provided in the Senior Indenture; (e) certain events in
bankruptcy, insolvency or reorganization of the Corporation or receivership of
the Bank and (f) any other Event of Default provided with respect to Senior
Securities of that series (Senior Indenture, Section 501).
If an Event of Default with respect to Senior Securities of any series at
the time outstanding occurs and is continuing, either the Trustee or the Holders
of at least 25 percent in aggregate principal amount of the outstanding Senior
Securities of that series may declare the principal amount (or, if the
Securities of that series are Discount Securities or Indexed Securities, such
portion of the principal amount of such Senior Securities as may be specified in
the terms thereof) of and all accrued but unpaid interest on all the Senior
Securities of that series to be due and payable immediately, by a written notice
to the Corporation (and to the Trustee, if given by Holders), and upon any such
declaration such principal amount (or specified amount) and interest shall
become immediately due and payable. At any time after a declaration of
acceleration with respect to Senior Securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained, the
Holders of a majority in principal amount of outstanding Senior Securities of
that series may, under certain circumstances, rescind and annul such declaration
and its consequences, if all Events of Default have been cured, or if permitted,
waived, and all payments due (other than those due as a result of acceleration)
have been made or provided for (Senior Indenture, Section 502).
The Senior Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Senior
Indenture at the request or direction of any of the Holders of Senior Securities
of any series, unless such Holders shall have offered to the Trustee reasonable
indemnity or security against the costs, expenses and liabilities which may be
incurred (Senior Indenture, Sections 601, 603). Subject to certain provisions,
the Holders of a majority in principal amount of the Outstanding Senior
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
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exercising any trust or power conferred on the Trustee, with respect to the
Senior Securities of that series (Senior Indenture, Section 512).
The Corporation is required to deliver to the Trustee annually an Officers'
Certificate as to its performance and observance of any of the terms, provisions
and conditions with respect to certain provisions in the Senior Indenture and as
to the absence of any default (Senior Indenture, Section 1206).
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Corporation. The obligations of the Corporation pursuant to the Subordinated
Securities will be subordinate in right of payment to all Senior Indebtedness as
defined below under "Subordination."
The maturity of the Subordinated Securities will be subject to acceleration
only in the event of certain events of bankruptcy, insolvency or reorganization
of the Corporation or the receivership of the Bank. See "Events of Default;
Defaults" below.
SUBORDINATION
The obligation of the Corporation to make any payment on account of the
principal of or premium, if any, and interest, if any, on the Subordinated
Securities will be subordinate and junior in right of payment to the
Corporation's obligations to the holders of Senior Indebtedness of the
Corporation to the extent described in the next paragraph. (Subordinated
Indenture, Section 1501). "Senior Indebtedness" of the Corporation is defined in
the Subordinated Indenture to mean Indebtedness for Money Borrowed of the
Corporation, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, except Indebtedness
Ranking on a Parity with the Debt Securities and any deferrals, renewals or
extensions of such Senior Indebtedness (Subordinated Indenture, Section 101).
"Indebtedness for Money Borrowed" of the Corporation is defined in the
Subordinated Indenture as (a) any obligation of, or any obligation guaranteed
by, the Corporation for the repayment of borrowed money, whether or not
evidenced by bonds, debentures, notes or other written instruments, (b) similar
obligations arising from off-balance sheet guarantees and direct credit
substitutes, (c) obligations associated with derivative products, such as
interest-rate and foreign-exchange-rate contracts, commodity contracts and
similar arrangements, and (d) any deferred obligations for the payment of the
purchase price of property or assets (Subordinated Indenture, Section 101).
