1-1 By: Fraser S.B. No. 861
1-2 (In the Senate - Filed March 3, 1999; March 8, 1999, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 9, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 4, Nays 0; April 9, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 861 By: Fraser
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to regulation of bank holding companies in an interstate
1-11 banking and branching environment, the authorization of interstate
1-12 operations of financial institutions in accordance with the
1-13 requirements of federal law, and the enhancement of state bank and
1-14 trust company charters for the interstate banking and branching
1-15 environment.
1-16 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-17 ARTICLE 1. INTERSTATE BANKING AND BRANCHING
1-18 SECTION 1.001. Title 3, Finance Code, is amended by adding
1-19 Subtitle G to read as follows:
1-20 SUBTITLE G. BANK HOLDING COMPANIES; INTERSTATE BANK OPERATIONS
1-21 CHAPTER 201. GENERAL PROVISIONS
1-22 SUBCHAPTER A. GENERAL PROVISIONS
1-23 Sec. 201.001. SCOPE OF SUBTITLE. (a) This subtitle:
1-24 (1) sets forth the conditions under which a company
1-25 may acquire a Texas bank or a Texas bank holding company, pursuant
1-26 to the provisions of Chapter 202;
1-27 (2) permits interstate branching under the Interstate
1-28 Banking and Branching Efficiency Act pursuant to the provisions of
1-29 Chapter 203; and
1-30 (3) provides for state regulation of the participation
1-31 by foreign banks in the financial markets of this state, pursuant
1-32 to the provisions of Chapter 204.
1-33 (b) This subtitle is not intended to discriminate against
1-34 out-of-state banks and bank holding companies in a manner that
1-35 would violate the Interstate Banking and Branching Efficiency Act.
1-36 Sec. 201.002. DEFINITIONS. (a) Unless the context requires
1-37 otherwise, in this subtitle:
1-38 (1) "Acquire" means an act that results in direct or
1-39 indirect control by a company of a bank holding company or a bank,
1-40 including an act that causes:
1-41 (A) the company to merge with a bank holding
1-42 company or a bank;
1-43 (B) the company to assume direct or indirect
1-44 ownership or control of:
1-45 (i) more than 25 percent of any class of
1-46 voting shares of a bank holding company or a bank, if the acquiring
1-47 company was not a bank holding company before the acquisition;
1-48 (ii) more than five percent of any class
1-49 of voting shares of a bank holding company or a bank, if the
1-50 acquiring company was a bank holding company before the
1-51 acquisition; or
1-52 (iii) all or substantially all of the
1-53 assets of a bank holding company or a bank; or
1-54 (C) an application relating to control of a bank
1-55 holding company or bank to be filed with a federal bank supervisory
1-56 agency.
1-57 (2) "Affiliate" has the meaning assigned by Section
1-58 2(k), Bank Holding Company Act (12 U.S.C. Section 1841(k)).
1-59 (3) "Agency" when used in reference to an office of a
1-60 foreign bank, has the meaning assigned by Section 1(b)(1),
1-61 International Banking Act (12 U.S.C. Section 3101(1)).
1-62 (4) "Bank":
1-63 (A) for purposes of Chapter 202 and the laws of
1-64 this state as they relate to Chapter 202, has the meaning assigned
2-1 by Section 2(c), Bank Holding Company Act (12 U.S.C. Section
2-2 1841(c));
2-3 (B) for purposes of Chapter 203 and the laws of
2-4 this state as they relate to Chapter 203, has the meaning assigned
2-5 to the term "insured bank" by Section 3(h), Federal Deposit
2-6 Insurance Act (12 U.S.C. Section 1813(h)), except that the term
2-7 does not include a foreign bank unless it is organized under the
2-8 laws of a territory of the United States, Puerto Rico, Guam,
2-9 American Samoa, or the Virgin Islands and its deposits are insured
2-10 by the Federal Deposit Insurance Corporation; and
2-11 (C) for purposes of Chapter 204 and the laws of
2-12 this state as they relate to Chapter 204, has the meaning assigned
2-13 by Section 2(c), Bank Holding Company Act (12 U.S.C. Section
2-14 1841(c)), or Section 3(a)(1), Federal Deposit Insurance Act (12
2-15 U.S.C. Section 1813(a)(1)), except that the term does not include a
2-16 foreign bank or a branch or agency of a foreign bank.
2-17 (5) "Bank holding company" has the meaning assigned by
2-18 Section 2(a), Bank Holding Company Act (12 U.S.C. Section 1841(a)),
2-19 and includes a Texas bank holding company, an out-of-state bank
2-20 holding company, and a foreign bank holding company unless the
2-21 context requires otherwise.
2-22 (6) "Bank Holding Company Act" means the federal Bank
2-23 Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as
2-24 amended.
2-25 (7) "Bank supervisory agency" means any of the
2-26 following:
2-27 (A) an agency of another state with primary
2-28 responsibility for chartering and supervising banks;
2-29 (B) the Office of the Comptroller of the
2-30 Currency, the Federal Deposit Insurance Corporation, or the Board
2-31 of Governors of the Federal Reserve System, and any successor to
2-32 these agencies; or
2-33 (C) an agency of a country, including a colony,
2-34 dependency, possession, or political subdivision of a country,
2-35 other than the United States with primary responsibility for
2-36 chartering and supervising banks.
2-37 (8) "Branch" has the meaning assigned by Section
2-38 31.002(a), except that for purposes of Chapter 204 and the laws of
2-39 this state as they relate to Chapter 204 the term:
2-40 (A) with respect to an office of a foreign bank,
2-41 has the meaning assigned by Section 1(b)(3), International Banking
2-42 Act (12 U.S.C. Section 3101(3)); and
2-43 (B) with respect to an office of a bank as
2-44 defined by this section for the purposes of Chapter 204, has the
2-45 meaning assigned to the term "domestic branch" by Section 3(o),
2-46 Federal Deposit Insurance Act (12 U.S.C. Section 1813(o)).
2-47 (9) "Commissioner" has the meaning assigned to the
2-48 term "banking commissioner" by Section 31.002(a), except that for
2-49 purposes of Chapter 203 and the laws of this state as they relate
2-50 to Chapter 203, with respect to a state savings bank, the term
2-51 means the savings and loan commissioner of Texas.
2-52 (10) "Company" has the meaning assigned by Section
2-53 2(b), Bank Holding Company Act (12 U.S.C. Section 1841(b)), and
2-54 includes a bank holding company.
2-55 (11) "Control" shall be construed consistently with
2-56 Section 2(a)(2), Bank Holding Company Act (12 U.S.C. Section
2-57 1841(a)(2)), and regulations and interpretive rulings of the Board
2-58 of Governors of the Federal Reserve System.
