The Federal Reserve Board yesterday dealt Riggs National Bank a setback in its efforts to stave off a takeover by Washington multimillionaire Joe L. Allbritton.
The Fed's board of governors yesterday denied a petition requesting a temporary cease-and-desist order prohibiting Allbritton from acquiring any additional shares of Riggs stock pending completion of an administrative hearing requested by Riggs. The Fed also denied the request for the administrative proceeding.
The board said that facts presented to it "demonstrate that Mr. Allbritton is acting as an individual using his personal resources in his efforts to acquire Riggs shares." Riggs has portrayed the effort as a combined attempt by Allbritton and companies he controls to take over the bank. The Fed has jurisdiction over acquisitions by companies of 25 percent of a bank's stock but no authority over acquisitions by individuals.
The petition before the Fed was just one of an array of efforts the bank has launched to blockk Allbritton's effort to seize control of the city's largest financial institution. Last week Riggs succeeded in temporarily barring Allbritton from moving forward pending a court hearing.
Allbritton, already the bank's largest shareholder with approximately 15 percent of its stock, has offered to buy at least 600,000 shares at a price of $67.50, much higher than the $50 level at which the stock was trading the week before the offer. If he succeeds, the former owner of the Washington Star will control about 35 percent of the bank's stock.
"The only corporation now involved holds only about 2 percent of the shares of Riggs, far short of the 25 percent level for which prior board approval is required," the board noted. Some 2 percent of the stock Allbritton controls in held by Pierce National Life Insurance Co. of Los Angeles, a wholly owned subsidiary of Perpetual Corp. which is wholly owned by Allbritton.
Riggs management opposed the offer, setting off the fight for control now being waged on several fronts.
Riggs had asked for the administration proceeding to determine whether a permanent cease-and-desist order should be granted to restrain what Riggs charged were violations of the Bank Holding Company Act and the Federal Deposit Insurance Act.
A spokesman for Allbritton said he was pleased with the decision by the Fed. Riggs officials could not be reached for comment