"Indebtedness Ranking on a Parity with the Debt Securities" is defined in the
Subordinated Indenture to mean Indebtedness for Money Borrowed of the
Corporation, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, which specifically by its
terms ranks equally with and not prior to the Subordinated Securities in the
right of payment upon the happening of any event of the kind specified in the
next paragraph. Indebtedness Ranking on a Parity with the Debt Securities
includes the Corporation's:
(i) 8 5/8% Subordinated Capital Notes due March 1997 issued under an
indenture dated March 1, 1987 between the Corporation and The Chase
Manhattan Bank (formerly known as Chemical Bank), as trustee;
(ii) Floating Rate Subordinated Capital Notes due March 1999 issued
under an indenture dated as of April 1, 1987 between the Corporation and
The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee;
(iii) Floating Rate Subordinated Notes due December 2000 issued under
an indenture dated December 12, 1985 between the Corporation and The Chase
Manhattan Bank (formerly known as The Chase Manhattan Bank, National
Association), as trustee;
(iv) Floating Rate Subordinated Notes due December 2009 issued under
an indenture dated December 15, 1984 between the Corporation and The Chase
Manhattan Bank (formerly known as The Chase Manhattan Bank, National
Association), as trustee.
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In the case of any bankruptcy, insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshaling of assets and liabilities or
similar proceedings or any liquidation or winding up of or relating to the
Corporation as a whole, whether voluntary or involuntary, all obligations of the
Corporation to Holders of Senior Indebtedness of the Corporation shall be
entitled to be paid in full before any payment shall be made on account of the
principal of, or premium, if any, or interest, if any, on the Subordinated
Securities of any series. In the event and during the continuation of any
default in the payment of principal of, or premium, if any, or interest, if any,
on, any Senior Indebtedness beyond any applicable grace period, or in the event
that any event of default with respect to any Senior Indebtedness shall have
occurred and be continuing, or would occur as a result of certain payments,
permitting the holders of such Senior Indebtedness (or a trustee on behalf of
the holders thereof) to accelerate the maturity thereof, then, unless and until
such default or event of default shall have been cured or waived or shall have
ceased to exist, no payment of principal of, or premium, if any, or interest, if
any, on the Subordinated Securities, or in respect of any redemption, exchange,
retirement, purchase or other acquisition of any of the Subordinated Securities,
shall be made by the Corporation (Subordinated Indenture, Sections 1501, 1503).
Any Prospectus Supplement relating to an issuance of Subordinated
Securities will set forth (as of the most recent practicable date) the aggregate
amount of outstanding Senior Indebtedness and any limitation on the issuance of
additional Senior Indebtedness.
Holders of Subordinated Securities, by their acceptance of such
Subordinated Securities, shall be deemed to have irrevocably waived any rights
such Holders may have to counterclaim or set off amounts owed by such Holders to
the Corporation against amounts owed to such Holders by the Corporation under
the Subordinated Indenture or to institute proceedings in respect of such
amounts (Subordinated Indenture, Section 1501).
By reason of such subordination in favor of the holders of Senior
Indebtedness of the Corporation, in the event of the insolvency of the
Corporation, holders of Senior Indebtedness of the Corporation may receive more,
ratably, and Holders of the Subordinated Securities having a claim pursuant to
the Subordinated Securities may receive less, ratably, than the other creditors
of the Corporation.
REDEMPTION
No redemption, defeasance or early repayment of amounts owed under the
Subordinated Securities, including purchases of capital notes by the Corporation
or its subsidiaries or at the option of Holders of Subordinated Securities, may
be made without the prior written consent of the Board of Governors and the Bank
of England. Such consent by the Bank of England and the Board of Governors will
depend on the Bank of England and the Board of Governors being satisfied that
the Corporation's capital is adequate and is likely to remain so (Subordinated
Indenture, Section 1302).
EVENTS OF DEFAULT; DEFAULTS
The only Events of Default under the Subordinated Indenture with respect to
Subordinated Securities of any series will be certain events in bankruptcy,
insolvency or reorganization of the Corporation or the receivership of the Bank
(Subordinated Indenture, Section 501).
