Texas Laws - Finance Code
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE G. BANK HOLDING COMPANIES; INTERSTATE BANK OPERATIONS (13600)(1-click HTML)

CHAPTER 201. GENERAL PROVISIONS (13601)(1-click HTML)
Sec. 201.001. SCOPE OF SUBTITLE. (13602)(1-click HTML)

(a) This subtitle: (13603)

(1) sets forth the conditions under which a company may acquire a Texas bank or a Texas bank holding company, pursuant to the provisions of Chapter 202; (13604)

(2) permits interstate branching under the Interstate Banking and Branching Efficiency Act pursuant to the provisions of Chapter 203; and (13605)

(3) provides for state regulation of the participation by foreign banks in the financial markets of this state, pursuant to the provisions of Chapter 204. (13606)

(b) This subtitle is not intended to discriminate against out-of-state banks and bank holding companies in a manner that would violate the Interstate Banking and Branching Efficiency Act. (13607)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13608)

Sec. 201.002. DEFINITIONS. (13609)(1-click HTML)

(a) Unless the context requires otherwise, in this subtitle: (13610)

(1) "Acquire" means an act that results in direct or indirect control by a company of a bank holding company or a bank, including an act that causes: (13611)

(A) the company to merge with a bank holding company or a bank; (13612)

(B) the company to assume direct or indirect ownership or control of: (13613)

(i) more than 25 percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was not a bank holding company before the acquisition; (13614)

(ii) more than five percent of any class of voting shares of a bank holding company or a bank, if the acquiring company was a bank holding company before the acquisition; or (13615)

(iii) all or substantially all of the assets of a bank holding company or a bank; or (13616)

(C) an application relating to control of a bank holding company or bank to be filed with a federal bank supervisory agency. (13617)

(2) "Affiliate" has the meaning assigned by Section 2(k), Bank Holding Company Act (12 U.S.C. Section 1841(k)). (13618)

(3) "Agency" when used in reference to an office of a foreign bank, has the meaning assigned by Section 1(b)(1), International Banking Act (12 U.S.C. Section 3101(1)). (13619)

(4) "Bank": (13620)

(A) for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202, has the meaning assigned by Section 2(c), Bank Holding Company Act (12 U.S.C. Section 1841(c)); (13621)

(B) for purposes of Chapter 203 and the laws of this state as they relate to Chapter 203, has the meaning assigned to the term "insured bank" by Section 3(h), Federal Deposit Insurance Act (12 U.S.C. Section 1813(h)), except that the term does not include a foreign bank unless it is organized under the laws of a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands and its deposits are insured by the Federal Deposit Insurance Corporation; and (13622)

(C) for purposes of Chapter 204 and the laws of this state as they relate to Chapter 204, has the meaning assigned by Section 2(c), Bank Holding Company Act (12 U.S.C. Section 1841(c)), or Section 3(a)(1), Federal Deposit Insurance Act (12 U.S.C. Section 1813(a)(1)), except that the term does not include a foreign bank or a branch or agency of a foreign bank. (13623)

(5) "Bank holding company" has the meaning assigned by Section 2(a), Bank Holding Company Act (12 U.S.C. Section 1841(a)), and includes a financial holding company. (13624)

(6) "Bank Holding Company Act" means the federal Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as amended. (13625)

(7) "Bank supervisory agency" means any of the following: (13626)

(A) an agency of another state with primary responsibility for chartering and supervising banks; (13627)

(B) the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, or the Bureau of Consumer Financial Protection, and any successor to these agencies; or (13628)

(C) an agency of a country, including a colony, dependency, possession, or political subdivision of a country, other than the United States with primary responsibility for chartering and supervising banks. (13629)

(8) "Branch" has the meaning assigned by Section 31.002(a), except that for purposes of Chapter 204 and the laws of this state as they relate to Chapter 204 the term: (13630)

(A) with respect to an office of a foreign bank, has the meaning assigned by Section 1(b)(3), International Banking Act (12 U.S.C. Section 3101(3)); and (13631)

(B) with respect to an office of a bank as defined by this section for the purposes of Chapter 204, has the meaning assigned to the term "domestic branch" by Section 3(o), Federal Deposit Insurance Act (12 U.S.C. Section 1813(o)). (13632)

(9) "Commissioner" has the meaning assigned to the term "banking commissioner" by Section 31.002(a), except that for purposes of Chapter 203 and the laws of this state as they relate to Chapter 203, with respect to a state savings bank, the term means the savings and mortgage lending commissioner of Texas. (13633)

(10) "Company" has the meaning assigned by Section 2(b), Bank Holding Company Act (12 U.S.C. Section 1841(b)), and includes a bank holding company. (13634)

(11) "Control" shall be construed consistently with Section 2(a)(2), Bank Holding Company Act (12 U.S.C. Section 1841(a)(2)), and regulations and interpretive rulings of the Board of Governors of the Federal Reserve System. (13635)

(12) "De novo branch" means a branch of a bank located in a host state that: (13636)

(A) is originally established by the bank as a branch; and (13637)

(B) does not become a branch of the bank as a result of: (13638)

(i) the acquisition of another bank or a branch of another bank; or (13639)

(ii) the merger or conversion involving the bank or branch. (13640)

(13) "Deposit" has the meaning assigned by Section 3(l), Federal Deposit Insurance Act (12 U.S.C. Section 1813(l)). (13641)

(14) "Depository institution" means an institution included for any purpose within the definitions of "insured depository institution" as assigned by Sections 3(c)(2) and 3(c)(3), Federal Deposit Insurance Act (12 U.S.C. Sections 1813(c)(2) and 1813(c)(3)). (13642)

(15) "Federal agency" means an agency of a foreign bank that is licensed by the Comptroller of the Currency pursuant to Section 4, International Banking Act (12 U.S.C. Section 3102). (13643)

(16) "Federal branch" means a branch of a foreign bank that is licensed by the Comptroller of the Currency pursuant to Section 4, International Banking Act (12 U.S.C. Section 3102). (13644)

(17) "Federal Deposit Insurance Act" means the Federal Deposit Insurance Act (12 U.S.C. Section 1811 et seq.), as amended. (13645)

(18) "Foreign bank" has the meaning assigned by Section 1(b)(7), International Banking Act (12 U.S.C. Section 3101(7)). (13646)

(19) "Foreign bank holding company" means a bank holding company that is organized under the laws of a country other than the United States or a territory or possession of the United States, and includes a foreign financial holding company. (13647)

(20) "Foreign person" means a natural or juridical person who is a citizen or national of one or more countries, including any colonies, dependencies, or possessions of the countries, other than the United States. (13648)

(21) "Home state" means: (13649)

(A) with respect to a national bank, the state in which the main office of the bank is located; (13650)

(B) with respect to a state bank, the state by which the bank is chartered; (13651)

(C) with respect to a foreign bank, the state determined to be the home state of the foreign bank under Section 5(c), International Banking Act (12 U.S.C. Section 3103(c)); and (13652)

(D) with respect to a bank holding company, the state in which the total deposits of all bank subsidiaries of the company are the largest on the later of July 1, 1966, or the date on which the company became a bank holding company. (13653)

(22) "Home state regulator" means: (13654)

(A) with respect to an out-of-state bank holding company, the bank supervisory agency of the home state of the bank holding company; and (13655)

(B) with respect to an out-of-state state bank, the bank supervisory agency of the state in which the bank is chartered. (13656)

(23) "Host state" means: (13657)

(A) with respect to a bank, a state other than the home state of the bank in which the bank maintains or seeks to establish and maintain a branch; and (13658)

(B) with respect to a bank holding company, a state other than the home state of the company in which the company controls or seeks to control a bank subsidiary. (13659)

(24) "International Banking Act" means the federal International Banking Act of 1978 (12 U.S.C. Section 3101 et seq.), as amended. (13660)

(25) "Interstate Banking and Branching Efficiency Act" means the federal Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, Public Law No. 103-328, codified at various sections of Title 12, United States Code. (13661)

(26) "Interstate branch" means a branch of a bank or a branch of a foreign bank, as the context requires, established, acquired, or retained pursuant to the Interstate Banking and Branching Efficiency Act, outside the home state of the bank or foreign bank. The term does not include, with respect to a foreign bank, a limited branch as that term is defined by this section. (13662)

(27) "Interstate merger transaction" means: (13663)

(A) the merger of banks with different home states and the conversion of branches of a bank involved in the merger into branches of the resulting bank; or (13664)

(B) the purchase of all or substantially all of the assets, including all or substantially all of the branches, of a bank whose home state is different from the home state of the acquiring bank. (13665)

(28) "Limited branch" means a branch of a foreign bank that accepts only the deposits that would be permissible for a corporation organized under Section 25A, Federal Reserve Act (12 U.S.C. Section 611 et seq.), in accordance with Section 5(a)(7), International Banking Act (12 U.S.C. Section 3103(a)(7)). (13666)

(29) "Out-of-state bank" means a bank whose home state is another state. (13667)

(30) "Out-of-state bank holding company" means a bank holding company whose home state is another state, and includes an out-of-state financial holding company. (13668)

(31) "Out-of-state foreign bank" means a foreign bank whose home state is another state. (13669)

(32) "Out-of-state state bank" means a bank chartered under the laws of another state. (13670)

(33) "Representative office" has the meaning assigned by Section 1(b)(15), International Banking Act (12 U.S.C. Section 3101(15)). (13671)

(34) "Resulting bank" means a bank that results from an interstate merger transaction. (13672)

(35) "State" means a state of the United States, the District of Columbia, a territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or the Northern Mariana Islands, except that for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202 the term means a state, territory, or other possession of the United States, including the District of Columbia. (13673)

(36) "State bank" means a Texas state bank or an out-of-state state bank, including an out-of-state state savings bank. (13674)

(37) "State savings bank" has the meaning assigned to the term "savings bank" by Section 3(g), Federal Deposit Insurance Act (12 U.S.C. Section 1813(g)), and includes a savings bank organized under Subtitle C or under similar laws of another state. (13675)

(38) "Subsidiary" has the meaning assigned by Section 2(d), Bank Holding Company Act (12 U.S.C. Section 1841(d)). (13676)

(39) "Texas bank" means a bank whose home state is this state, except that for purposes of Chapter 202 and the laws of this state as they relate to Chapter 202 the term means a Texas state bank or a national bank organized under federal law with its main office in this state. (13677)