2-59 (12) "De novo branch" means a branch of a bank located
2-60 in a host state that:
2-61 (A) is originally established by the bank as a
2-62 branch; and
2-63 (B) does not become a branch of the bank as a
2-64 result of:
2-65 (i) the acquisition of another bank or a
2-66 branch of another bank; or
2-67 (ii) the merger or conversion involving
2-68 the bank or branch.
2-69 (13) "Deposit" has the meaning assigned by Section
3-1 3(l), Federal Deposit Insurance Act (12 U.S.C. Section 1813(l)).
3-2 (14) "Depository institution" means an institution
3-3 included for any purpose within the definitions of "insured
3-4 depository institution" as assigned by Sections 3(c)(2) and
3-5 3(c)(3), Federal Deposit Insurance Act (12 U.S.C. Sections
3-6 1813(c)(2) and 1813(c)(3)).
3-7 (15) "Federal agency" means an agency of a foreign
3-8 bank that is licensed by the Comptroller of the Currency pursuant
3-9 to Section 4, International Banking Act (12 U.S.C. Section 3102).
3-10 (16) "Federal branch" means a branch of a foreign bank
3-11 that is licensed by the Comptroller of the Currency pursuant to
3-12 Section 4, International Banking Act (12 U.S.C. Section 3102).
3-13 (17) "Federal Deposit Insurance Act" means the Federal
3-14 Deposit Insurance Act (12 U.S.C. Section 1811 et seq.), as amended.
3-15 (18) "Foreign bank" has the meaning assigned by
3-16 Section 1(b)(7), International Banking Act (12 U.S.C. Section
3-17 3101(7)).
3-18 (19) "Foreign bank holding company" means a bank
3-19 holding company that is organized under the laws of a country other
3-20 than the United States or a territory or possession of the United
3-21 States.
3-22 (20) "Foreign person" means a natural or juridical
3-23 person who is a citizen or national of one or more countries,
3-24 including any colonies, dependencies, or possessions of the
3-25 countries, other than the United States.
3-26 (21) "Home state" means:
3-27 (A) with respect to a national bank, the state
3-28 in which the main office of the bank is located;
3-29 (B) with respect to a state bank, the state by
3-30 which the bank is chartered;
3-31 (C) with respect to a foreign bank, the state
3-32 determined to be the home state of the foreign bank under Section
3-33 5(c), International Banking Act (12 U.S.C. Section 3103(c)); and
3-34 (D) with respect to a bank holding company, the
3-35 state in which the total deposits of all bank subsidiaries of the
3-36 company are the largest on the later of July 1, 1966, or the date
3-37 on which the company became a bank holding company.
3-38 (22) "Home state regulator" means:
3-39 (A) with respect to an out-of-state bank holding
3-40 company, the bank supervisory agency of the home state of the bank
3-41 holding company; and
3-42 (B) with respect to an out-of-state state bank,
3-43 the bank supervisory agency of the state in which the bank is
3-44 chartered.
3-45 (23) "Host state" means:
3-46 (A) with respect to a bank, a state other than
3-47 the home state of the bank in which the bank maintains or seeks to
3-48 establish and maintain a branch; and
3-49 (B) with respect to a bank holding company, a
3-50 state other than the home state of the company in which the company
3-51 controls or seeks to control a bank subsidiary.
3-52 (24) "International Banking Act" means the federal
3-53 International Banking Act of 1978 (12 U.S.C. Section 3101 et seq.),
3-54 as amended.
3-55 (25) "Interstate Banking and Branching Efficiency Act"
3-56 means the federal Riegle-Neal Interstate Banking and Branching
3-57 Efficiency Act of 1994, Public Law No. 103-328, codified at various
3-58 sections of Title 12, United States Code.
3-59 (26) "Interstate branch" means a branch of a bank or a
3-60 branch of a foreign bank, as the context requires, established,
3-61 acquired, or retained pursuant to the Interstate Banking and
3-62 Branching Efficiency Act, outside the home state of the bank or
3-63 foreign bank. The term does not include, with respect to a foreign
3-64 bank, a limited branch as that term is defined by this section.
3-65 (27) "Interstate merger transaction" means:
3-66 (A) the merger of banks with different home
3-67 states and the conversion of branches of a bank involved in the
3-68 merger into branches of the resulting bank; or
3-69 (B) the purchase of all or substantially all of
4-1 the assets, including all or substantially all of the branches, of
4-2 a bank whose home state is different from the home state of the
4-3 acquiring bank.
4-4 (28) "Limited branch" means a branch of a foreign bank
4-5 that accepts only the deposits that would be permissible for a
4-6 corporation organized under Section 25A, Federal Reserve Act (12
4-7 U.S.C. Section 611 et seq.), in accordance with Section 5(a)(7),
4-8 International Banking Act (12 U.S.C. Section 3103(a)(7)).
4-9 (29) "Out-of-state bank" means a bank whose home state
4-10 is another state.
4-11 (30) "Out-of-state bank holding company" means a bank
4-12 holding company whose home state is another state.
4-13 (31) "Out-of-state foreign bank" means a foreign bank
4-14 whose home state is another state.
4-15 (32) "Out-of-state state bank" means a bank chartered
4-16 under the laws of another state.
4-17 (33) "Representative office" has the meaning assigned
4-18 by Section 1(b)(15), International Banking Act (12 U.S.C. Section
4-19 3101(15)).
4-20 (34) "Resulting bank" means a bank that results from
4-21 an interstate merger transaction.
4-22 (35) "State" means a state of the United States, the
4-23 District of Columbia, a territory of the United States, Puerto
4-24 Rico, Guam, American Samoa, the Trust Territory of the Pacific
4-25 Islands, the Virgin Islands, or the Northern Mariana Islands,
4-26 except that for purposes of Chapter 202 and the laws of this state
4-27 as they relate to Chapter 202 the term means a state, territory, or
4-28 other possession of the United States, including the District of
4-29 Columbia.
4-30 (36) "State bank" means a Texas state bank or an
4-31 out-of-state state bank, including an out-of-state state savings
4-32 bank.
4-33 (37) "State savings bank" has the meaning assigned to
4-34 the term "savings bank" by Section 3(g), Federal Deposit Insurance
4-35 Act (12 U.S.C. Section 1813(g)), and includes a savings bank
4-36 organized under Subtitle C or under similar laws of another state.
4-37 (38) "Subsidiary" has the meaning assigned by Section
4-38 2(d), Bank Holding Company Act (12 U.S.C. Section 1841(d)).
4-39 (39) "Texas bank" means a bank whose home state is
4-40 this state, except that for purposes of Chapter 202 and the laws of
4-41 this state as they relate to Chapter 202 the term means a Texas
4-42 state bank or a national bank organized under federal law with its
4-43 main office in this state.