If an Event of Default with respect to Subordinated Securities of any
series at the time Outstanding occurs and is continuing, the Trustee or the
Holders of at least 25 percent in principal amount of the Outstanding
Subordinated Securities of that series may declare the principal amount (or, if
any of the Subordinated Securities of that series are Discount Securities or
Indexed Securities, such portion of the principal amount of such Subordinated
Securities as may be specified in the terms thereof) of and all accrued but
unpaid interest on all the Subordinated Securities of that series to be due and
payable immediately, by a written notice to the Corporation (and to the Trustee,
if given by Holders), and upon any such declaration such principal amount (or
specified amount) and interest shall become immediately due and payable
(Subordinated Indenture, Section 502). The foregoing provision would, in the
event of the bankruptcy or insolvency of the Corporation, be subject as to
enforcement to the broad equity powers of a Federal bankruptcy court and to the
determination by that court of the nature and status of the payment claims of
the
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Holders of the Subordinated Securities. At any time after a declaration of
acceleration with respect to the Subordinated Securities of any series has been
made, but before a judgment or decree for payment of the money due has been
obtained, the Holders of a majority in principal amount of Outstanding
Subordinated Securities of that series may, under certain circumstances, rescind
and annul such acceleration but only if all Defaults have been remedied, or if
permitted, waived and if certain other conditions have been satisfied
(Subordinated Indenture, Sections 502, 513).
The following events will be Defaults under the Subordinated Indenture with
respect to Subordinated Securities of any series: (a) an Event of Default with
respect to such series of Subordinated Securities; (b) failure to pay principal
or premium, if any, on any Subordinated Security of that series at Maturity,
continued for seven days; and (c) failure to pay any interest, if any, on any
Subordinated Security of that series when due and payable, continued for 30 days
(Subordinated Indenture, Section 503).
If the Corporation does not pay any installment of interest on the
applicable Interest Payment Date or all or any part of principal on the
Maturity, the obligation to make such payment and such Interest Payment Date or
Maturity, as the case may be, shall be deferred until (i) in the case of a
payment of interest, the date upon which a dividend is paid on any class of
share capital of the Corporation and (ii) in the case of a payment of principal,
the first Business Day after the date that falls six months after the original
Maturity. Failure by the Corporation to make any such payment prior to such
deferred Interest Payment Date or Maturity shall not constitute a default by the
Corporation or otherwise allow any holder to sue the Corporation for such
payment or to take any other action. Each payment so deferred will accrue
interest at the rate per annum shown on the front cover of the applicable
Prospectus Supplement. Any payment so deferred shall not be treated as due for
any purpose (including, without limitation, for the purposes of ascertaining
whether or not a Default has occurred until the deferred Interest Payment Date
or Maturity, as the case may be). Any such deferral shall take place only once
with respect to any payment of interest or principal.
The maturity of the Subordinated Securities will be subject to acceleration
only in the event of certain events of bankruptcy, insolvency or reorganization
of the Corporation or the receivership of the Bank. There will be no right of
acceleration of the payment of principal of the Subordinated Securities of such
series upon a default in the payment of principal of or premium, if any, or
interest, if any, or a default in the performance of any covenant or agreement
in the Subordinated Securities or the Subordinated Indenture or any Default
other than an Event of Default. If a Default with respect to the Subordinated
Securities of any series occurs and is continuing, the Trustee may, subject to
certain limitations and conditions, seek to enforce its rights and the rights of
the Holders of Subordinated Securities of such series or the performance of any
covenant or agreement in the Subordinated Indenture (Subordinated Indenture,
Section 503).
The Subordinated Indenture provides that, subject to the duty of the
Trustee upon the occurrence of a Default to act with the required standard of
care, the Trustee will be under no obligation to exercise any of its rights or
powers under the Subordinated Indenture at the request or direction of any of
the Holders of Subordinated Securities of any series unless such Holders shall
have offered to the Trustee reasonable indemnity or security against the costs,
expenses and liabilities which may be incurred. (Subordinated Indenture,
Sections 601, 603). Subject to certain provisions, the Holders of a majority in
principal amount of the Outstanding Subordinated Securities of any series will
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, with respect to the Subordinated Securities of
that series (Subordinated Indenture, Section 507).