(40) "Texas bank holding company" means a bank holding company whose home state is this state and that is not controlled by a bank holding company other than a Texas bank holding company, and includes a Texas financial holding company. (13678)

(41) "Texas representative office" means a representative office that is located in this state and registered pursuant to Subchapter C, Chapter 204. (13679)

(42) "Texas state agency," means, when used in reference to an office of a foreign bank, an agency of a foreign bank that is located in this state and licensed pursuant to Subchapter B, Chapter 204. (13680)

(43) "Texas state bank" means a bank that is organized under Subtitle A. (13681)

(44) "Texas state branch," means, when used in reference to an office of a foreign bank, a branch of a foreign bank that is located in this state and licensed pursuant to Subchapter B, Chapter 204. (13682)

(45) "United States" means: (13683)

(A) when used in a geographical sense, the several states, the District of Columbia, Puerto Rico, Guam, American Samoa, the American Virgin Islands, the Trust Territory of the Pacific Islands, and other territories of the United States; and (13684)

(B) when used in a political sense, the federal government of the United States. (13685)

(46) "Financial holding company" means a bank holding company that has elected to be treated as a financial holding company under 12 U.S.C. Section 1843(l). (13686)

(47) "Functional regulatory agency" means a department or agency of this state, another state, the United States, or a foreign government with whom the United States currently maintains diplomatic relations that regulates and charters, licenses, or registers persons engaged in financial activities or activities incidental or complementary to financial activities, including activities related to banking, insurance, or securities. (13687)

(b) The definitions provided by Section 31.002 apply to this subtitle to the extent not inconsistent with this section and as the context requires. (13688)

(c) The definitions shall be liberally construed to accomplish the purposes of this subtitle. (13689)

(d) The finance commission by rule may adopt other definitions to accomplish the purposes of this subtitle. (13690)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 27, eff. Sept. 1, 2001. (13691)

Amended by: (13692)

Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 6.058, eff. September 1, 2007. (13693)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 19, eff. June 14, 2013. (13694)

Sec. 201.003. RULES. (13695)(1-click HTML)

(a) The finance commission may adopt rules to accomplish the purposes of this subtitle, including rules necessary or reasonable to: (13696)

(1) implement and clarify this subtitle in a manner consistent with and to the extent permitted by applicable federal law; (13697)

(2) preserve or protect the safety and soundness of banking in this state; (13698)

(3) grant at least the same rights and privileges to Texas state banks that are or may be granted to other depository institutions; (13699)

(4) recover the cost of maintaining and operating the department and the cost of enforcing this subtitle by imposing and collecting ratable and equitable fees for supervision and regulation, including fees for notices, applications, and examinations; and (13700)

(5) facilitate the fair hearing and adjudication of matters before the commissioner and the finance commission. (13701)

(b) In adopting rules, the finance commission shall consider the need to: (13702)

(1) coordinate with applicable federal law; (13703)

(2) promote a stable banking environment; (13704)

(3) provide the public with convenient, safe, and competitive banking services; (13705)

(4) preserve and promote the competitive position of Texas state banks with regard to other depository institutions consistent with the safety and soundness of Texas state banks and the Texas state bank system; and (13706)

(5) allow for economic development in this state. (13707)

(c) The presence or absence in this subtitle of a specific reference to rules regarding a particular subject does not enlarge or diminish the rulemaking authority provided by this section. (13708)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 28, eff. Sept. 1, 2001. (13709)

Sec. 201.004. LAW APPLICABLE TO INTERSTATE BRANCHES. (13710)(1-click HTML)

(a) The laws of this state, including laws regarding community reinvestment, consumer protection, fair lending, and establishment of intrastate branches, apply to an interstate branch located in this state to the same extent the laws of this state would apply if the branch in this state were a branch of an out-of-state national bank in this state, except to the extent otherwise provided under federal law. An out-of-state state bank that establishes an interstate branch in this state under this subtitle may conduct any activity at the branch in this state that is permissible under the laws of the bank's home state, to the extent the activity is permissible for a Texas state bank or for a branch of an out-of-state national bank in this state. (13711)

(b) To the extent provided by Section 4.102(c), Business & Commerce Code, the laws of this state govern a deposit contract between a bank and a consumer account holder if the branch or separate office of the bank that accepts the deposit contract is located in this state. (13712)

(c) Without limiting Subsection (a), for purposes of the laws of this state relating to authority to act as a fiduciary, depository of public funds, or custodian of securities pledged to secure public funds, or authority to engage in repurchase transactions with public entities, a legally operating interstate branch in this state is considered to be in, within, located in, authorized to do business in, domiciled in, and chartered in this state. (13713)

(d) This subtitle does not limit or affect the authority of: (13714)

(1) the home state regulator of a bank's home state to enforce any law applicable to a branch of an out-of-state state bank; (13715)

(2) a law enforcement officer, a regulatory supervisor, other than the commissioner, or another official of this state to enforce the laws of this state applicable to a branch of an out-of-state state bank; or (13716)

(3) this state to adopt, apply, or administer any tax or method of taxation to a bank, bank holding company, or foreign bank, or any affiliate of a bank, bank holding company, or foreign bank, to the extent that the tax or tax method is otherwise permissible by or under the United States Constitution or other federal law. (13717)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13718)

Amended by: (13719)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 20, eff. June 14, 2013. (13720)

Sec. 201.005. COOPERATIVE AGREEMENTS; FEES. (13721)(1-click HTML)

(a) To carry out the purposes of this subtitle, to the extent permitted by federal law, the commissioner may: (13722)

(1) enter into cooperative, coordinating, or information sharing agreements with another bank supervisory agency, a functional regulatory agency, or an organization affiliated with or representing one or more bank supervisory agencies; (13723)

(2) with respect to periodic examination or other supervision or investigation, accept reports of examination or investigation by, and reports submitted to, another bank supervisory agency or functional regulatory agency in lieu of conducting examinations or investigations or receiving reports as might otherwise be required or permissible under this subtitle; (13724)

(3) enter into contracts with another bank supervisory agency or functional regulatory agency having concurrent regulatory or supervisory jurisdiction to engage the services of the agency for reasonable compensation to assist in connection with the commissioner's performance of official duties under this subtitle or other law, or to provide services to the agency for reasonable compensation in connection with the agency's performance of official duties under law, except that Chapter 2254, Government Code, does not apply to the contracts; (13725)

(4) enter into joint examinations or joint enforcement actions with another bank supervisory agency or functional regulatory agency having concurrent regulatory or supervisory jurisdiction, except that the commissioner may independently take action under Section 201.009 if the commissioner determines that the action is necessary to carry out the commissioner's responsibilities under this subtitle or to enforce compliance with the laws of this state; and (13726)

(5) assess supervisory and examination fees to be paid by a state bank, state savings bank, bank holding company, or foreign bank in connection with the commissioner's performance of duties under this subtitle. (13727)

(b) Supervisory or examination fees assessed by the commissioner in accordance with this subtitle may be shared with another bank supervisory agency, a functional regulatory agency, or an organization affiliated with or representing one or more bank supervisory agencies in accordance with an agreement between the commissioner and the agency or organization. The commissioner may also receive a portion of supervisory or examination fees assessed by another bank supervisory agency or functional regulatory agency in accordance with an agreement between the commissioner and the agency. (13728)

(c) A cooperative agreement entered into by the commissioner under this section does not limit the authority of a law enforcement officer, regulatory supervisor, or other official of this state who is not a party to the agreement to enforce the laws of this state applicable to a branch of an out-of-state state bank located in this state. (13729)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 29, eff. Sept. 1, 2001. (13730)

Amended by: (13731)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 21, eff. June 14, 2013. (13732)

Sec. 201.006. ISSUANCE OF INTERPRETIVE STATEMENTS AND OPINIONS. (13733)(1-click HTML)

(a) To encourage the effective coordination and implementation of home state laws and host state laws with respect to interstate branching, the commissioner, directly or through a deputy commissioner or department attorney, may: (13734)

(1) issue interpretive statements containing matters of general policy to guide the public and banks and bank holding companies subject to this subtitle; (13735)

(2) amend or repeal a published interpretive statement by issuing an amended statement or notice of repeal of a statement and publishing the statement or notice; (13736)

(3) issue, in response to specific requests from the public or the banking industry, opinions interpreting this subtitle or determining the applicability of laws of this state to the operation of interstate branches or other offices in this state by out-of-state banks or in other states by Texas banks; and (13737)

(4) amend or repeal an opinion by issuing an amended opinion or notice of repeal of an opinion, except that the requesting party may rely on the original opinion if: (13738)

(A) all material facts were originally disclosed to the commissioner; (13739)

(B) the safety and soundness of the affected bank or bank holding company will not be affected by further reliance on the original opinion; and (13740)

(C) the text and interpretation of relevant, governing provisions of applicable home state, host state, and federal law have not been changed by legislative or judicial action. (13741)

(b) An interpretive statement or opinion may be disseminated by newsletter, via electronic medium such as the internet, in a volume of statutes or related materials published by the commissioner or others, or by other means reasonably calculated to notify persons affected by the interpretive statement or opinion. An opinion may be disseminated to the public if the commissioner determines that the opinion is useful for the general guidance and convenience of the public or banks or bank holding companies. A published opinion must be redacted to preserve the confidentiality of the requesting party unless the requesting party consents to be identified in the published opinion. Notice of an amended or withdrawn statement or opinion must be disseminated in a substantially similar manner as the affected statement or opinion was originally disseminated. (13742)

(c) An interpretive statement or opinion issued under this subtitle does not have the force of law and is not a rule for the purposes of Chapter 2001, Government Code, unless adopted by the finance commission as provided by Chapter 2001, Government Code. An interpretive statement or opinion is an administrative construction of this subtitle entitled to great weight if the construction is reasonable and does not conflict with this subtitle. (13743)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 5.01, eff. Sept. 1, 2001. (13744)

Sec. 201.007. CONFIDENTIALITY. (13745)(1-click HTML)

Except as expressly provided otherwise in this subtitle, confidentiality of information obtained by the commissioner under this subtitle is governed by Subchapter D, Chapter 31, or, with respect to a state savings bank, Subtitle C, and may not be disclosed by the commissioner or an employee of the commissioner's department except as provided by Subchapter D, Chapter 31, or, with respect to a state savings bank, Subtitle C. (13746)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13747)