4-44 (40) "Texas bank holding company" means a bank holding
4-45 company whose home state is this state and that is not controlled
4-46 by a bank holding company other than a Texas bank holding company.
4-47 (41) "Texas representative office" means a
4-48 representative office that is located in this state and registered
4-49 pursuant to Subchapter C, Chapter 204.
4-50 (42) "Texas state agency," means, when used in
4-51 reference to an office of a foreign bank, an agency of a foreign
4-52 bank that is located in this state and licensed pursuant to
4-53 Subchapter B, Chapter 204.
4-54 (43) "Texas state bank" means a bank that is organized
4-55 under Subtitle A.
4-56 (44) "Texas state branch," means, when used in
4-57 reference to an office of a foreign bank, a branch of a foreign
4-58 bank that is located in this state and licensed pursuant to
4-59 Subchapter B, Chapter 204.
4-60 (45) "United States" means:
4-61 (A) when used in a geographical sense, the
4-62 several states, the District of Columbia, Puerto Rico, Guam,
4-63 American Samoa, the American Virgin Islands, the Trust Territory of
4-64 the Pacific Islands, and other territories of the United States;
4-65 and
4-66 (B) when used in a political sense, the federal
4-67 government of the United States.
4-68 (b) The definitions provided by Section 31.002 apply to this
4-69 subtitle to the extent not inconsistent with this section and as
5-1 the context requires.
5-2 (c) The definitions shall be liberally construed to
5-3 accomplish the purposes of this subtitle.
5-4 (d) The finance commission by rule may adopt other
5-5 definitions to accomplish the purposes of this subtitle.
5-6 Sec. 201.003. RULES. (a) The finance commission may adopt
5-7 rules to accomplish the purposes of this subtitle, including rules
5-8 necessary or reasonable to:
5-9 (1) implement and clarify this subtitle in a manner
5-10 consistent with and to the extent permitted by applicable federal
5-11 law;
5-12 (2) preserve or protect the safety and soundness of
5-13 banking in this state;
5-14 (3) grant the same rights and privileges to Texas
5-15 state banks that are or may be granted to other depository
5-16 institutions;
5-17 (4) recover the cost of maintaining and operating the
5-18 department and the cost of enforcing this subtitle by imposing and
5-19 collecting ratable and equitable fees for supervision and
5-20 regulation, including fees for notices, applications, and
5-21 examinations; and
5-22 (5) facilitate the fair hearing and adjudication of
5-23 matters before the commissioner and the finance commission.
5-24 (b) In adopting rules, the finance commission shall consider
5-25 the need to:
5-26 (1) coordinate with applicable federal law;
5-27 (2) promote a stable banking environment;
5-28 (3) provide the public with convenient, safe, and
5-29 competitive banking services;
5-30 (4) preserve and promote the competitive parity of
5-31 Texas state banks with other depository institutions consistent
5-32 with the safety and soundness of Texas state banks and the Texas
5-33 state bank system; and
5-34 (5) allow for economic development in this state.
5-35 (c) The presence or absence in this subtitle of a specific
5-36 reference to rules regarding a particular subject does not enlarge
5-37 or diminish the rulemaking authority provided by this section.
5-38 Sec. 201.004. LAW APPLICABLE TO INTERSTATE BRANCHES.
5-39 (a) The laws of this state apply to an interstate branch located
5-40 in this state to the same extent the laws of this state would apply
5-41 if the branch in this state were a national bank with its main
5-42 office located in this state, except to the extent otherwise
5-43 provided under federal law.
5-44 (b) To the extent provided by Section 4.102(c), Business &
5-45 Commerce Code, the laws of this state govern a deposit contract
5-46 between a bank and a consumer account holder if the branch or
5-47 separate office of the bank that accepts the deposit contract is
5-48 located in this state.
5-49 (c) Without limiting Subsection (a), for purposes of the
5-50 laws of this state relating to authority to act as a fiduciary,
5-51 depository of public funds, or custodian of securities pledged to
5-52 secure public funds, or authority to engage in repurchase
5-53 transactions with public entities, a legally operating interstate
5-54 branch in this state is considered to be in, within, located in,
5-55 authorized to do business in, domiciled in, and chartered in this
5-56 state.
5-57 Sec. 201.005. COOPERATIVE AGREEMENTS; FEES. (a) To carry
5-58 out the purposes of this subtitle, to the extent permitted by
5-59 federal law, the commissioner may:
5-60 (1) enter into cooperative, coordinating, or
5-61 information sharing agreements with another bank supervisory agency
5-62 or an organization affiliated with or representing one or more bank
5-63 supervisory agencies;
5-64 (2) with respect to periodic examination or other
5-65 supervision or investigation, accept reports of examination or
5-66 investigation by, and reports submitted to, another bank
5-67 supervisory agency in lieu of conducting examinations or
5-68 investigations or receiving reports as might otherwise be required
5-69 or permissible under this subtitle;
6-1 (3) enter into contracts with another bank supervisory
6-2 agency having concurrent regulatory or supervisory jurisdiction to
6-3 engage the services of the agency for reasonable compensation to
6-4 assist in connection with the commissioner's performance of
6-5 official duties under this subtitle or other law, or to provide
6-6 services to the agency for reasonable compensation in connection
6-7 with the agency's performance of official duties under law, except
6-8 that Chapter 2254, Government Code, does not apply to the
6-9 contracts;
6-10 (4) enter into joint examinations or joint enforcement
6-11 actions with another bank supervisory agency having concurrent
6-12 regulatory or supervisory jurisdiction, except that the
6-13 commissioner may independently take action under Section 201.009 if
6-14 the commissioner determines that the action is necessary to carry
6-15 out the commissioner's responsibilities under this subtitle or to
6-16 enforce compliance with the laws of this state; and
6-17 (5) assess supervisory and examination fees to be paid
6-18 by a state bank, state savings bank, bank holding company, or
6-19 foreign bank in connection with the commissioner's performance of
6-20 duties under this subtitle.
6-21 (b) Supervisory or examination fees assessed by the
6-22 commissioner in accordance with this subtitle may be shared with
6-23 another bank supervisory agency or an organization affiliated with
6-24 or representing one or more bank supervisory agencies in accordance
6-25 with an agreement between the commissioner and the agency or
6-26 organization. The commissioner may also receive a portion of
6-27 supervisory or examination fees assessed by another bank
6-28 supervisory agency in accordance with an agreement between the
6-29 commissioner and the agency.
