04-002801 Bbu Bank vs. Department Of Financial Services, Office Of Financial Regulation, Division Of Financial Institutions Status: Closed Recommended Order on Wednesday, October 27, 2004.

Summary: Report issued on the public hearing on proposed bank, which will be owned, in part, by nationals of a country other than the United States.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BBU BANK, )

)

Petitioner, )

)

vs. ) Case No. 04 - 2801

)

OFFICE OF FINANCIAL REGULATION, )

DIVISION OF FINANCIAL )

INSTITUTIONS, )

)

Respondent. )

_________________________________)

REPORT OF PUBLIC HEARING

Pursuant to notice, a public hearing was held in this case

before Larry J. Sartin, an Administrative Law Judge of the

Division of Administrative Hearings, in Tallahassee, Florida, on

September 21, 2004.

APPEARANCES

For Petitioner: Raul J. Valdes - Fauli, Esquire

Steel, Hector & Davis, LLP

200 South Biscayne Boulevard, Suite 4000

Miami, Florida 33131 - 2398

and

R. Michael Underwood, Esquire

Steel, Hector & Davis, LLP

215 South Monroe Street, Suite 601

Tallahassee, Florida 32301 - 1 804

For Respondent: Bruce Kuhse, Esquire

Office of Financial Regulation

The Fletcher Building, Suite 526

200 East Gaines Street

Tallahassee, Florida 32399 - 0379

STATEMENT OF THE ISSUE

The ultimate issue in this case is whether an application

to organ ize Petitioner, BBU Bank, should be approved by

Respondent, the Office of Financial Regulation, Division of

Financial Institutions.

PRELIMINARY STATEMENT

On March 12, 2004, Respondent received an Application for

Authority to Organize a Bank, a Savings Bank or Association

Pursuant to Chapters 658 and 665, Florida Statutes, seeking

authority to organize a new bank in Florida. Pursuant to the

Application, the new bank was to be known as BBU Bank. The

Application also disclosed that two foreign nationals, Jua n

Carlos Escotet and Luis Xavier Lujan, are to own in excess of

ten percent of the proposed new bank.

Due to the proposed ownership interest by Mr. Escotet and

Mr. Lujan, BBU Bank was required by Section 120.80(3)(a)4.,

Florida Statutes, to participate in a public hearing conducted

pursuant to Sections 120.569 and 120.57, Florida Statutes.

Accordingly, on August 5, 2004, the Office of Financial

Regulation issued an Order Granting Office's Petition for Public

Hearing, ordering the conduct of the public hear ing.

By letter dated August 9, 2004, the Office of Financial

Regulation referred the matter to the Division of Administrative

Hearings, requesting the assignment of an administrative law

judge to conduct the public hearing. It was represented that

the hea ring would last between two and two and one - half hours

and that it should be held in Tallahassee, Florida. A copy of

the Order Granting Office's Petition for Public Hearing was

filed with the August 9, 2004, letter. The request was

designated DOAH Case N o. 04 - 2801 and was assigned to the

undersigned.

After consultation with the parties, a Notice of Hearing

was entered on August 19, 2004, scheduling the hearing to

commence at 1:00 p.m. on September 21, 2004. Notice of the

hearing was caused to be publishe d by Petitioner in The Miami

Herald , on August 31, 2004. That Notice, as evidenced by an

Affidavit of Publication filed by Petitioner, indicated the

time, date, and location of the public hearing in compliance

with Florida Administrative Code Rule 3C - 105. 105(1).

On September 14, 2004, an Order Granting Motion for

Official Recognition was entered. Pursuant to this Order,

official recognition, requested by Respondent, was taken of

Florida Administrative Code Rules 3C - 105.001 through 3C - 105.210,

was taken.

O n September 17, 2004, the parties filed a Joint Pre -

Hearing Stipulation.

At the commencement of the public hearing, it was

determined that no members of the public were present who wished

to be heard from. Petitioner then presented the testimony of

Mr. Es cotet, Mr. Lujan, Ambassador V. Manual Rocha, and Manuel

Lasaga, Ph.D. Petitioner also offered two exhibits, which were

marked as Petitioner's Exhibits 1A and 1B, and 2. Respondent

offered five exhibits, which were marked as Respondent's

Exhibits 1 throu gh 5. All exhibits were admitted without

objection. Respondent's Exhibits 1 and 2 consist of

confidential documents which have remained in the possession of

the undersigned and have been reviewed only by the undersigned.

Those documents are being return ed to Respondent with this

Report.

At the conclusion of the public hearing the parties were

advised by the undersigned of their right to file proposed

public hearing reports. With the agreement of the parties, a

filing date of 15 days after the filing of the transcript of the

public hearing was established for the filing of proposed

reports. By Notice of Filing Transcript, the parties were

informed that the Transcript had been filed on October 5, 2004,

and, therefore, their proposed reports were to be fil ed on or

before October 20, 2004. On October 20, 2004, Respondent filed

a Joint Proposed Report of Public Hearing. The Joint Proposed

Report has been fully considered in completing this Report.