The Corporation is required to furnish to the Trustee annually an Officer's
Certificate as to the performance and observance by the Corporation of certain
of the terms, provisions and conditions under the Subordinated Indenture and as
to the absence of default (Subordinated Indenture, Section 1204).
REPLACEMENT DEBT SECURITIES
Unless otherwise provided for in the applicable Prospectus Supplement, if a
Debt Security of any series is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office of the Trustee in the City
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and State of New York upon payment by the Holder of such expenses as may be
incurred by the Corporation and the Trustee in connection therewith and the
furnishing of such evidence and indemnity as the Corporation and such Trustee
may require. Mutilated Debt Securities must be surrendered before new Debt
Securities will be issued (Section 306).
NOTICES
Unless otherwise provided in the applicable Prospectus Supplement, any
notice required to be given to a Holder of a Debt Security of any series that is
a Registered Security will be mailed to the last address of such Holder set
forth in the applicable Security Register, and any notice so mailed shall be
deemed to have been received by such Holder, whether or not such Holder actually
receives such notice (Section 105).
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of
the Corporation's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of the Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto. If
so indicated in the Prospectus Supplement, the terms of any series may differ
from the terms set forth below. The description of certain provisions of the
Preferred Stock does not purport to be complete and is subject to and qualified
in its entirety by reference to the provisions of the Corporation's Restated
Certificate of Incorporation (the "Certificate"), and the Certificate of
Designations Establishing a Series of a Class of Stock (the "Designations")
relating to each particular series of the Preferred Stock, which will be filed
with the Commission at or prior to the time of the sale of such Preferred Stock.
GENERAL
Under the Corporation's Certificate, the Board of Directors of the
Corporation is authorized, without further stockholder action, to provide for
the issuance of up to 49,158 shares of preferred stock, without par value and up
to 10,000,000 shares of preferred stock, par value $1.00 per share, in one or
more series, with such designations or titles; dividend rates; special or
relative rights in the event of liquidation, distribution or sale of assets or
dissolution or winding up of the Corporation; any redemption or purchase account
provisions; any conversion provisions; and any voting rights thereof, as shall
be set forth as and when established by the Board of Directors of the
Corporation. The shares of any series of Preferred Stock will be, when issued,
fully paid and non-assessable and holders thereof shall have no preemptive
rights in connection therewith.
As of the date hereof, the Corporation has outstanding 1,916,950 shares of
Adjustable Rate Cumulative Preferred Stock and 22,154 shares of $5.50 Cumulative
Preferred Stock. The Adjustable Rate Cumulative Preferred Stock has a
liquidation preference of $50 per share. The dividend rate is determined
quarterly and is based on a formula which considers certain short- and long-term
interest rates. The dividend rate per annum for any dividend period will not be
less than 6% nor greater than 12%. This stock is redeemable at the option of the
Corporation at any time at a redemption price of $50 per share. The $5.50
Cumulative Preferred Stock has a stated value and a liquidation value of $100
per share and is redeemable at the election of the Corporation at any time at a
redemption price of $100 per share.
The liquidation preference of any series of the Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with changes
in market and economic conditions, the financial condition and prospects of the
Corporation and other factors that generally influence the market prices of
securities.
RANK
Any series of the Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock of the Corporation and with all equity securities issued
by the Corporation, the terms of which specifically provide that such equity
securities will
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rank junior to the Preferred Stock (collectively referred to as the "Junior
Securities"); (ii) on a parity with all equity securities issued by the
Corporation, the terms of which specifically provide that such equity securities
will rank on a parity with the Preferred Stock, (collectively referred to as the
"Parity Securities"); and (iii) junior to all equity securities issued by the
Corporation, the terms of which specifically provide that such equity securities
will rank senior to the Preferred Stock (collectively referred to as the "Senior
Securities"). As used in any Designation for these purposes, the term "equity
securities" will not include debt securities convertible into or exchangeable
for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of
funds legally available therefor, cash dividends at such rates and on such dates
as are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Dividends will be payable to holders of record of the Preferred
Stock as they appear on the books of the Corporation on such record dates, as
shall be fixed by the Board of Directors. Dividends on any series of Preferred
Stock may be cumulative or non-cumulative.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities unless dividends shall have been
paid or set apart for such payment on the Preferred Stock. If full dividends are
not so paid, the Preferred Stock shall share dividends pro rata with the Parity
Securities. If dividends are cumulative, any accumulated unpaid dividends will
not bear interest.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Corporation or the holder thereof upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Corporation or by any other method determined to be equitable by the Board of
Directors.