Sec. 201.008. NOTICE OF SUBSEQUENT EVENT. (13748)(1-click HTML)

Each out-of-state state bank that has established and maintains an interstate branch in this state pursuant to this subtitle shall give written notice to the commissioner, at least 30 days before the effective date of the event, or in the case of an emergency transaction, within a shorter period consistent with applicable state or federal law, of a merger or other transaction that would cause a change of control with respect to the bank or a bank holding company that controls the bank, with the result that an application would be required to be filed with the bank's home state regulator or a federal bank supervisory agency, including an application filed pursuant to the Change in Bank Control Act of 1978 (12 U.S.C. Section 1817(j)), as amended, or the Bank Holding Company Act (12 U.S.C. Section 1841 et seq.). (13749)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13750)

Sec. 201.009. ENFORCEMENT; APPEALS. (13751)(1-click HTML)

(a) If the commissioner determines that a bank holding company or a foreign bank has violated this subtitle or other applicable law of this state, the commissioner may take any enforcement action the commissioner would be empowered to take if the bank holding company or foreign bank were a Texas state bank, except that the commissioner shall promptly give notice to the home state regulator of each enforcement action taken against an out-of-state bank holding company or foreign bank and, to the extent practicable, shall consult and cooperate with the home state regulator in pursuing and resolving the enforcement action. A bank holding company or foreign bank may appeal a final order or other decision of the commissioner under this subtitle as provided by Sections 31.202, 31.203, and 31.204. (13752)

(b) If the commissioner determines that an interstate branch maintained by an out-of-state state bank in this state is being operated in violation of a law of this state that is applicable to the branch under Section 24(j), Federal Deposit Insurance Act (12 U.S.C. Section 1831a(j)), including a law that governs community reinvestment, fair lending, or consumer protection, the commissioner, with written notice to the home state regulator and subject to the terms of any applicable cooperative agreement with the home state regulator, may take any enforcement action the commissioner would be empowered to take if the branch were a Texas state bank or state savings bank, as the case may be. An out-of-state state bank may appeal a final order or other decision of the commissioner under this subtitle as provided by Sections 31.202, 31.203, and 31.204, or as provided under Subtitle C with respect to a state savings bank. (13753)

(c) Repealed by Acts 2013, 83rd Leg., R.S., Ch. 940, Sec. 26, eff. June 14, 2013. (13754)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13755)

Amended by: (13756)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 22, eff. June 14, 2013. (13757)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 26, eff. June 14, 2013. (13758)

Sec. 201.010. TAXATION. (13759)(1-click HTML)

A bank subject to this subtitle is subject to the franchise tax to the extent provided by Chapter 171, Tax Code. (13760)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13761)

Sec. 201.011. SEVERABILITY. (13762)(1-click HTML)

The provisions of this subtitle or the applications of those provisions are severable as provided by Section 311.032(c), Government Code. (13763)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13764)

SUBCHAPTER B. REGISTRATION OF FINANCIAL INSTITUTIONS (13765)(1-click HTML)
Sec. 201.101. DEFINITIONS. (13766)(1-click HTML)

In this subchapter: (13767)

(1) "Financial institution" means: (13768)

(A) a bank as defined for any purpose by Section 201.002(a)(4), whether chartered under the laws of this state, another state, the United States, or another country, including a state savings bank; (13769)

(B) a savings and loan association chartered under Chapter 62 or similar laws of another state; (13770)

(C) a federal savings and loan association, federal savings bank, or federal credit union; (13771)

(D) a credit union chartered under Chapter 122 or similar laws of another state; or (13772)

(E) a trust company chartered under the laws of this state or another state. (13773)

(2) "Out-of-state financial institution" means a financial institution that: (13774)

(A) is not chartered under the laws of this state; and (13775)

(B) has its main or principal office in another state or country. (13776)

(3) "Texas financial institution" means a financial institution that: (13777)

(A) is chartered under the laws of this state or under federal law; and (13778)

(B) has its main or principal office in this state. (13779)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13780)

Sec. 201.102. REGISTRATION TO DO BUSINESS. (13781)(1-click HTML)

An out-of-state financial institution must file an application for registration with the secretary of state, before operating a branch or other office in this state, by complying with the law of this state relating to foreign corporations doing business in this state, notwithstanding a provision in that law that purports to limit or prohibit its applicability to financial institutions. (13782)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13783)

Sec. 201.103. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF PROCESS. (13784)(1-click HTML)

(a) A Texas financial institution may file in the office of the secretary of state a statement appointing an agent authorized to receive service of process. (13785)

(b) A statement appointing an agent must set forth: (13786)

(1) the name of the Texas financial institution; (13787)

(2) the federal tax identification number of the Texas financial institution; (13788)

(3) the address, including the street address, of the principal office of the Texas financial institution; and (13789)

(4) the name of the agent in this state authorized to receive service of process and the agent's address, including the street address, in this state. (13790)

(c) The agent named under Subsection (b) must be: (13791)

(1) an individual resident of this state; (13792)

(2) a domestic corporation, limited partnership, partnership, limited liability company, professional association, cooperative, or real estate investment trust; or (13793)

(3) a foreign entity registered with the secretary of state to transact business in this state. (13794)

(d) A statement appointing an agent must be signed by an officer of the Texas financial institution. The statement must also be signed by the person appointed agent, who by signing accepts the appointment. The appointed agent may resign by filing a resignation in the office of the secretary of state and giving notice to the Texas financial institution. (13795)

(e) The secretary of state shall collect for the use of the state: (13796)

(1) a fee of $25 for indexing and filing the original statement appointing an agent; and (13797)

(2) a fee of $15 for filing an amendment to or cancellation of a statement appointing an agent. (13798)

(f) An amendment to a statement appointing an agent to receive service of process must meet the requirements for execution of an original statement. (13799)

(g) A statement appointing an agent may be canceled by filing with the secretary of state a written notice of cancellation executed by an officer of the Texas financial institution. A notice of cancellation must contain: (13800)

(1) the name of the Texas financial institution; (13801)

(2) the federal tax identification number of the Texas financial institution; (13802)

(3) the date of filing of the statement appointing the agent; and (13803)

(4) the current street address of the principal office of the Texas financial institution. (13804)

(h) Service of process on a registered agent appointed under this section is an alternate method of service in addition to other methods provided by law unless other law specifically requires service to be made on the registered agent. A resignation or notice of cancellation is effective immediately on acknowledgement of filing by the secretary of state, and after the acknowledgement the financial institution is subject to service of process as otherwise provided by law. (13805)

(i) The secretary of state may adopt forms and procedural rules for filing of documents under this section. (13806)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13807)

CHAPTER 202. BANK HOLDING COMPANIES (13808)(1-click HTML)
Sec. 202.001. ACQUISITION OF BANK OR BANK HOLDING COMPANY. (13809)(1-click HTML)

(a) A company intending to acquire a Texas bank holding company or a Texas bank shall submit to the commissioner a copy of the application for approval or notice submitted to the Board of Governors of the Federal Reserve System under Section 3, Bank Holding Company Act (12 U.S.C. Section 1842). The copy must be: (13810)

(1) submitted to the commissioner when the application is submitted to the board of governors; (13811)

(2) accompanied by any additional information required under Subsection (b); and (13812)

(3) accompanied by any filing fee required by law. (13813)

(b) An applicant or notificant that is an out-of-state bank holding company shall provide satisfactory evidence to the commissioner of compliance with or inapplicability of: (13814)

(1) the requirements of Section 202.003; and (13815)

(2) if the applicant or notificant is not incorporated under the laws of this state, the laws of this state relating to registration of foreign corporations to do business in this state. (13816)

(c) On receipt of the notice prescribed by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)), the commissioner shall state in writing within the period prescribed by that subsection the commissioner's: (13817)

(1) views and recommendations concerning the proposed transaction; (13818)

(2) opinion regarding whether the proposed transaction complies with this chapter and the Interstate Banking and Branching Efficiency Act; and (13819)

(3) opinion regarding whether the proposed transaction complies with the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et seq.), as amended. (13820)

(d) The commissioner is not required to disapprove the application or notice solely because of the opinion stated under Subsection (c)(3). (13821)

(e) If the commissioner's response disapproves an application for or notice of an acquisition of a Texas state bank or a Texas bank holding company controlling a Texas state bank, the commissioner may: (13822)

(1) appear at the hearing held as provided by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)); and (13823)

(2) present evidence at the hearing regarding the reasons the application or notice should be denied. (13824)

(f) If the commissioner's response disapproves an application for or notice of an acquisition other than as described by Subsection (e), the commissioner may request that a hearing be held as provided by Section 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)). If the board of governors grants the request, the commissioner shall appear and present evidence at the hearing regarding the reasons the application or notice should be denied. (13825)

(g) If the board of governors approves an application or notice that the commissioner disapproved, the commissioner may accept the decision or attempt to overturn the decision on appeal as provided by Section 9, Bank Holding Company Act (12 U.S.C. Section 1848). (13826)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13827)

Sec. 202.002. LIMITATION ON CONTROL OF DEPOSITS. (13828)(1-click HTML)

(a) The commissioner may not approve an acquisition if, on consummation of the transaction, the applicant, including all depository institution affiliates of the applicant, would control 20 percent or more of the total amount of deposits in this state held by depository institutions in this state. (13829)

(b) The commissioner may request and the applicant shall provide supplemental information to the commissioner to aid in a determination under this section, including information that is more current than or in addition to information in the most recently available summary of deposits, reports of condition, or similar reports filed with or produced by state or federal authorities. (13830)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13831)

Sec. 202.003. REQUIRED AGE OF ACQUIRED BANK. (13832)(1-click HTML)

(a) An out-of-state bank holding company may not make an acquisition under this chapter if the Texas bank to be acquired, or any Texas bank subsidiary of the bank holding company to be acquired, has not been in existence and in continuous operation for at least five years as of the effective date of acquisition. (13833)

(b) For purposes of this section: (13834)

(1) a bank that is the successor as a result of merger or acquisition of all or substantially all of the assets of a prior bank is considered to have been in existence and continuously operated during the period of its existence and continuous operation as a bank and during the period of existence and continuous operation of the prior bank; and (13835)