6-30 Sec. 201.006. ISSUANCE OF INTERPRETIVE STATEMENTS AND
6-31 OPINIONS. (a) To encourage the effective coordination and
6-32 implementation of home state laws and host state laws with respect
6-33 to interstate branching, the commissioner, directly or through the
6-34 deputy commissioner or a department attorney, may:
6-35 (1) issue interpretive statements containing matters
6-36 of general policy to guide the public and banks and bank holding
6-37 companies subject to this subtitle;
6-38 (2) amend or repeal a published interpretive statement
6-39 by issuing an amended statement or notice of repeal of a statement
6-40 and publishing the statement or notice;
6-41 (3) issue, in response to specific requests from the
6-42 public or the banking industry, opinions interpreting this subtitle
6-43 or determining the applicability of laws of this state to the
6-44 operation of interstate branches or other offices in this state by
6-45 out-of-state banks or in other states by Texas banks; and
6-46 (4) amend or repeal an opinion by issuing an amended
6-47 opinion or notice of repeal of an opinion, except that the
6-48 requesting party may rely on the original opinion if:
6-49 (A) all material facts were originally disclosed
6-50 to the commissioner;
6-51 (B) the safety and soundness of the affected
6-52 bank or bank holding company will not be affected by further
6-53 reliance on the original opinion; and
6-54 (C) the text and interpretation of relevant,
6-55 governing provisions of applicable home state, host state, and
6-56 federal law have not been changed by legislative or judicial
6-57 action.
6-58 (b) An interpretive statement or opinion may be disseminated
6-59 by newsletter, via electronic medium such as the internet, in a
6-60 volume of statutes or related materials published by the
6-61 commissioner or others, or by other means reasonably calculated to
6-62 notify persons affected by the interpretive statement or opinion.
6-63 An opinion may be disseminated to the public if the commissioner
6-64 determines that the opinion is useful for the general guidance and
6-65 convenience of the public or banks or bank holding companies. A
6-66 published opinion must be redacted to preserve the confidentiality
6-67 of the requesting party unless the requesting party consents to be
6-68 identified in the published opinion. Notice of an amended or
6-69 withdrawn statement or opinion must be disseminated in a
7-1 substantially similar manner as the affected statement or opinion
7-2 was originally disseminated.
7-3 (c) An interpretive statement or opinion issued under this
7-4 subtitle does not have the force of law and is not a rule for the
7-5 purposes of Chapter 2001, Government Code, unless adopted by the
7-6 finance commission as provided by Chapter 2001, Government Code.
7-7 An interpretive statement or opinion is an administrative
7-8 construction of this subtitle entitled to great weight if the
7-9 construction is reasonable and does not conflict with this
7-10 subtitle.
7-11 Sec. 201.007. CONFIDENTIALITY. Except as expressly provided
7-12 otherwise in this subtitle, confidentiality of information obtained
7-13 by the commissioner under this subtitle is governed by Subchapter
7-14 D, Chapter 31, or, with respect to a state savings bank, Subtitle
7-15 C, and may not be disclosed by the commissioner or an employee of
7-16 the commissioner's department except as provided by Subchapter D,
7-17 Chapter 31, or, with respect to a state savings bank, Subtitle C.
7-18 Sec. 201.008. NOTICE OF SUBSEQUENT EVENT. Each out-of-state
7-19 state bank that has established and maintains an interstate branch
7-20 in this state pursuant to this subtitle shall give written notice
7-21 to the commissioner, at least 30 days before the effective date of
7-22 the event, or in the case of an emergency transaction, within a
7-23 shorter period consistent with applicable state or federal law, of
7-24 a merger or other transaction that would cause a change of control
7-25 with respect to the bank or a bank holding company that controls
7-26 the bank, with the result that an application would be required to
7-27 be filed with the bank's home state regulator or a federal bank
7-28 supervisory agency, including an application filed pursuant to the
7-29 Change in Bank Control Act of 1978 (12 U.S.C. Section 1817(j)), as
7-30 amended, or the Bank Holding Company Act (12 U.S.C. Section 1841 et
7-31 seq.).
7-32 Sec. 201.009. ENFORCEMENT; APPEALS. (a) If the
7-33 commissioner determines that a bank holding company or a foreign
7-34 bank has violated this subtitle or other applicable law of this
7-35 state, the commissioner may take any enforcement action the
7-36 commissioner would be empowered to take if the bank holding company
7-37 or foreign bank were a Texas state bank, except that the
7-38 commissioner shall promptly give notice to the home state regulator
7-39 of each enforcement action taken against an out-of-state bank
7-40 holding company or foreign bank and, to the extent practicable,
7-41 shall consult and cooperate with the home state regulator in
7-42 pursuing and resolving the enforcement action. A bank holding
7-43 company or foreign bank may appeal a final order or other decision
7-44 of the commissioner under this subtitle as provided by Sections
7-45 31.202, 31.203, and 31.204.
7-46 (b) If the commissioner determines that an interstate branch
7-47 maintained by an out-of-state state bank in this state is being
7-48 operated in violation of a law of this state or in an unsafe and
7-49 unsound manner, the commissioner may take any enforcement action
7-50 the commissioner would be empowered to take if the branch were a
7-51 Texas state bank or state savings bank, as the case may be, except
7-52 that the commissioner shall promptly give notice to the home state
7-53 regulator of each enforcement action taken against an out-of-state
7-54 state bank and, to the extent practicable, shall consult and
7-55 cooperate with the home state regulator in pursuing and resolving
7-56 the enforcement action. An out-of-state state bank may appeal a
7-57 final order or other decision of the commissioner under this
7-58 subtitle as provided by Sections 31.202, 31.203, and 31.204, or as
7-59 provided under Subtitle C with respect to a state savings bank.
7-60 (c) Notwithstanding Subsections (a) and (b), the
7-61 commissioner may enforce the laws of this state against an entity
7-62 subject to this subtitle by appropriate action in the courts,
7-63 including an action for injunctive relief, if the banking
7-64 commissioner concludes the action is necessary or desirable.
7-65 Sec. 201.010. TAXATION. A bank subject to this subtitle is
7-66 subject to the franchise tax to the extent provided by Chapter 171,
7-67 Tax Code.
7-68 Sec. 201.011. SEVERABILITY. The provisions of this subtitle
7-69 or the applications of those provisions are severable as provided
8-1 by Section 311.032(c), Government Code.
8-2 (Sections 201.012-201.100 reserved for expansion
8-3 SUBCHAPTER B. REGISTRATION OF FINANCIAL INSTITUTIONS
8-4 Sec. 201.101. DEFINITIONS. In this subchapter:
8-5 (1) "Financial institution" means:
8-6 (A) a bank as defined for any purpose by Section
8-7 201.002(a)(4), whether chartered under the laws of this state,
8-8 another state, the United States, or another country, including a
8-9 state savings bank;
8-10 (B) a savings and loan association chartered
8-11 under Chapter 62 or similar laws of another state;
8-12 (C) a federal savings and loan association,
8-13 federal savings bank, or federal credit union;
8-14 (D) a credit union chartered under Chapter 122
8-15 or similar laws of another state; or
8-16 (E) a trust company chartered under the laws of
8-17 this state or another state.