FINDINGS OF FACT

1. On March 12, 2004, the Office of Finan cial Regulation

(hereinafter referred to as the "Office") received an

Application for Authority to Organize a Bank, a Savings Bank or

Association Pursuant to Chapters 658 and 665, Florida Statutes

(hereinafter referred to as the "Application").

2. The new bank is to be known as BBU Bank and is to be

located at 150 Alhambra Circle, Coral Gables, Miami - Dade County,

Florida.

3. The Application listed three individuals who would own

an interest in BBU Bank who were nationals of a country other

than the United States: Juan Carlos Escotet, Luis Xavier Lujan,

and Jorge Carraballo Rodriguez. Mr. Escotet and Mr. Jujan, but

not Mr. Rodriguez, were determined to be proposed "major

shareholders" of BBU Bank. A major shareholder is defined in

Florida Administrative Code Rule 3C - 105.001(7) as "any person

subscribing to 10 percent or more of the voting stock or

nonvoting stock which is convertible into voting stock of the

proposed state financial institution." Mr. Rodriguez will not

own ten percent of the stock of BBU Bank nor will he be a

director or executive officer of BBU Bank.

4. The Office caused notice of its receipt of the

Application to be published in the March 26, 2004, edition of

the Florida Administrative Weekly. That notice was made

consistent with the requirements of Section 120.80(3)(a)1.a.,

Florida Statutes, and Florida Administrative Code Rule 3C -

105.103(1).

5. By letter dated March 22, 2004, the Office acknowledged

receipt of the Application and deposit of the filing fee,

reported that notice of re ceipt of the Application had been

published in the Florida Administrative Weekly, and requested

additional information, including documentation of BBU Bank's

source of cash and/or a copy of a loan commitment to fund the

purchase of bank stock by each of th e proposed directors, the

qualifications of the proposed directors, and information

concerning whether an application had been filed with the

Federal Deposit Insurance Corporation (hereinafter referred to

as the "FDIC").

6. By letter dated July 2, 2004, t he Office notified the

applicants that documents addressing the information requested

in previous correspondence had been received and reviewed. The

Office, therefore, informed the applicants that it had "now

[found] your application substantially complet e." The Office

also notified the applicants that a public hearing was required,

due to the proposed role of Mr. Escotet and Mr. Lujan in BBU

Bank.

7. On August 5, 2004, Don Saxon, Commissioner of the

Office, issued an Order Granting Office's Petition for Public

Hearing, ordering the public hearing on the Application required

by Section 120.80(3)(a)4, Florida Statutes.

8. The Order was filed with the Division of Administrative

Hearings on August 10, 2004, with a letter requesting the

assignment of an admi nistrative law judge to conduct the public

hearing.

9. The public hearing was scheduled to commence at 1:00

p.m., on September 21, 2004. Notice of the hearing was caused

to be published in The Miami Herald on August 31, 2004, in

compliance with Florida A dministrative Code Rule 3C - 105.105(1).

10. The public hearing was conducted as scheduled. No

member of the public appeared at the hearing. No opposition to

the Application was expressed by anyone appearing at the

hearing.

11. Mr. Escotet, a proposed di rector and holder of

62 percent of the common stock of BBU Bank, appeared and

testified at the public hearing. Based upon that testimony, it

is found that Mr. Escotet:

a. Is a citizen of Venezuela;

b. Is currently President of Banesco Banco Universal,

C aracas, Venezuela;

c. Has extensive banking experience and serves on the

board for several other banks in Venezuela; and

d. Possess sufficient financial institution experience,

ability, standing, and reputation to enable him to perform his

duties as a di rector for BBU Bank in a manner that can

reasonably be expected to result in the successful operation of

the bank.

12. Mr. Lujan, a proposed director and holder of

31 percent of the common stock of BBU Bank, appeared and

testified at the public hearing. Based upon that testimony, it

is found that Mr. Escotet:

a. Is a citizen of Venezuela;

b. Is currently the Executive President of Banesco Bank

Universal, Caracas, Venezuela;

c. Has more than 20 years of educational, managerial, and

executive experience in the banking business; and

d. Possess sufficient financial institution experience,

ability, standing, and reputation to enable him to perform his

duties as a director for BBU Bank in a manner that can

reasonably be expected to result in the successful o peration of

the bank.

13. The other proposed directors, Jose R. Gutierrez,

Martha S. Pantin, Raul Robau, Santiago D. Morales, and Raul J.

Valdes - Fauli, are all citizens of the United States. They have

sufficient business institution experience, ability, standing,

and reputation to enable them to perform their duties as a

director for BBU Bank in a manner that can reasonably be

expected to result in the successful operation of the bank.