(2) a bank effecting a purchase and assumption, merger, or similar transaction with or supervised by the Federal Deposit Insurance Corporation or its successor is considered to have been in existence and continuously operated during the existence and continuous operation of the bank with respect to which the transaction was consummated. (13836)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13837)

Sec. 202.004. NONBANKING ACQUISITION, ELECTION, OR ACTIVITY. (13838)(1-click HTML)

(a) A bank holding company doing business in this state that submits an application, election, or notice to the Board of Governors of the Federal Reserve System under Section 4, Bank Holding Company Act (12 U.S.C. Section 1843), that involves or will involve an office location in this state shall submit to the commissioner a copy of the application, election, or notice when the application, election, or notice is submitted to the board of governors, including a notice or application to acquire a nonbanking institution, an election to be treated as a financial holding company, or a request, proposal, or application to engage in an activity that is or may be a financial activity or an activity incidental or complementary to a financial activity. The bank holding company shall submit other information reasonably requested by the commissioner to determine the manner in which the acquisition, election, or activity will directly or indirectly affect residents of this state. (13839)

(b) To assist in determining whether to disapprove the proposed acquisition, election, or activity, the commissioner may hold a public hearing as provided by Section 31.201, regardless of whether requested to do so by a person, regarding the proposed acquisition, election, or activity and its effect on this state. The commissioner shall convene a hearing if the bank holding company requests a hearing in writing when it submits the application, election, or notice to the commissioner. (13840)

(c) The commissioner shall disapprove the proposed acquisition, election, or activity if the commissioner determines that the acquisition, election, or activity would be detrimental to the public interest as a result of probable adverse effects, including undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices. (13841)

(d) If the commissioner determines to disapprove the proposed acquisition, election, or activity, the commissioner may prepare and file a response to the application, election, or notice with the board of governors and may request that a hearing be held. If the board of governors grants the request, the commissioner shall appear and present evidence at the hearing regarding the reasons the proposed acquisition, election, or activity should be denied. (13842)

(e) If the board of governors approves a proposed acquisition, election, or activity that the commissioner disapproved, the commissioner may accept the decision or seek to overturn the decision on appeal as provided by Section 9, Bank Holding Company Act (12 U.S.C. Section 1848). (13843)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 30, eff. Sept. 1, 2001. (13844)

Sec. 202.005. APPLICABLE LAWS. (13845)(1-click HTML)

(a) The commissioner may: (13846)

(1) examine a bank holding company that controls a Texas bank to the same extent as if the bank holding company were a Texas state bank; and (13847)

(2) bring an enforcement proceeding under Chapter 35 against a bank holding company or other person that violates or participates in a violation of Subtitle A, an agreement filed with the commissioner under this chapter, or a rule adopted by the finance commission or order issued by the commissioner under Subtitle A, as if the bank holding company were a Texas state bank. (13848)

(a-1) The grounds, procedures, and effects of an enforcement proceeding brought under this section apply to a bank holding company, an officer, director, or employee of a bank holding company, or a controlling shareholder or other person participating in the affairs of a bank holding company in the same manner as the grounds, procedures, and effects apply to a state bank, an officer, director, or employee of a state bank, or a controlling shareholder or other person participating in the affairs of a state bank. (13849)

(b) A Texas bank that is controlled by a bank holding company that is not a Texas bank holding company shall be subject to all laws of this state that are applicable to Texas banks that are controlled by Texas bank holding companies. (13850)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 867, Sec. 94, eff. Sept. 1, 2001. (13851)

Amended by: (13852)

Acts 2007, 80th Leg., R.S., Ch. 237 (H.B. 1962), Sec. 77, eff. September 1, 2007. (13853)

Acts 2011, 82nd Leg., R.S., Ch. 183 (S.B. 1165), Sec. 17, eff. May 28, 2011. (13854)

Acts 2015, 84th Leg., R.S., Ch. 422 (H.B. 3555), Sec. 14, eff. September 1, 2015. (13855)

Sec. 202.006. FINANCIAL ACTIVITIES. (13856)(1-click HTML)

(a) A financial holding company may engage in a financial activity or an activity incidental or complementary to a financial activity if the activity has been authorized by: (13857)

(1) the Board of Governors of the Federal Reserve System under 12 U.S.C. Section 1843(k); or (13858)

(2) a rule adopted by the finance commission under Subsection (b). (13859)

(b) The finance commission by rule may determine that an activity not otherwise approved or authorized under this chapter, federal law, or other law is: (13860)

(1) a financial activity; (13861)

(2) incidental to a financial activity; or (13862)

(3) complementary to a financial activity. (13863)

(c) In adopting a rule under Subsection (b), the finance commission shall consider: (13864)

(1) the purposes of this subtitle and the Gramm-Leach-Bliley Act (Pub. L. No. 106-102); (13865)

(2) changes or reasonably expected changes in the marketplace in which financial holding companies compete; (13866)

(3) changes or reasonably expected changes in the technology for delivering financial services; (13867)

(4) whether the activity is necessary or appropriate to allow a financial holding company to: (13868)

(A) compete effectively with another company seeking to provide financial services; (13869)

(B) efficiently deliver information and services that are financial in nature through the use of technological means, including an application necessary to protect the security or efficacy of systems for the transmission of data or financial transactions; or (13870)

(C) offer customers available or emerging technological means for using financial services or for the document imaging of data; and (13871)

(5) if otherwise determined to be permissible, whether the conduct of the activity by a financial holding company should be qualified through the imposition of reasonable and necessary conditions to protect the public and require appropriate regard for safety and soundness of the holding company's subsidiary banks and the financial system generally. (13872)

(d) A determination by the board of governors under federal law or by a rule of the finance commission under this section does not alter or negate applicable licensing and regulatory requirements administered by a functional regulatory agency of this state. (13873)

Added by Acts 2001, 77th Leg., ch. 528, Sec. 31, eff. Sept. 1, 2001. (13874)

CHAPTER 203. INTERSTATE BANK MERGERS AND BRANCHING (13875)(1-click HTML)
Sec. 203.001. INTERSTATE BRANCHING BY TEXAS STATE BANKS. (13876)(1-click HTML)

(a) With the prior approval of the commissioner, a Texas state bank may establish and maintain a de novo branch or acquire a branch in a state other than Texas pursuant to Section 32.203. (13877)

(b) With the prior approval of the commissioner, a Texas state bank may establish, maintain, and operate one or more branches in another state pursuant to an interstate merger transaction in which the Texas state bank is the resulting bank. Not later than the date on which the required application for the interstate merger transaction is filed with the responsible federal bank supervisory agency, the applicant Texas state bank shall file an application on a form prescribed by the commissioner and pay the fee prescribed by law. The applicant shall also comply with the applicable provisions of Sections 32.301-32.303. The commissioner shall approve the interstate merger transaction and the operation of branches outside of this state by the Texas state bank if the commissioner makes the findings required by Section 32.302(b). An interstate merger transaction may be consummated only after the applicant has received the commissioner's written approval. (13878)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13879)

Sec. 203.002. CONDITIONS FOR ENTRY BY DE NOVO BRANCHING. (13880)(1-click HTML)

(a) An out-of-state bank may establish a de novo branch in this state if: (13881)

(1) the out-of-state bank confirms in writing to the commissioner that as long as it maintains a branch in this state, it will comply with all applicable laws of this state; (13882)

(2) the applicant provides satisfactory evidence to the commissioner of compliance with the applicable requirements of Section 201.102; and (13883)

(3) the commissioner, acting on or before the 30th day after the date the commissioner receives notice of an application under Subsection (b), certifies to the responsible federal bank supervisory agency that the requirements of this subchapter have been met. (13884)

(b) An out-of-state bank desiring to establish and maintain a de novo branch shall provide written notice of the proposed transaction to the commissioner not later than the date on which the bank applies to the responsible federal bank supervisory agency for approval to establish the branch. The filing of the notice must be accompanied by the filing fee, if any, prescribed by the commissioner. (13885)

(c) A de novo branch may be established in this state through the acquisition of a branch of an existing Texas bank if the acquiring out-of-state bank complies with this section. (13886)

(d) A depository institution may not establish or maintain a branch in this state on the premises or property of an affiliate if the affiliate engages in commercial activities, except as provided by Section 92.063(d). (13887)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13888)

Amended by: (13889)

Acts 2007, 80th Leg., R.S., Ch. 217 (H.B. 944), Sec. 4, eff. May 25, 2007. (13890)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 23, eff. June 14, 2013. (13891)

Sec. 203.003. ENTRY BY INTERSTATE MERGER TRANSACTION. (13892)(1-click HTML)

(a) Subject to Section 203.004, one or more Texas banks may enter into an interstate merger transaction with one or more out-of-state banks under this chapter, and an out-of-state bank resulting from the transaction may maintain and operate the branches in this state of a Texas bank that participated in the transaction. An out-of-state bank that will be the resulting bank in the interstate merger transaction shall comply with Section 201.102. (13893)

(b) An out-of-state bank that will be the resulting bank pursuant to an interstate merger transaction involving a Texas state bank shall notify the commissioner of the proposed merger not later than the date on which it files an application for an interstate merger transaction with the responsible federal bank supervisory agency, and shall submit a copy of that application to the commissioner and pay the filing fee, if any, required by the commissioner. A Texas state bank that is a party to the interstate merger transaction shall comply with Chapter 32 and with other applicable state and federal laws. An out-of-state bank that will be the resulting bank in the interstate merger transaction shall provide satisfactory evidence to the commissioner of compliance with Section 201.102. (13894)

(c) Repealed by Acts 2013, 83rd Leg., R.S., Ch. 940, Sec. 26, eff. June 14, 2013. (13895)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13896)

Amended by: (13897)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 24, eff. June 14, 2013. (13898)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 26, eff. June 14, 2013. (13899)

Sec. 203.004. LIMITATION ON CONTROL OF DEPOSITS. (13900)(1-click HTML)

(a) An interstate merger transaction is not permitted if, on consummation of the transaction, the resulting bank, including all depository institution affiliates of the resulting bank, would control 20 percent or more of the total amount of deposits in this state held by all depository institutions in this state. (13901)