8-18 (2) "Out-of-state financial institution" means a
8-19 financial institution that:
8-20 (A) is not chartered under the laws of this
8-21 state; and
8-22 (B) has its main or principal office in another
8-23 state or country.
8-24 (3) "Texas financial institution" means a financial
8-25 institution that:
8-26 (A) is chartered under the laws of this state or
8-27 under federal law; and
8-28 (B) has its main or principal office in this
8-29 state.
8-30 Sec. 201.102. REGISTRATION TO DO BUSINESS. An out-of-state
8-31 financial institution must file an application for registration
8-32 with the secretary of state, before operating a branch or other
8-33 office in this state, by complying with the law of this state
8-34 relating to foreign corporations doing business in this state,
8-35 notwithstanding a provision in that law that purports to limit or
8-36 prohibit its applicability to financial institutions.
8-37 Sec. 201.103. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF
8-38 PROCESS. (a) A Texas financial institution may file in the office
8-39 of the secretary of state a statement appointing an agent
8-40 authorized to receive service of process.
8-41 (b) A statement appointing an agent must set forth:
8-42 (1) the name of the Texas financial institution;
8-43 (2) the federal tax identification number of the Texas
8-44 financial institution;
8-45 (3) the address, including the street address, of the
8-46 principal office of the Texas financial institution; and
8-47 (4) the name of the agent in this state authorized to
8-48 receive service of process and the agent's address, including the
8-49 street address, in this state.
8-50 (c) The agent named under Subsection (b) must be:
8-51 (1) an individual resident of this state;
8-52 (2) a domestic corporation, limited partnership,
8-53 partnership, limited liability company, professional association,
8-54 cooperative, or real estate investment trust; or
8-55 (3) a foreign entity registered with the secretary of
8-56 state to transact business in this state.
8-57 (d) A statement appointing an agent must be signed by an
8-58 officer of the Texas financial institution. The statement must
8-59 also be signed by the person appointed agent, who by signing
8-60 accepts the appointment. The appointed agent may resign by filing
8-61 a resignation in the office of the secretary of state and giving
8-62 notice to the Texas financial institution.
8-63 (e) The secretary of state shall collect for the use of the
8-64 state:
8-65 (1) a fee of $25 for indexing and filing the original
8-66 statement appointing an agent; and
8-67 (2) a fee of $15 for filing an amendment to or
8-68 cancellation of a statement appointing an agent.
8-69 (f) An amendment to a statement appointing an agent to
9-1 receive service of process must meet the requirements for execution
9-2 of an original statement.
9-3 (g) A statement appointing an agent may be canceled by
9-4 filing with the secretary of state a written notice of cancellation
9-5 executed by an officer of the Texas financial institution. A
9-6 notice of cancellation must contain:
9-7 (1) the name of the Texas financial institution;
9-8 (2) the federal tax identification number of the Texas
9-9 financial institution;
9-10 (3) the date of filing of the statement appointing the
9-11 agent; and
9-12 (4) the current street address of the principal office
9-13 of the Texas financial institution.
9-14 (h) Service of process on a registered agent appointed under
9-15 this section is an alternate method of service in addition to other
9-16 methods provided by law unless other law specifically requires
9-17 service to be made on the registered agent. A resignation or
9-18 notice of cancellation is effective immediately on acknowledgement
9-19 of filing by the secretary of state, and after the acknowledgement
9-20 the financial institution is subject to service of process as
9-21 otherwise provided by law.
9-22 (i) The secretary of state may adopt forms and procedural
9-23 rules for filing of documents under this section.
9-24 CHAPTER 202. BANK HOLDING COMPANIES
9-25 Sec. 202.001. ACQUISITION OF BANK OR BANK HOLDING COMPANY.
9-26 (a) A company intending to acquire a Texas bank holding company or
9-27 a Texas bank shall submit to the commissioner a copy of the
9-28 application for approval or notice submitted to the Board of
9-29 Governors of the Federal Reserve System under Section 3, Bank
9-30 Holding Company Act (12 U.S.C. Section 1842). The copy must be:
9-31 (1) submitted to the commissioner when the application
9-32 is submitted to the board of governors;
9-33 (2) accompanied by any additional information required
9-34 under Subsection (b); and
9-35 (3) accompanied by any filing fee required by law.
9-36 (b) An applicant or notificant that is an out-of-state bank
9-37 holding company shall provide satisfactory evidence to the
9-38 commissioner of compliance with or inapplicability of:
9-39 (1) the requirements of Section 202.003; and
9-40 (2) if the applicant or notificant is not incorporated
9-41 under the laws of this state, the laws of this state relating to
9-42 registration of foreign corporations to do business in this state.
9-43 (c) On receipt of the notice prescribed by Section 3(b),
9-44 Bank Holding Company Act (12 U.S.C. Section 1842(b)), the
9-45 commissioner shall state in writing within the period prescribed by
9-46 that subsection the commissioner's:
9-47 (1) views and recommendations concerning the proposed
9-48 transaction;
9-49 (2) opinion regarding whether the proposed transaction
9-50 complies with this chapter and the Interstate Banking and Branching
9-51 Efficiency Act; and
9-52 (3) opinion regarding whether the proposed transaction
9-53 complies with the Community Reinvestment Act of 1977 (12 U.S.C.
9-54 Section 2901 et seq.), as amended.
9-55 (d) The commissioner is not required to disapprove the
9-56 application or notice solely because of the opinion stated under
9-57 Subsection (c)(3).
9-58 (e) If the commissioner's response disapproves an
9-59 application for or notice of an acquisition of a Texas state bank
9-60 or a Texas bank holding company controlling a Texas state bank, the
9-61 commissioner may:
9-62 (1) appear at the hearing held as provided by Section
9-63 3(b), Bank Holding Company Act (12 U.S.C. Section 1842(b)); and
9-64 (2) present evidence at the hearing regarding the
9-65 reasons the application or notice should be denied.
9-66 (f) If the commissioner's response disapproves an
9-67 application for or notice of an acquisition other than as described
9-68 by Subsection (e), the commissioner may request that a hearing be
9-69 held as provided by Section 3(b), Bank Holding Company Act (12
10-1 U.S.C. Section 1842(b)). If the board of governors grants the
10-2 request, the commissioner shall appear and present evidence at the
10-3 hearing regarding the reasons the application or notice should be
10-4 denied.