14. Mr. Gutierrez is the proposed President and Chief

Executive Offic e for BBU Bank. Mr. Gutierrez is currently a

director for, and chairman of the Audit Committee of, Eastern

National Bank, Miami, Florida. Mr. Gutierrez has 24 years of

banking experience, including serving as president of three

banks, in Miami - Dade Count y. Mr. Gutierrez has sufficient

financial institution experience, ability, standing, and

reputation to enable him to perform his duties as BBU Bank's

President and Chief Executive Officer in a manner that can

reasonably be expected to result in the succes sful operation of

the bank.

15. Neither Mr. Escotet or Mr. Lujan has been convicted

of, or pled guilty or nolo contendere to, any violation of

Section 655.50, Florida Statutes, any offense described in

Chapter 896, Florida Statutes, or any other crime. T he other

proposed officers and directors of BBU Bank reported to the

Office that they had not been convicted of, or pled guilty or

nolo contendere to, any violation of Section 655.50, Florida

Statutes, any offense described in Chapter 896, Florida

Statutes , or any other crime and no evidence to the contrary was

presented at the public hearing.

16. The Office conducted a background investigation of all

of the directors and executive officers of BBU and reported no

information to preclude them from serving i n their proposed

capacities for the bank. Respondent's Exhibit 2 at 337 - 371.

17. Consistent with Section 658.21(4), Florida Statutes,

three of the proposed directors, Mr. Escotet, Mr. Lujan, and

Mr. Valdes - Fauli, have direct financial institution experie nce

within three years of the date of the Application.

18. The business plan for BBU Bank represents that the

bank will offer full - service banking to individuals and

businesses located primarily in Miami - Dade County. BBU Bank

will seek international busi nesses originating from Venezuela

and other countries in Latin America, relying upon the contacts

and experience of its directors and executive officers.

19. BBU Bank will issue 2,000,000 shares of common stock

at a price of $7.50 per share. Stock sales will produce

$15,000,000.00 in capital. After payment of $350,000.00 of

organization expenses, BBU Bank will allocate the remaining

$14,650,000.00 capital funds as follows:

Paid - in Capital (2,000,000 shares of

$5.00 par value): $10,000,000.00

Paid - i n Surplus (at least 20% of

Paid - in Common Stock): 4,650,000.00

Total Capital Account $14,650,000.00

The initial capitalization of BBU Bank is adequate for its

proposed business activities.

20. BBU Bank will have quarters suitable to carry out i ts

business. Conditions in Miami - Dade County indicate reasonable

prospects for the successful operation of BBU Bank. The bank's

financial plan is reasonable and attainable.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction to conduct a public hearing pursuant to Sections

120.569 and 120.57(1), Florida Statutes, and to issue a report

thereon. § 120.80(3)(a)4., Fla. Stat.

22. Section 120.80(3)(a)4., Florida Statutes, provides, in

pertinent part, the following:

In the case of every application for

license to establish a new bank, trust

company, or capital stock savings

association in which a foreign national

proposes to own or control 10 percent or

more of any class of voting securities, and

in the case of every application by a

foreign national for approval to acquire

control of a bank, trust company, or capital

stock savings association, the Office of

Financial Regulation shall request that a

public hearing be conducted pursuant to ss.

120.569 and 120.57. Notice of such he aring

shall be published by the applicant as

provided in subparagraph 2. The failure of

any such foreign national to appear

personally at the hearing shall be grounds

for denial of the application.

Notwithstanding the provisions of s.

120.60 (1) and subpa ragraph 3., every

application involving a foreign national

shall be approved or denied within 1 year

after receipt of the original application or

any timely requested additional information

or the correction of any errors or

omissions, or within 30 days af ter the

conclusion of the public hearing on the

application, whichever is later.

23. Two individuals, Mr. Escotet and Mr. Lujan, are

foreign nationals who propose to own or control ten percent or

more of any class of voting securities of BBU Bank.

24. T herefore, after publishing notice consistent with

Florida Administrative Code Rule 3C - 105.105, a public hearing

was conducted on the Application on September 21, 2004.

25. This Report is being issued consistent with the

requirements of Section 120.80(3)(b ), Florida Statutes.

DONE AND ENTERED this 27th day of October, 2004 , in

Tallahassee, Leon County, Florida.

S

___________________________________

LARRY J. SARTIN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 27th day of October, 2004 .

COPIES FURNISHED:

Raul J. Valdes - Fauli, Esquire

Steel, Hector & Davis, LLP

200 South Biscayne Boulevard, Suite 4000

Miami, Florida 33131 - 2398

R. Michael Underwood, Esquire

Steel, Hector & Davis, LLP

215 South Monroe Street, Suite 601

Tallahassee, Florida 32301 - 1804

Bruce Kuhse, Esquire

Office of Financial Regulation

The Fletcher Building, Suite 526

200 East Gaines Street

Tallahassee, Florida 32399 - 0379

Don B. Saxon, Commissioner

Office of Financial R egulation

The Fletcher Building, Suite 526

200 East Gaines Street

Tallahassee, Florida 32399 - 0379