(b) The commissioner may request and the applicant shall provide supplemental information to the commissioner to aid in a determination under this section, including information that is more current than or in addition to information in the most recently available summary of deposits, reports of condition, or similar reports filed with or produced by state or federal authorities. (13902)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13903)

Sec. 203.006. ADDITIONAL BRANCHES. (13904)(1-click HTML)

An out-of-state bank that has established or acquired a branch in this state under this chapter may establish or acquire additional branches in this state to the same extent that a Texas state bank may establish or acquire a branch in this state under applicable state and federal law. (13905)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13906)

Sec. 203.007. EXAMINATIONS. (13907)(1-click HTML)

(a) With respect to an interstate branch maintained by an out-of-state state bank in this state, the banking commissioner: (13908)

(1) with written notice to the home state regulator and subject to the terms of any applicable cooperative agreement with the home state regulator, may examine the branch for the purpose of determining whether the branch is in compliance with the laws of this state that are applicable under Section 24(j), Federal Deposit Insurance Act (12 U.S.C. Section 1831a(j)), including laws governing community reinvestment, fair lending, and consumer protection; and (13909)

(2) if expressly permitted under and subject to the terms of any cooperative agreement with the home state regulator, or if the bank has been determined to be in a troubled condition by the home state regulator or the bank's appropriate federal banking agency, may participate in the examination of the bank by the home state regulator to ascertain whether the activities of the branch in this state are being conducted in an unsafe or unsound manner. (13910)

(b) For purposes of this section, a bank is considered to be in a troubled condition if the bank: (13911)

(1) has a composite rating, as determined in the bank's most recent report of examination, of four or five under the Uniform Financial Institutions Ratings System; (13912)

(2) is subject to a proceeding initiated by the Federal Deposit Insurance Corporation for termination or suspension of deposit insurance; or (13913)

(3) is subject to a proceeding initiated by the home state regulator to: (13914)

(A) vacate, revoke, or terminate the bank's charter; (13915)

(B) liquidate the bank; or (13916)

(C) appoint a receiver for the bank. (13917)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13918)

Amended by: (13919)

Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 25, eff. June 14, 2013. (13920)

CHAPTER 204. FOREIGN BANKS (13921)(1-click HTML)
Sec. 204.001. TRANSACTING BUSINESS. (13922)(1-click HTML)

(a) A foreign bank may not transact business in this state except to the extent permitted by this chapter. (13923)

(b) Subsection (a) does not prohibit a foreign bank: (13924)

(1) from transacting business at a licensed federal branch or agency in this state in accordance with federal law; (13925)

(2) that does not maintain a branch or agency in this state or conduct business from an office or location in this state from making unsecured loans in this state or loans secured by liens on real or personal property located in this state, enforcing those loans in this state, or transacting trust business in this state, to the extent permitted by other law; or (13926)

(3) organized under the laws of a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands, the deposits of which are insured by the Federal Deposit Insurance Corporation, from establishing and operating an interstate branch in this state in its capacity as a state bank pursuant to Chapter 203. (13927)

(c) For purposes of Subsection (a), a foreign bank is not considered to be transacting business in this state merely because a subsidiary or affiliate transacts business in this state, including business that a depository institution subsidiary or affiliate may lawfully conduct in this state as an agent for the foreign bank to the extent authorized by the laws of this state. (13928)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13929)

Sec. 204.002. BOOKS, ACCOUNTS, AND RECORDS. (13930)(1-click HTML)

Each Texas state branch, agency, or representative office shall maintain and make available appropriate books, accounts, and records reflecting: (13931)

(1) all transactions effected by or on behalf of the office; and (13932)

(2) all other actions taken in this state by employees of the foreign bank located in this state to effect transactions on behalf of an office of the foreign bank located outside this state. (13933)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13934)

Sec. 204.003. EXAMINATION; FEES. (13935)(1-click HTML)

(a) The commissioner may make examinations of a Texas state branch, agency, or representative office as the commissioner considers necessary to determine whether the office is being operated in compliance with the laws of this state and in accordance with safe and sound banking practices. Sections 31.105-31.107 apply to the examinations. (13936)

(b) A foreign bank that maintains a Texas state branch, agency, or representative office shall pay fees to the commissioner in accordance with Section 201.005 or rules adopted under this subtitle. (13937)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13938)

Sec. 204.004. REPORTS. (13939)(1-click HTML)

(a) A foreign bank doing business in this state through a Texas state branch, agency, or representative office shall make written reports to the commissioner that: (13940)

(1) are in English; (13941)

(2) are submitted at the times and in the form specified by the commissioner or by rules adopted under this subtitle; (13942)

(3) are under oath of one of the foreign bank's officers, managers, or agents transacting business in this state; (13943)

(4) show the amount of the foreign bank's assets and liabilities, expressed in United States currency; (13944)

(5) with respect to a Texas state branch or agency, show the amount of the branch or agency's assets and liabilities, expressed in United States currency; and (13945)

(6) contain other information that the commissioner requires. (13946)

(b) A license or registration of a foreign bank under this chapter may be revoked or the foreign bank may be subject to an enforcement action under Chapter 35 if the foreign bank fails to make a report required under Subsection (a) or makes a material false or misleading statement in the report. (13947)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13948)

Sec. 204.005. CHANGE OF CONTROL OF FOREIGN BANK. (13949)(1-click HTML)

A foreign bank licensed to establish and maintain a Texas state branch or agency pursuant to Subchapter B, or which has registered a Texas representative office pursuant to Subchapter C, shall file with the commissioner a notice of change of control, in the form and containing the information the commissioner requires, not later than the 14th day after the date of a merger or other transaction that results or will result in a change of control. (13950)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13951)

Sec. 204.006. OPERATIONS IN THIS STATE OF BANKS OWNED OR CONTROLLED BY FOREIGN BANKS AND OTHER FOREIGN PERSONS. (13952)(1-click HTML)

(a) Except as provided in Subsection (b): (13953)

(1) the laws of this state governing the acquisition or ownership of interests in Texas banks or out-of-state banks seeking to establish and maintain interstate branches in this state do not prohibit ownership of those institutions by, or otherwise discriminate against, foreign banks or other foreign persons; and (13954)

(2) the laws of this state governing the powers and activities of Texas banks and out-of-state banks maintaining interstate branches in this state do not discriminate among those banks on the basis of their ownership or control by foreign banks or other foreign persons. (13955)

(b) Notwithstanding Subsection (a), the commissioner may apply the laws of this state governing the ownership, control, or operations of Texas banks, even if applicable specifically or exclusively to foreign banks or other foreign persons, to the extent those laws are determined by the commissioner to be: (13956)

(1) substantially equivalent to or consistent with the standards or requirements governing the ownership, control, or operations of Texas banks by foreign banks or other foreign persons under applicable federal law; or (13957)

(2) otherwise consistent with the laws and policies of the United States, including its international agreements governing financial services. (13958)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13959)

Sec. 204.007. ESTABLISHMENT OF INTERSTATE BRANCH IN THIS STATE BY AN OUT-OF-STATE FOREIGN BANK. (13960)(1-click HTML)

(a) An out-of-state foreign bank may establish an interstate Texas state branch in the same manner as, and subject to the same criteria, standards, conditions, requirements, and procedures applicable to, the establishment of an interstate branch in this state by an out-of-state bank having the same home state in the United States, including by acquisition of or merger with a Texas bank, or establishment of a de novo branch in the manner provided by Section 203.002, notwithstanding another law of this state to the contrary other than Subsection (b). (13961)

(b) With respect to establishment of an initial interstate Texas state branch and subsequent intrastate branches of an out-of-state foreign bank, the commissioner: (13962)

(1) shall apply the same criteria, standards, conditions, requirements, and procedures applicable under Subchapter B to the establishment of an initial Texas state branch and subsequent intrastate branches in this state; (13963)

(2) may apply other criteria, standards, conditions, requirements, or provisions of the laws of this state that are determined by the commissioner to be substantially equivalent to or consistent with federal law generally applicable to the establishment of a branch in the United States by a foreign bank or specifically applicable to the establishment of a branch in the United States by the applicant foreign bank; and (13964)

(3) may allow an out-of-state foreign bank to: (13965)

(A) acquire or merge with another foreign bank maintaining a Texas branch or agency and after the acquisition or merger continue the operations as its own; (13966)

(B) acquire or establish an interstate Texas branch through another means not inconsistent with Section 5, International Banking Act (12 U.S.C. Section 3103); or (13967)

(C) convert a state agency to a state branch as provided by Section 204.008. (13968)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13969)

Sec. 204.008. CONVERSION OF EXISTING OFFICE. (13970)(1-click HTML)

(a) For purposes of this section, foreign bank offices in this state are divided into classes and ranked in ascending order as: (13971)

(1) representative office; (13972)

(2) Texas state agency; and (13973)

(3) Texas state branch. (13974)

(b) A foreign bank may change a lower class office into a higher class office by applying for the higher class office pursuant to Section 204.101. On approval of the application to establish the higher class office and after all conditions to the approval have been fulfilled, the foreign bank may change the lower class office into the higher class office and the commissioner shall issue a license authorizing the bank to maintain the higher class office. The foreign bank shall promptly surrender any license or registration previously issued by the commissioner in connection with the lower class office. (13975)

(c) A foreign bank may change a higher class office into a lower class office by applying for approval to close the higher class office pursuant to Section 204.115. On approval of the application to close the higher class office and after conditions precedent to the closing have been fulfilled, the foreign bank may change the higher class office into the lower class office, and the commissioner shall issue a license or registration authorizing the bank to maintain the lower class office. (13976)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13977)

SUBCHAPTER B. DIRECT BRANCH AND AGENCY OFFICES OF FOREIGN BANKS (13978)(1-click HTML)
Sec. 204.101. APPLICATION TO ESTABLISH BRANCH OR AGENCY. (13979)(1-click HTML)

(a) A foreign bank that desires to establish and maintain a Texas state branch or agency shall submit an application to the commissioner. The application must: (13980)

(1) be accompanied by all application fees and deposits required by applicable rules; (13981)

(2) be in the form specified by the commissioner; (13982)

(3) be subscribed and acknowledged by an officer of the foreign bank; (13983)

(4) have attached: (13984)

(A) a complete copy of the foreign bank's application to the Board of Governors of the Federal Reserve System under Section 7(d), International Banking Act (12 U.S.C. Section 3105(d)); (13985)