On and after a redemption date, unless the Corporation defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not redeem shares of
preferred stock which constitute Tier 1 capital for purposes of the Board of
Governors' risk-based capital requirements without the prior approval of the
Board of Governors. Ordinarily, the Board of Governors would permit such a
redemption if (1) the shares are redeemed with the proceeds of a sale by the
bank holding company of common stock or perpetual preferred stock or (2) the
Board of Governors determines that a bank holding company's capital position
after such redemption would clearly be adequate and that its condition and
circumstances warrant the reduction of a source of permanent capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, holders of each series of Preferred Stock that ranks senior to
the Junior Securities will be entitled to receive out of assets of the
Corporation available for distribution to stockholders, before any distribution
is made on any Junior Securities, including Common Stock, distributions upon
liquidation in the amount set forth in the Prospectus Supplement relating to
such series of Preferred Stock, plus an amount equal to any accrued and unpaid
dividends. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect to the Preferred
Stock of any series and any other Parity Securities are not paid in full, the
holders of the Preferred Stock of such series and the Parity Securities will
share ratably in any such distribution of assets of the Corporation in
proportion to the full liquidation preferences to which each is entitled. After
payment of the full amount of the liquidation preference to which they are
entitled, the holders
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of such series of Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Corporation. However, neither
(i) the merger or consolidation of the Corporation with or into one or more
corporations pursuant to any statute which provides in effect that the
stockholders of the Corporation shall continue as stockholders of the continuing
or combined corporation nor (ii) the acquisition by the Corporation of assets or
stock of another corporation shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will have no voting rights.
Under regulations adopted by the Board of Governors, if the holders of
shares of any series of Preferred Stock of the Corporation became entitled to
vote for the election of directors, such series may then be deemed a "class of
voting securities" and a holder of 25% or more of such series (or a holder of 5%
if it otherwise exercises a "controlling influence" over the Corporation) may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act of 1956, as amended. In addition, at such time as such
series is deemed a class of voting securities, (i) any other bank holding
company may be required to obtain the approval of the Board of Governors to
acquire or retain 5% or more of such series, and (ii) any person other than a
bank holding company may be required to obtain the approval of the Board of
Governors under the Change in Bank Control Act to acquire or retain 10% or more
of such series.
PLAN OF DISTRIBUTION
The Corporation may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents which solicit to receive offers on behalf of the Corporation or
through dealers or through a combination of any such methods of sale. The
applicable Prospectus Supplement will set forth the terms of the offering of any
Securities, including the names of the underwriters, the purchase price of such
Securities and the proceeds to the Corporation from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers, and any securities exchanges on which such Securities may be listed.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Such Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Unless otherwise set forth in the applicable Prospectus
Supplement, the obligations of the underwriters to purchase such Securities will
be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all of such Securities if any of such Securities are
purchased.
The Corporation may, from time to time, authorize agents acting on a best
efforts basis as agents of the Corporation to solicit or receive offers to
purchase the Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters or agents may be deemed to have received compensation from the
Corporation in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Securities for whom they may act as
agents. Underwriters may sell Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters, dealers and agents participating in a distribution of the
Securities (including agents only soliciting or receiving offers to purchase
Securities on behalf of the Corporation) may be deemed to be underwriters, and
any discounts and commissions received by them and any profit realized by them
on resale
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of the Securities may be deemed to be underwriting discounts and commissions,
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Corporation, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act. The Corporation may agree to reimburse underwriters or
agents for certain expenses incurred in connection with the distribution of the
Securities.