10-5 (g) If the board of governors approves an application or
10-6 notice that the commissioner disapproved, the commissioner may
10-7 accept the decision or attempt to overturn the decision on appeal
10-8 as provided by Section 9, Bank Holding Company Act (12 U.S.C.
10-9 Section 1848).
10-10 Sec. 202.002. LIMITATION ON CONTROL OF DEPOSITS. (a) The
10-11 commissioner may not approve an acquisition if, on consummation of
10-12 the transaction, the applicant, including all depository
10-13 institution affiliates of the applicant, would control 20 percent
10-14 or more of the total amount of deposits in this state held by
10-15 depository institutions in this state.
10-16 (b) The commissioner may request and the applicant shall
10-17 provide supplemental information to the commissioner to aid in a
10-18 determination under this section, including information that is
10-19 more current than or in addition to information in the most
10-20 recently available summary of deposits, reports of condition, or
10-21 similar reports filed with or produced by state or federal
10-22 authorities.
10-23 Sec. 202.003. REQUIRED AGE OF ACQUIRED BANK. (a) An
10-24 out-of-state bank holding company may not make an acquisition under
10-25 this chapter if the Texas bank to be acquired, or any Texas bank
10-26 subsidiary of the bank holding company to be acquired, has not been
10-27 in existence and in continuous operation for at least five years as
10-28 of the effective date of acquisition.
10-29 (b) For purposes of this section:
10-30 (1) a bank that is the successor as a result of merger
10-31 or acquisition of all or substantially all of the assets of a prior
10-32 bank is considered to have been in existence and continuously
10-33 operated during the period of its existence and continuous
10-34 operation as a bank and during the period of existence and
10-35 continuous operation of the prior bank; and
10-36 (2) a bank effecting a purchase and assumption,
10-37 merger, or similar transaction with or supervised by the Federal
10-38 Deposit Insurance Corporation or its successor is considered to
10-39 have been in existence and continuously operated during the
10-40 existence and continuous operation of the bank with respect to
10-41 which the transaction was consummated.
10-42 Sec. 202.004. ACQUISITION OF NONBANKING INSTITUTION. (a) A
10-43 bank holding company doing business in this state that submits an
10-44 application or notice to the Board of Governors of the Federal
10-45 Reserve System regarding an acquisition or activity regulated by
10-46 Section 4, Bank Holding Company Act (12 U.S.C. Section 1843), that
10-47 involves or will involve an office location in this state shall
10-48 submit to the commissioner a copy of the application or notice when
10-49 the application or notice is submitted to the board of governors.
10-50 The bank holding company shall submit other information reasonably
10-51 requested by the commissioner to determine the manner in which the
10-52 acquisition or activity will directly or indirectly affect
10-53 residents of this state.
10-54 (b) To assist in determining whether to disapprove the
10-55 proposed acquisition or activity, the commissioner may hold a
10-56 public hearing as provided by Section 31.201, regardless of whether
10-57 requested to do so by a person, regarding the proposed acquisition
10-58 or activity and its effect on this state. The commissioner shall
10-59 convene a hearing if the bank holding company requests a hearing in
10-60 writing when it submits the application or notice to the
10-61 commissioner.
10-62 (c) The commissioner shall disapprove the proposed
10-63 acquisition or activity if the commissioner determines that the
10-64 acquisition or activity would be detrimental to the public interest
10-65 as a result of probable adverse effects, including undue
10-66 concentration of resources, decreased or unfair competition,
10-67 conflicts of interest, or unsound banking practices.
10-68 (d) If the commissioner determines to disapprove the
10-69 proposed acquisition or activity, the commissioner may prepare and
11-1 file a response to the application or notice with the board of
11-2 governors and may request that a hearing be held. If the board of
11-3 governors grants the request, the commissioner shall appear and
11-4 present evidence at the hearing regarding the reasons the proposed
11-5 acquisition or activity should be denied.
11-6 (e) If the board of governors approves a proposed
11-7 acquisition or activity that the commissioner disapproved, the
11-8 commissioner may accept the decision or seek to overturn the
11-9 decision on appeal as provided by Section 9, Bank Holding Company
11-10 Act (12 U.S.C. Section 1848).
11-11 Sec. 202.005. APPLICABLE LAWS. (a) The commissioner may:
11-12 (1) examine a bank holding company that controls a
11-13 Texas bank to the same extent as if the bank holding company were a
11-14 Texas state bank; and
11-15 (2) bring an enforcement proceeding under Chapter 35
11-16 against a bank holding company that violates or participates in a
11-17 violation of this subtitle, an agreement filed with the
11-18 commissioner under this chapter, or a rule adopted or order issued
11-19 by the commissioner or the finance commission under this subtitle,
11-20 as if the bank holding company were a Texas state bank.
11-21 (b) A Texas bank that is controlled by a bank holding
11-22 company that is not a Texas bank holding company shall be subject
11-23 to all laws of this state that are applicable to Texas banks that
11-24 are controlled by Texas bank holding companies.
11-25 CHAPTER 203. INTERSTATE BANK MERGERS AND BRANCHING
11-26 Sec. 203.001. INTERSTATE BRANCHING BY TEXAS STATE BANKS.
11-27 (a) With the prior approval of the commissioner, a Texas state
11-28 bank may establish and maintain a de novo branch or acquire a
11-29 branch in a state other than Texas pursuant to Section 32.203.
11-30 (b) With the prior approval of the commissioner, a Texas
11-31 state bank may establish, maintain, and operate one or more
11-32 branches in another state pursuant to an interstate merger
11-33 transaction in which the Texas state bank is the resulting bank.
11-34 Not later than the date on which the required application for the
11-35 interstate merger transaction is filed with the responsible federal
11-36 bank supervisory agency, the applicant Texas state bank shall file
11-37 an application on a form prescribed by the commissioner and pay the
11-38 fee prescribed by law. The applicant shall also comply with the
11-39 applicable provisions of Sections 32.301-32.303. The commissioner
11-40 shall approve the interstate merger transaction and the operation
11-41 of branches outside of this state by the Texas state bank if the
11-42 commissioner makes the findings required by Section 32.302(b). An
11-43 interstate merger transaction may be consummated only after the
11-44 applicant has received the commissioner's written approval.
11-45 Sec. 203.002. CONDITIONS FOR ENTRY BY DE NOVO BRANCHING.