(B) an authenticated copy of the foreign bank's certificate of formation and bylaws or other constitutive documents and, if the copy is in a language other than English, an English translation of the document, under the oath of the translator; and (13986)

(C) evidence of compliance with Section 201.102; (13987)

(5) be submitted when the federal application is submitted to the board of governors; and (13988)

(6) include on its face or in accompanying documents: (13989)

(A) the name of the foreign bank; (13990)

(B) the street address where the principal office of the Texas state branch or agency is to be located and, if different, the Texas state branch or agency's mailing address; (13991)

(C) the name and qualifications of each officer and director of the foreign bank who will have control of all or part of the business and affairs of the Texas state branch or agency; (13992)

(D) a detailed statement of the foreign bank's financial condition as of a date not more than 360 days before the date of the application; and (13993)

(E) other information that: (13994)

(i) is necessary to enable the commissioner to make the findings listed in Section 204.103; (13995)

(ii) is required by rules adopted under this subtitle; or (13996)

(iii) the commissioner reasonably requests. (13997)

(b) The finance commission may adopt rules prescribing abbreviated application procedures and standards applicable to applications by foreign banks that have already established an initial Texas state branch or agency to establish additional intrastate branches or agencies. (13998)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (13999)

Amended by: (14000)

Acts 2013, 83rd Leg., R.S., Ch. 575 (S.B. 804), Sec. 36, eff. June 14, 2013. (14001)

Sec. 204.102. HEARING AND DECISION ON APPLICATION. (14002)(1-click HTML)

(a) After the application is complete and accepted for filing and all required fees and deposits have been paid, the commissioner shall determine from the application and the initial investigation whether the conditions set forth by Section 204.103 have been established. The commissioner shall approve the application or set the application for hearing. (14003)

(b) If the commissioner sets the application for hearing: (14004)

(1) the commissioner shall notify the Board of Governors of the Federal Reserve System that the application has been set for hearing as provided by federal regulations; (14005)

(2) the department shall participate as the opposing party; and (14006)

(3) the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable law. (14007)

(c) Information relating to the financial condition and business affairs of the foreign bank and financial information relating to its management and shareholders, except for previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or an employee of the department except as provided by Subchapter D, Chapter 31. (14008)

(d) The commissioner shall make a finding from the record of the hearing on each condition listed in Section 204.103 and enter an order granting or denying the license. If the license is denied, the commissioner shall inform the Board of Governors of the Federal Reserve System of the order and the reasons the federal application should be denied. (14009)

(e) The commissioner may make approval of an application conditional. The commissioner shall include any conditions in the order granting the license but may not issue the license until the Texas state branch or agency has received the approval of the Board of Governors of the Federal Reserve System. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant. (14010)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14011)

Sec. 204.103. ISSUANCE OF LICENSE. (14012)(1-click HTML)

(a) The commissioner shall issue a license to a foreign bank to establish and maintain a Texas state branch or agency if the commissioner finds after reasonable inquiry that: (14013)

(1) all members of the management of the Texas state branch or agency have sufficient banking experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the agency will operate in compliance with state law; (14014)

(2) the foreign bank has sufficient standing to justify a belief that the Texas state branch or agency will be free from improper or unlawful influence or interference with respect to the office's operation in compliance with state law; and (14015)

(3) the foreign bank is acting in good faith and the application does not contain a material misrepresentation. (14016)

(b) Each Texas state branch or agency shall post its license in a conspicuous place at its office. A license issued under this subchapter is not transferable or assignable. (14017)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14018)

Sec. 204.104. NO CONCURRENT FEDERAL BRANCH OR AGENCY. (14019)(1-click HTML)

(a) A foreign bank licensed under this subchapter to establish and maintain a Texas state branch or agency may not concurrently maintain a federal branch or federal agency in this state. (14020)

(b) A foreign bank which maintains a federal branch or federal agency in this state may not concurrently be licensed under this subchapter to maintain a Texas state branch or agency. (14021)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14022)

Sec. 204.105. POWERS OF BRANCH AND AGENCY. (14023)(1-click HTML)

(a) A Texas state branch or agency is subject to this subtitle and other laws of this state applicable to banks as if the Texas state branch or agency were a Texas state bank unless: (14024)

(1) this chapter or a rule adopted under this subtitle provides otherwise; or (14025)

(2) the context of a provision or other information indicates that a provision applies only to a bank organized under the laws of a state or the United States. (14026)

(b) Among other exceptions to Subsection (a) that may be required or authorized by the commissioner provided by this subchapter or by rules adopted under this subtitle: (14027)

(1) a Texas state branch may not accept deposits of less than $100,000 from citizens or residents of the United States, other than credit balances that are incidental to or arise out of its exercise of other lawful banking powers, unless the Federal Deposit Insurance Corporation determines that specific deposit taking activities in lesser amounts do not constitute domestic retail deposit activities requiring deposit insurance protection within the meaning of Section 6, International Banking Act (12 U.S.C. Section 3104); (14028)

(2) a Texas state agency may not accept deposits from citizens or residents of the United States, other than credit balances that are incidental to or arise out of its exercise of other lawful banking powers, but may accept deposits from persons who are neither citizens nor residents of the United States; and (14029)

(3) a limitation or restriction based on the capital and surplus of a Texas state bank is considered to refer, as applied to a Texas state branch or agency, to the dollar equivalent of the capital and surplus of the foreign bank, and if the foreign bank has more than one Texas state branch or agency in this state, the business transacted by all the branches and agencies must be aggregated in determining compliance with the limitation. (14030)

(c) Subject to Subsections (a) and (b), a foreign bank licensed to transact business in this state through a Texas state branch or agency may: (14031)

(1) borrow and lend money with or without property as security; (14032)

(2) purchase, sell, and make loans regardless of whether the loans are secured by bonds or mortgages on real property; (14033)

(3) engage in a foreign exchange transaction; (14034)

(4) issue, advise, confirm, and otherwise deal with a letter of credit and pay, accept, or negotiate a draft drawn under a letter of credit; (14035)

(5) accept a bill of exchange or draft; (14036)

(6) buy or acquire and sell or dispose of a bill of exchange, draft, note, acceptance, or other obligation for the payment of money; (14037)

(7) maintain a credit balance of money received at the Texas state branch or agency incidental to or arising out of the exercise of its authorized activities in this state if the money is not intended to be a deposit and does not remain in the Texas state branch or agency after the completion of all transactions to which it relates; (14038)

(8) accept deposits to the extent permitted by Subsection (b); (14039)

(9) receive money for transmission and transmit the money from its authorized place of business in this state to any other place; (14040)

(10) act as an indenture trustee or as a registrar, paying agent, or transfer agent, on behalf of the issuer, for equity or investment securities; and (14041)

(11) perform other activities that: (14042)

(A) are authorized by rules adopted to accomplish the purposes of this subtitle; or (14043)

(B) the commissioner determines are analogous or incidental to specific activities authorized by this section for a Texas state branch or agency. (14044)

(d) A foreign bank licensed to transact business in this state through a Texas state branch or agency may share the premises of the Texas state branch or agency with another authorized office of the foreign bank or a direct or indirect subsidiary of the foreign bank if the books and records of the Texas state branch or agency are kept separately from the books and records of the other office. (14045)

(e) For purposes of this section, the term "resident of the United States" means: (14046)

(1) an individual residing in the United States; (14047)

(2) a corporation, partnership, association, or other entity organized in the United States; or (14048)

(3) a branch or office located in the United States of an entity that is not organized in the United States. (14049)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14050)

Amended by: (14051)

Acts 2007, 80th Leg., R.S., Ch. 110 (H.B. 2007), Sec. 13, eff. September 1, 2007. (14052)

Sec. 204.106. APPLICATION TO ACT AS FIDUCIARY. (14053)(1-click HTML)

(a) Except as provided by Section 204.105(c)(10), a foreign bank may not act as a fiduciary at a Texas state branch or agency except by obtaining a fiduciary license as provided by this section. A foreign bank that intends to act as a fiduciary at a Texas state branch or agency shall submit an application to the commissioner. The application must: (14054)

(1) be accompanied by all application fees and deposits required by applicable rules; (14055)

(2) be in the form specified by the commissioner; (14056)

(3) be subscribed and acknowledged by an officer of the foreign bank; (14057)

(4) describe in detail: (14058)

(A) the proposed fiduciary activities; (14059)

(B) the names and relevant expertise of its officers and employees that will conduct the fiduciary activities; and (14060)

(C) the manner in which the fiduciary activities will be captured in the books and records of the Texas state branch or agency with due regard for separation of beneficial and legal interests; and (14061)

(5) contain other information that: (14062)

(A) is necessary to enable the commissioner to make the findings required by Subsection (c); (14063)

(B) is required by rules adopted under this subtitle; or (14064)

(C) the commissioner reasonably requests. (14065)

(b) On or before the 60th day after the date the application is complete and accepted for filing and all required fees and deposits have been paid, the commissioner shall approve the application or set the application for hearing. If the commissioner sets the application for hearing, the department shall participate as the opposing party and the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable law. (14066)

(c) The commissioner may issue a license permitting the foreign bank to engage in fiduciary activities if the commissioner finds that the foreign bank will exercise its fiduciary powers in accordance with the laws of this state and has sufficient fiduciary and accounting expertise and controls to protect beneficial interests under its control. The commissioner may make approval of an application conditional by including conditions and limitations in the order granting the license. If the approval is conditioned on a written commitment from the applicant offered to and accepted by the commissioner, the commitment is enforceable against the applicant. (14067)

(d) A foreign bank that obtains the approval of the commissioner under this section may engage in fiduciary activities at its Texas state branch or agency to the same extent and in the same manner as a Texas state bank could do so at the same location, subject to any conditions or limitations applicable to the license. (14068)

(e) The commissioner may initiate an enforcement action under Chapter 35 or may suspend or revoke the authority of a foreign bank to engage in fiduciary activities in this state in the same manner as a revocation of license under Section 204.118 if the commissioner finds in writing that: (14069)

(1) conditions exist related to the fiduciary activities of the foreign bank in this state which would authorize the commissioner to revoke or suspend its license pursuant to Section 204.117; or (14070)