If so indicated in the applicable Prospectus Supplement, the Corporation
will authorize agents or dealers acting as the Corporation's agents to solicit
offers by certain institutions to purchase Securities from the Corporation at
the public offering price set forth in such Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in such Prospectus Supplement. Institutions with whom Contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Corporation. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Securities are being sold to underwriters, the Corporation shall have
sold to such underwriters the total principal amount of the Securities less the
principal amount thereof covered by Contracts.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Corporation. Any remarketing firm will be identified and the terms of
its agreement, if any, with the Corporation and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be deemed to be
underwriters in connection with the Securities remarketed thereby.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with, and perform services for, the
Corporation in the ordinary course of business.
HSBC Securities, Inc., an affiliate of the Corporation, may be a managing
underwriter, underwriter, market-maker or agent in connection with any offer or
sale of the Securities. Each offering of the Securities will be conducted in
compliance with any applicable requirements of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. regarding the underwriting
by HSBC Securities, Inc. of the securities of an affiliate. In addition, this
Prospectus may be used by HSBC Securities, Inc. in connection with offers and
sales related to market-making activities. HSBC Securities, Inc. may act as
principal or agent in any such transactions. Such sales will be made at
negotiated prices related to the prevailing market prices at the time of sale.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of the Securities on
behalf of such Plan should determine whether such purchase is permitted under
the governing Plan documents and is prudent and appropriate for the Plan in view
of its overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to the
Plan ("parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of Section 4975 of the Code). Thus, a Plan fiduciary
considering the purchase of the Securities should consider whether such a
purchase might constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code.
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The Corporation, directly or through its affiliates, may be considered a
"party in interest" or a "disqualified person" with respect to many Plans that
are subject to ERISA. The purchase of Securities by a Plan that is subject to
the fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement accounts
and other plans described in Section 4975(e)(1) of the Code) and with respect to
which the Corporation is a party in interest or a disqualified person may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such Securities are acquired pursuant to and in accordance with
an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts), PTCE 95-60 (an exemption for certain transactions involving insurance
company general accounts), or PTCE 96-23 (an exemption for certain transactions
determined by an in-house asset manager). ANY PENSION OR OTHER EMPLOYEE BENEFIT
PLAN PROPOSING TO ACQUIRE ANY SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
Certain of the underwriters and their associates may be customers of,
engage in transactions with, and perform services for, the Corporation in the
ordinary course of business.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Corporation by Cleary, Gottlieb, Steen & Hamilton, special counsel to the
Corporation, and for the Underwriters by Brown & Wood LLP.
EXPERTS
The consolidated financial statements of the Corporation as of December 31,
1994 and 1995 and for each of the years in the three-year period ended December
31, 1995 and the consolidated balance sheet of Marine Midland Bank as of
December 31, 1994 and 1995 contained in the Corporation's 1995 Form 10-K and the
supplemental consolidated financial statements as of December 31, 1994 and 1995
and for each of the years in the three-year period ended December 31, 1995 and
the consolidated balance sheet of Marine Midland Bank as of December 31, 1994
and 1995 contained in the June 5th 8-K have been incorporated herein by
reference in reliance upon the reports, set forth therein of KPMG Peat Marwick
LLP, independent accountants, and upon the authority of said firm as experts in
accounting and auditing. Such reports referred to the Corporation's changes in
accounting for income taxes and post-retirement benefits other than pensions in
1993, certain investments in debt and equity securities in 1994 and loan
impairment in 1995.
The consolidated financial statements of CTUS, Inc. as of December 31, 1994
and 1995 and for the years then ended contained in the October 22nd 8-K have
been incorporated herein by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent accountants, and upon the authority of said firm as
experts in accounting and auditing. Such report referred to CTUS Inc.'s changes
in accounting for certain investments in debt and equity securities in 1994 and
loan impairment in 1995.
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