11-46 (a) An out-of-state bank may establish a de novo branch in this
11-47 state if:
11-48 (1) the laws of the home state of the out-of-state
11-49 bank would permit a Texas bank to establish and maintain a de novo
11-50 branch in that state under substantially the same terms and
11-51 conditions as set forth in this subchapter;
11-52 (2) the out-of-state bank confirms in writing to the
11-53 commissioner that as long as it maintains a branch in this state,
11-54 it will comply with all applicable laws of this state;
11-55 (3) the applicant provides satisfactory evidence to
11-56 the commissioner of compliance with the applicable requirements of
11-57 Section 201.102; and
11-58 (4) the commissioner, acting on or before the 30th day
11-59 after the date the commissioner receives notice of an application
11-60 under Subsection (b), certifies to the responsible federal bank
11-61 supervisory agency that the requirements of this subchapter have
11-62 been met.
11-63 (b) An out-of-state bank desiring to establish and maintain
11-64 a de novo branch shall provide written notice of the proposed
11-65 transaction to the commissioner not later than the date on which
11-66 the bank applies to the responsible federal bank supervisory agency
11-67 for approval to establish the branch. The filing of the notice
11-68 must be accompanied by the filing fee, if any, prescribed by the
11-69 commissioner.
12-1 (c) A de novo branch may be established in this state
12-2 through the acquisition of a branch of an existing Texas bank if
12-3 the acquiring out-of-state bank complies with this section.
12-4 Sec. 203.003. ENTRY BY INTERSTATE MERGER TRANSACTION.
12-5 (a) Subject to Sections 203.004 and 203.005, one or more Texas
12-6 banks may enter into an interstate merger transaction with one or
12-7 more out-of-state banks under this chapter, and an out-of-state
12-8 bank resulting from the transaction may maintain and operate the
12-9 branches in this state of a Texas bank that participated in the
12-10 transaction. An out-of-state bank that will be the resulting bank
12-11 in the interstate merger transaction shall comply with Section
12-12 201.102.
12-13 (b) An out-of-state bank that will be the resulting bank
12-14 pursuant to an interstate merger transaction involving a Texas
12-15 state bank shall notify the commissioner of the proposed merger not
12-16 later than the date on which it files an application for an
12-17 interstate merger transaction with the responsible federal bank
12-18 supervisory agency, and shall submit a copy of that application to
12-19 the commissioner and pay the filing fee, if any, required by the
12-20 commissioner. A Texas state bank that is a party to the interstate
12-21 merger transaction shall comply with Chapter 32 and with other
12-22 applicable state and federal laws. An out-of-state bank that will
12-23 be the resulting bank in the interstate merger transaction shall
12-24 provide satisfactory evidence to the commissioner of compliance
12-25 with Section 201.102.
12-26 (c) An out-of-state bank that does not operate a branch in
12-27 this state may not establish and maintain a branch in this state
12-28 through the acquisition of a branch of an existing Texas bank
12-29 except as provided by Section 203.002.
12-30 Sec. 203.004. LIMITATION ON CONTROL OF DEPOSITS. (a) An
12-31 interstate merger transaction is not permitted if, on consummation
12-32 of the transaction, the resulting bank, including all depository
12-33 institution affiliates of the resulting bank, would control 20
12-34 percent or more of the total amount of deposits in this state held
12-35 by all depository institutions in this state.
12-36 (b) The commissioner may request and the applicant shall
12-37 provide supplemental information to the commissioner to aid in a
12-38 determination under this section, including information that is
12-39 more current than or in addition to information in the most
12-40 recently available summary of deposits, reports of condition, or
12-41 similar reports filed with or produced by state or federal
12-42 authorities.
12-43 Sec. 203.005. REQUIRED AGE OF ACQUIRED BANK. (a) An
12-44 out-of-state bank may not acquire a Texas bank in an interstate
12-45 merger transaction if the Texas bank has not been in existence and
12-46 in continuous operation for at least five years as of the effective
12-47 date of the interstate merger transaction. However, this section
12-48 does not apply if the acquiring out-of-state bank could establish a
12-49 de novo branch in this state pursuant to Section 203.002.
12-50 (b) For purposes of this section:
12-51 (1) a bank that is the successor as a result of merger
12-52 or acquisition of all or substantially all of the assets of a prior
12-53 bank is considered to have been in existence and continuously
12-54 operated during the period of its existence and continuous
12-55 operation as a bank and during the period of existence and
12-56 continuous operation of the prior bank; and
12-57 (2) a bank effecting a purchase and assumption,
12-58 merger, or similar transaction with or supervised by the Federal
12-59 Deposit Insurance Corporation or its successor is considered to
12-60 have been in existence and continuously operated during the
12-61 existence and continuous operation of the bank with respect to
12-62 which the transaction was consummated.
12-63 Sec. 203.006. ADDITIONAL BRANCHES. An out-of-state bank
12-64 that has established or acquired a branch in this state under this
12-65 chapter may establish or acquire additional branches in this state
12-66 to the same extent that a Texas state bank may establish or acquire
12-67 a branch in this state under applicable state and federal law.
12-68 Sec. 203.007. EXAMINATIONS; PERIODIC REPORTS. (a) The
12-69 banking commissioner may make examinations of a branch established
13-1 and maintained in this state pursuant to this chapter by an
13-2 out-of-state bank as the banking commissioner considers necessary
13-3 to determine whether the branch is being operated in compliance
13-4 with the laws of this state and in accordance with safe and sound
13-5 banking practices. Sections 31.105-31.107 or 96.054-96.057, as
13-6 appropriate, apply to the examinations.
13-7 (b) The commissioner may prescribe requirements for periodic
13-8 reports from an out-of-state bank that operates a branch in Texas
13-9 pursuant to this chapter. Reporting requirements prescribed by the
13-10 commissioner under this section must be:
13-11 (1) consistent with the reporting requirements
13-12 applicable to Texas state banks or state savings banks, as
13-13 appropriate; and
13-14 (2) appropriate to discharge the responsibilities of
13-15 the commissioner under this chapter.
13-16 CHAPTER 204. FOREIGN BANKS
13-17 SUBCHAPTER A. GENERAL PROVISIONS
13-18 Sec. 204.001. TRANSACTING BUSINESS. (a) A foreign bank may
13-19 not transact business in this state except to the extent permitted
13-20 by this chapter.
13-21 (b) Subsection (a) does not prohibit a foreign bank:
13-22 (1) from transacting business at a licensed federal
13-23 branch or agency in this state in accordance with federal law;
13-24 (2) that does not maintain a branch or agency in this
13-25 state or conduct business from an office or location in this state
13-26 from making unsecured loans in this state or loans secured by liens
13-27 on real or personal property located in this state, enforcing those
13-28 loans in this state, or transacting trust business in this state,
13-29 to the extent permitted by other law; or
13-30 (3) organized under the laws of a territory of the
13-31 United States, Puerto Rico, Guam, American Samoa, or the Virgin
13-32 Islands, the deposits of which are insured by the Federal Deposit
13-33 Insurance Corporation, from establishing and operating an
13-34 interstate branch in this state in its capacity as a state bank
13-35 pursuant to Chapter 203.