(2) a fact or condition exists which, if it had existed at the time of the foreign bank's original notice to engage in fiduciary activities, would have resulted in the commissioner denying authority to engage in fiduciary activities. (14071)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14072)

Sec. 204.107. FILING OF AMENDMENTS TO CERTIFICATE OF FORMATION. (14073)(1-click HTML)

If the certificate of formation of a foreign bank licensed to maintain a Texas state branch or agency is amended, the foreign bank shall promptly file with the commissioner a copy of the amendment, duly authenticated by the proper officer of the country of the foreign bank's organization. The filing does not enlarge or alter the business the foreign bank is authorized to pursue in this state, authorize the foreign bank to transact business in this state under a name other than the name set forth in its license, or extend the duration of its corporate existence. (14074)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14075)

Amended by: (14076)

Acts 2013, 83rd Leg., R.S., Ch. 575 (S.B. 804), Sec. 37, eff. June 14, 2013. (14077)

Sec. 204.108. AMENDED LICENSE FOR BRANCH OR AGENCY. (14078)(1-click HTML)

(a) A foreign bank licensed to establish and maintain a Texas state branch or agency shall apply to the commissioner for an amended license if it changes its corporate name, changes the duration of its corporate existence, or desires to pursue in this state other or additional purposes than those set forth in its prior application for the foreign bank's license or amended license then in effect. (14079)

(b) The requirements with respect to the form and contents of an application under Subsection (a), the manner of its execution, the issuance of an amended license, and the effect of the amended license are the same as in the case of an initial application for a license to establish and maintain a Texas state branch or agency. (14080)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14081)

Sec. 204.109. RELOCATION OF OFFICE. (14082)(1-click HTML)

(a) With the prior written approval of the commissioner, a foreign bank licensed to establish and maintain a Texas state branch or agency may relocate the branch or agency office. A foreign bank that intends to relocate a Texas state branch or agency office shall submit a letter to the commissioner describing the address of the proposed location, the reasons for relocation, and the manner of notifying its customers of the relocation. (14083)

(b) On or before the 30th day after the date the foreign bank's letter has been accepted for filing and any required fee has been paid, the commissioner shall approve or deny the relocation. The commissioner may not permit the foreign bank to relocate its Texas state branch or agency office if the commissioner finds that the proposed location and the manner of relocation and notification will be deceptive or that the relocation will impede or tend to impede the foreign bank's depositors and creditors in this state. (14084)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14085)

Sec. 204.110. SEPARATE ASSETS. (14086)(1-click HTML)

(a) Each foreign bank licensed to establish and maintain a Texas state branch or agency in this state shall keep the assets of its business in this state separate and apart from the assets of its business outside this state. (14087)

(b) The depositors and creditors of a foreign bank arising out of transactions with, and recorded on the books of, its Texas state branch or agency are entitled to absolute preference and priority over the depositors and creditors of the foreign bank's offices located outside this state with respect to the assets of the foreign bank in this state. (14088)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14089)

Sec. 204.111. DISCLOSURE OF LACK OF DEPOSIT INSURANCE. (14090)(1-click HTML)

Each foreign bank licensed to establish and maintain a Texas state branch or agency shall give notice that deposits and credit balances in the office are not insured by the Federal Deposit Insurance Corporation. (14091)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14092)

Sec. 204.112. LIMITATIONS ON PAYMENT OF INTEREST ON DEPOSITS. (14093)(1-click HTML)

A foreign bank licensed to establish and maintain a Texas state branch or agency is subject to the same limitations with respect to the payment of interest on deposits as a state bank that is a member of the Federal Reserve System. (14094)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14095)

Sec. 204.113. PLEDGE OF ASSETS. (14096)(1-click HTML)

(a) In accordance with rules adopted under this subtitle, a foreign bank licensed to establish and maintain a Texas state branch or agency may be required to keep on deposit, with unaffiliated banks in this state that the foreign bank designates and the commissioner approves, money and securities pledged to the commissioner in an aggregate amount to be determined by the commissioner, valued at the lower of principal amount or market value, consisting of: (14097)

(1) dollar deposits; (14098)

(2) bonds, notes, debentures, or other legally created, general obligations of a state, an agency or political subdivision of a state, the United States, or an instrumentality of the United States; (14099)

(3) securities that this state, an agency or political subdivision of this state, the United States, or an instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee; (14100)

(4) securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Agricultural Mortgage Corporation, or the Federal Farm Credit Banks Funding Corporation; (14101)

(5) obligations of or issued or guaranteed by the International Bank for Reconstruction and Development, the African Development Bank, the Asian Development Bank, the InterAmerican Development Bank, or the North American Development Bank; or (14102)

(6) other assets as may be permitted by rule. (14103)

(b) The assets deposited and the amount of the assets to be maintained under Subsection (a) are subject to the conditions and limitations the commissioner considers necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors, and the public interest in this state, and the support of public confidence in the business of the Texas state branch or agency. The commissioner may give credit to reserves required to be maintained with a federal reserve bank in or outside this state pursuant to federal law, in accordance with rules adopted under this subtitle. (14104)

(c) While a foreign bank continues business in the ordinary course, the foreign bank may collect interest on the money and securities deposited under this section and from time to time exchange, examine, and verify the securities. (14105)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14106)

Sec. 204.114. ASSET MAINTENANCE. (14107)(1-click HTML)

(a) In accordance with rules adopted under this subtitle, a foreign bank licensed to establish and maintain a Texas state branch or agency shall at all times satisfy the ratio of branch or agency assets to liabilities determined by the commissioner, in the commissioner's sole discretion, to be necessary or desirable with respect to the foreign bank. The type of assets to be held in this state are specified by Subsection (b) and the type of liabilities to be included in the ratio are specified by Subsection (c). (14108)

(b) Assets to be held in this state for the purpose of satisfying the ratio of assets to liabilities: (14109)

(1) include: (14110)

(A) currency, bonds, notes, debentures, drafts, bills of exchange, or other evidences of indebtedness, including loan participation agreements or certificates; (14111)

(B) other obligations payable in the United States or in United States funds or, with the prior approval of the commissioner, in funds freely convertible into United States funds; and (14112)

(C) other assets the commissioner permits or as may be specified by rule; and (14113)

(2) exclude obligations of a person for money borrowed to the extent that the total of the obligations of the person exceeds 10 percent of total assets considered for purposes of this section. (14114)

(c) Liabilities included for purposes of calculating the ratio of assets to liabilities: (14115)

(1) include all liabilities of the foreign bank appearing in the books, accounts, or records of its Texas state branch or agency, including acceptances; and (14116)

(2) exclude amounts due and other liabilities to other offices, agencies, branches, and wholly owned subsidiaries of the foreign bank, and other liabilities the commissioner determines. The existence of a nominal number of directors' shares outstanding does not cause a subsidiary to be considered less than wholly owned. (14117)

(d) Subject to rules adopted under this subtitle, the commissioner, in the commissioner's sole discretion, may vary the ratio of assets to liabilities required by this section for a foreign bank as may be necessary or desirable to reflect differences among Texas branches or Texas agencies because of: (14118)

(1) the financial condition of Texas branch or agency offices of the foreign bank; (14119)

(2) the financial condition of branch or agency offices of the foreign bank located in other states; (14120)

(3) the general economic conditions prevalent in the home country of the foreign bank; or (14121)

(4) the financial condition of the foreign bank itself, including: (14122)

(A) the financial condition of its branches and agencies located in other countries; (14123)

(B) the financial condition of its affiliated bank and nonbank subsidiaries in the United States; and (14124)

(C) the financial condition of the foreign bank on a worldwide consolidated basis or in its home country. (14125)

(e) For purposes of this section, assets must be valued at the lower of principal amount or market value. The commissioner may determine the value of a non-marketable security, loan, or other asset or obligation held or owed to the foreign bank or its Texas state branch or agency in this state. If the commissioner cannot determine the value of an non-marketable asset, the asset must be excluded from the ratio computation. (14126)

(f) The commissioner may require a foreign bank to deposit the assets required to be held in this state pursuant to this section with specific banks in this state designated by the commissioner if, because of the existence or the potential occurrence of unusual and extraordinary circumstances, the commissioner considers it necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors, and the public interest in this state, and the maintenance of public confidence in the business of a Texas state branch or agency. (14127)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14128)

Sec. 204.115. VOLUNTARY CLOSURE OF BRANCH OR AGENCY. (14129)(1-click HTML)

(a) A foreign bank licensed to establish and maintain a Texas state branch or agency may not close the office without filing an application with, and obtaining the prior approval of, the commissioner. An application by a foreign bank under this section must be in the form and include the information the commissioner requires. (14130)

(b) The commissioner shall approve the application if the commissioner finds that the closing of the office will not be substantially detrimental to the foreign bank's depositors and creditors in this state. An application may be approved subject to conditions imposed by the commissioner for the continued protection of the foreign bank's depositors and creditors in this state, including a condition that the foreign bank pledge assets in the manner specified by Section 204.113 for a specified period of time. (14131)

(c) When an application by a foreign bank under this section has been approved and all conditions precedent to the closing have been fulfilled, the foreign bank may close the office and an officer, manager, or agent of the foreign bank shall deliver to the commissioner: (14132)

(1) all copies of examination reports or other property of the department; (14133)

(2) a statement under oath by an authorized officer, manager, or agent of the foreign bank that all deposit and other liabilities of the Texas state branch or agency to depositors and creditors in this state have been properly discharged by payment or pledge or otherwise assumed or retained by a financial institution; (14134)

(3) the license issued by the commissioner; (14135)

(4) an appropriate board resolution closing the Texas state branch or agency; and (14136)

(5) a statement of the location where the records of the Texas state branch or agency will be kept after the closing. (14137)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14138)

Sec. 204.116. ENFORCEMENT. (14139)(1-click HTML)

The commissioner may initiate an enforcement action under Chapter 35 or a proceeding to revoke the license of a Texas state branch or agency if the commissioner by examination or other credible evidence finds that the foreign bank: (14140)

(1) does not currently meet the criteria established by this chapter for the original issuance of a license; (14141)

(2) has refused to permit the commissioner to examine its books, papers, accounts, records, or affairs in accordance with Sections 204.002 and 204.003; (14142)

(3) has failed to make a report required under this chapter or made a material false or misleading statement in the report; (14143)

(4) has violated this subtitle, another law or rule applicable to a foreign bank or a Texas state branch or agency, or a final and enforceable order of the commissioner or the finance commission; (14144)

(5) has misrepresented or concealed a material fact in the original application for license; (14145)

(6) has violated a condition of its license or an agreement between the foreign bank and the commissioner or the department; or (14146)

(7) conducts business in an unsafe and unsound manner. (14147)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14148)

Sec. 204.117. PROCEDURE FOR REVOCATION. (14149)(1-click HTML)

(a) Notice of a revocation proceeding must: (14150)

(1) be in the form of a proposed order; (14151)

(2) be served on the foreign bank by personal delivery or registered or certified mail, return receipt requested, to a director, officer, manager, or employee of the foreign bank at a Texas state branch or agency location, or to the registered agent of the foreign bank; (14152)

(3) state the effective date of the proposed order, which may not be before the 21st day after the date the proposed order is mailed or delivered except as otherwise provided in Section 204.118; and (14153)

(4) state the grounds for the proposed revocation with reasonable certainty. (14154)

(b) Unless the foreign bank requests a hearing in writing on or before the effective date of the proposed order, the order takes effect as proposed and is final and nonappealable. (14155)

(c) A hearing requested on a proposed order shall be held not later than the 30th day after the date the written request for hearing is received by the department unless the parties agree to a later hearing date. The department shall participate as the opposing party, and the commissioner shall conduct the hearing and one or more prehearing conferences and opportunities for discovery as the commissioner considers advisable and consistent with applicable statutes and rules. The foreign bank may not accept new business during the pendency of the hearing unless the commissioner gives prior written approval, except that it shall comply with any stricter requirements imposed by Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)). (14156)

(d) Information relating to the financial condition and business affairs of the foreign bank, except previously published statements and information, is confidential and may not be considered in the public portion of the hearing or disclosed by the commissioner or an employee of the department except as provided by Subchapter D, Chapter 31. (14157)

(e) Based on the record, the commissioner shall issue or refuse to issue the proposed order. An issued order may contain modifications indicated by the record to be necessary or desirable, including modifications to impose penalties available under Chapter 35 in lieu of license revocation. (14158)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14159)

Sec. 204.118. IMMEDIATE SUSPENSION OR REVOCATION. (14160)(1-click HTML)

(a) If the commissioner finds that any of the factors set forth in Section 204.116 are true with respect to a foreign bank licensed to maintain a Texas state branch or agency and that it is necessary for the protection of the interests of creditors of the foreign bank's business in this state or for the protection of the public interest that the commissioner immediately suspend or revoke the license of the foreign bank, the commissioner may issue, without notice and hearing, an order suspending or revoking the license of the foreign bank for a period of up to 90 days, pending investigation or hearing under Section 204.117. (14161)

(b) An order issued under this section shall be served on the foreign bank in the manner required by Section 204.117(a)(2). (14162)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14163)

Sec. 204.119. STATUS OF REVOKED LICENSE. (14164)(1-click HTML)

Unless stayed by the finance commission or district court that has jurisdiction over an appeal, a final order of the commissioner revoking a license is effective immediately and the foreign bank shall immediately cease all activity in this state requiring a license. Subject to Section 204.120, all functions requiring a license must be immediately transferred to a branch, affiliate, or agency of the foreign bank that is located outside of this state and that has the power to perform those functions under governing law. Continued activity in this state of an unlicensed foreign bank is subject to Subchapter C, Chapter 35. (14165)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14166)

Sec. 204.120. SEIZURE AND LIQUIDATION. (14167)(1-click HTML)

(a) If the commissioner finds that any of the factors set forth in Section 204.116 are true with respect to a foreign bank licensed to establish and maintain a Texas state branch or agency, the commissioner may by order immediately take possession of the property and business of the foreign bank in this state if that action is necessary or desirable for the protection of the interests of the depositors and creditors of the foreign bank's business in this state or for the protection of the public. The commissioner shall retain possession until the foreign bank resumes business in this state or is finally liquidated, except that the commissioner may permit the foreign bank to resume business in this state on conditions the commissioner requires. An order issued under this section shall be served on the foreign bank in the manner required by Section 204.117(a)(2). (14168)

(b) As soon as practicable after taking possession of the property and business of a foreign bank pursuant to Subsection (a), the commissioner shall initiate a receivership proceeding by filing a copy of the order issued under this section in a district court in Travis County to be governed by Chapter 36 as if the foreign bank were a Texas state bank, except as otherwise provided by this section. Notwithstanding the priorities established by Chapter 36, the depositors and creditors of the Texas state branch or agency, arising out of transactions with and recorded on the books of the Texas state branch or agency, have an absolute preference and priority over the creditors of the foreign bank's offices located outside this state. (14169)

(c) An action initiated that seeks to directly or indirectly affect the assets of the Texas state branch or agency is considered to be an intervention in the receivership proceeding. Venue for an action instituted to effect, contest, or otherwise intervene in the liquidation of a Texas state branch or agency is in Travis County, except that on motion filed and served concurrently with or before the filing of the answer, the court may, on a finding of good cause, transfer the action to the county of the Texas state branch or agency location. (14170)

(d) The foreign bank may contest the commissioner's actions as provided by this subsection. On or before the 10th day after the date the commissioner has taken possession of the property and business of a foreign bank pursuant to Subsection (a), the foreign bank, acting through a majority of its directors, may intervene in the action filed by the banking commissioner to challenge the commissioner's closing of the foreign bank's Texas state branch or agency and to enjoin the commissioner or other receiver from liquidating its assets. The court may issue an ex parte order restraining the commissioner or other receiver from liquidating the foreign bank's assets pending a hearing on the injunction. The commissioner or other receiver shall comply with the restraining order but may petition the court for permission to liquidate an asset as necessary to prevent its loss or diminution pending the outcome of the injunction. The commissioner or other receiver may not be required to post bond. The court shall hear this action as quickly as possible and shall give it priority over other business. The foreign bank or the commissioner or other receiver may appeal the court's judgment as in other civil cases, except that the commissioner or other receiver shall retain all seized foreign bank assets pending a final appellate court order even if the commissioner does not prevail in the trial court. If the commissioner prevails in the trial court, liquidation of the state trust company may proceed unless the trial court or appellate court orders otherwise. If liquidation is enjoined or stayed pending appeal, the trial court retains jurisdiction to permit liquidation of an asset as necessary to prevent its loss or diminution pending the outcome of the appeal. (14171)

(e) After the commissioner or other receiver has completed the liquidation of the property and business of a foreign bank, the commissioner or other receiver shall transfer any remaining assets to the foreign bank in accordance with the court's orders, except that: (14172)

(1) if the foreign bank has an office in another state of the United States that is in liquidation and the assets of the office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner or other receiver to transfer to the liquidator of that office the amount of the remaining assets that appears to be necessary to cover the insufficiency; or (14173)

(2) if the foreign bank has two or more such offices in liquidation and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to the offices, the court shall order the commissioner or other receiver to distribute the remaining assets among the liquidators of the offices in the manner the court finds equitable. (14174)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14175)

Sec. 204.121. DISSOLUTION. (14176)(1-click HTML)

(a) If a foreign bank licensed to maintain a Texas state branch or agency in this state is dissolved, has its authority or existence terminated or canceled in the jurisdiction of its incorporation, or has its authority to maintain a branch or agency in this state terminated by the Board of Governors of the Federal Reserve System under Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)), an officer, manager, or agent of the foreign bank shall deliver to the commissioner: (14177)

(1) a certified copy of: (14178)

(A) a certificate of the official responsible for records of banking corporations of the foreign bank's jurisdiction of incorporation attesting to the occurrence of dissolution or of termination or cancellation of authority or existence; (14179)

(B) an order or decree of a court directing the dissolution of the foreign bank or the termination or cancellation of its authority or existence; or (14180)

(C) an order of the Board of Governors of the Federal Reserve System terminating its authority under Section 7(e), International Banking Act (12 U.S.C. Section 3105(e)); and (14181)

(2) the documents and information required by Section 204.115(c). (14182)

(b) The filing of the certificate, order, or decree has the same effect provided by Section 204.119 as if the license issued under this subchapter were revoked by the commissioner as of the effective date of termination or cancellation specified in the certificate, order, or decree unless the commissioner orders an earlier effective date, subject to the procedural protections of Section 204.117 or 204.118. (14183)

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1, 1999. (14184)

SUBCHAPTER C. REPRESENTATIVE OFFICES OF FOREIGN BANK (14185)(1-click HTML)
Sec. 204.201. REGISTRATION OF REPRESENTATIVE OFFICE. (14186)(1-click HTML)

(a) A foreign bank may establish a Texas representative office if the foreign bank files with the commissioner a verified statement of registration. A statement of registration must: (14187)

(1) be accompanied by all registration fees and deposits required by rule; (14188)

(2) be in the form specified by the commissioner; (14189)

(3) be subscribed and acknowledged by an officer of the foreign bank; (14190)

(4) contain as an exhibit or attachment: (14191)

(A) a copy of the foreign bank's notice or application submitted to the Board of Governors of the Federal Reserve System under Section 10, International Banking Act (12 U.S.C. Section 3107), and, when issued, the order or notification from the board of governors indicating that the representative office has been approved; (14192)

(B) an authenticated copy of the foreign bank's certificate of formation and bylaws or other constitutive documents and, if the copy is in a language other than English, an English translation of the document, under the oath of the translator; and (14193)

(C) evidence of compliance with Section 201.102; (14194)

(5) be submitted when the federal notice or application is submitted to the board of governors; and (14195)

(6) directly or in exhibits or attachments contain: (14196)

(A) the name of the foreign bank; (14197)

(B) the street address and post office address where each Texas representative office is to be located in this state; (14198)

(C) the name and qualifications of each officer and director of the foreign bank who will have charge of any aspect of the business and affairs of the Texas representative office; (14199)

(D) a complete and detailed statement of the financial condition of the foreign bank as of a date not more than 360 days before the date of the filing; and (14200)

(E) other information the commissioner requires. (14201)

(b) The finance commission may adopt rules prescribing abbreviated registration procedures and standards for foreign banks that have already established an initial Texas representative office to establish additional Texas representative offices. (14202)

  

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