13-36 (c) For purposes of Subsection (a), a foreign bank is not
13-37 considered to be transacting business in this state merely because
13-38 a subsidiary or affiliate transacts business in this state,
13-39 including business that a depository institution subsidiary or
13-40 affiliate may lawfully conduct in this state as an agent for the
13-41 foreign bank to the extent authorized by the laws of this state.
13-42 Sec. 204.002. BOOKS, ACCOUNTS, AND RECORDS. Each Texas
13-43 state branch, agency, or representative office shall maintain and
13-44 make available appropriate books, accounts, and records reflecting:
13-45 (1) all transactions effected by or on behalf of the
13-46 office; and
13-47 (2) all other actions taken in this state by employees
13-48 of the foreign bank located in this state to effect transactions on
13-49 behalf of an office of the foreign bank located outside this state.
13-50 Sec. 204.003. EXAMINATION; FEES. (a) The commissioner may
13-51 make examinations of a Texas state branch, agency, or
13-52 representative office as the commissioner considers necessary to
13-53 determine whether the office is being operated in compliance with
13-54 the laws of this state and in accordance with safe and sound
13-55 banking practices. Sections 31.105-31.107 apply to the
13-56 examinations.
13-57 (b) A foreign bank that maintains a Texas state branch,
13-58 agency, or representative office shall pay fees to the commissioner
13-59 in accordance with Section 201.005 or rules adopted under this
13-60 subtitle.
13-61 Sec. 204.004. REPORTS. (a) A foreign bank doing business
13-62 in this state through a Texas state branch, agency, or
13-63 representative office shall make written reports to the
13-64 commissioner that:
13-65 (1) are in English;
13-66 (2) are submitted at the times and in the form
13-67 specified by the commissioner or by rules adopted under this
13-68 subtitle;
13-69 (3) are under oath of one of the foreign bank's
14-1 officers, managers, or agents transacting business in this state;
14-2 (4) show the amount of the foreign bank's assets and
14-3 liabilities, expressed in United States currency;
14-4 (5) with respect to a Texas state branch or agency,
14-5 show the amount of the branch or agency's assets and liabilities,
14-6 expressed in United States currency; and
14-7 (6) contain other information that the commissioner
14-8 requires.
14-9 (b) A license or registration of a foreign bank under this
14-10 chapter may be revoked or the foreign bank may be subject to an
14-11 enforcement action under Chapter 35 if the foreign bank fails to
14-12 make a report required under Subsection (a) or makes a material
14-13 false or misleading statement in the report.
14-14 Sec. 204.005. CHANGE OF CONTROL OF FOREIGN BANK. A foreign
14-15 bank licensed to establish and maintain a Texas state branch or
14-16 agency pursuant to Subchapter B, or which has registered a Texas
14-17 representative office pursuant to Subchapter C, shall file with the
14-18 commissioner a notice of change of control, in the form and
14-19 containing the information the commissioner requires, not later
14-20 than the 14th day after the date of a merger or other transaction
14-21 that results or will result in a change of control.
14-22 Sec. 204.006. OPERATIONS IN THIS STATE OF BANKS OWNED OR
14-23 CONTROLLED BY FOREIGN BANKS AND OTHER FOREIGN PERSONS. (a) Except
14-24 as provided in Subsection (b):
14-25 (1) the laws of this state governing the acquisition
14-26 or ownership of interests in Texas banks or out-of-state banks
14-27 seeking to establish and maintain interstate branches in this state
14-28 do not prohibit ownership of those institutions by, or otherwise
14-29 discriminate against, foreign banks or other foreign persons; and
14-30 (2) the laws of this state governing the powers and
14-31 activities of Texas banks and out-of-state banks maintaining
14-32 interstate branches in this state do not discriminate among those
14-33 banks on the basis of their ownership or control by foreign banks
14-34 or other foreign persons.
14-35 (b) Notwithstanding Subsection (a), the commissioner may
14-36 apply the laws of this state governing the ownership, control, or
14-37 operations of Texas banks, even if applicable specifically or
14-38 exclusively to foreign banks or other foreign persons, to the
14-39 extent those laws are determined by the commissioner to be:
14-40 (1) substantially equivalent to or consistent with the
14-41 standards or requirements governing the ownership, control, or
14-42 operations of Texas banks by foreign banks or other foreign persons
14-43 under applicable federal law; or
14-44 (2) otherwise consistent with the laws and policies of
14-45 the United States, including its international agreements governing
14-46 financial services.
14-47 Sec. 204.007. ESTABLISHMENT OF INTERSTATE BRANCH IN THIS
14-48 STATE BY AN OUT-OF-STATE FOREIGN BANK. (a) An out-of-state
14-49 foreign bank may establish an interstate Texas state branch in the
14-50 same manner as, and subject to the same criteria, standards,
14-51 conditions, requirements, and procedures applicable to, the
14-52 establishment of an interstate branch in this state by an
14-53 out-of-state bank having the same home state in the United States,
14-54 including by acquisition of or merger with a Texas bank, or
14-55 establishment of a de novo branch in the manner provided by Section
14-56 203.002, notwithstanding another law of this state to the contrary
14-57 other than Subsection (b).
14-58 (b) With respect to establishment of an initial interstate
14-59 Texas state branch and subsequent intrastate branches of an
14-60 out-of-state foreign bank, the commissioner:
14-61 (1) shall apply the same criteria, standards,
14-62 conditions, requirements, and procedures applicable under
14-63 Subchapter B to the establishment of an initial Texas state branch
14-64 and subsequent intrastate branches in this state;
14-65 (2) may apply other criteria, standards, conditions,
14-66 requirements, or provisions of the laws of this state that are
14-67 determined by the commissioner to be substantially equivalent to or
14-68 consistent with federal law generally applicable to the
14-69 establishment of a branch in the United States by a foreign bank or
15-1 specifically applicable to the establishment of a branch in the
15-2 United States by the applicant foreign bank; and
15-3 (3) may allow an out-of-state foreign bank to:
15-4 (A) acquire or merge with another foreign bank
15-5 maintaining a Texas branch or agency and after the acquisition or
15-6 merger continue the operations as its own;
15-7 (B) acquire or establish an interstate Texas
15-8 branch through another means not inconsistent with Section 5,
15-9 International Banking Act (12 U.S.C. Section 3103); or
15-10 (C) convert a state agency to a state branch as
15-11 provided by Section 204.008.
15-12 Sec. 204.008. CONVERSION OF EXISTING OFFICE. (a) For
15-13 purposes of this section, foreign bank offices in this state are
15-14 divided into classes and ranked in ascending order as:
15-15 (1) representative office;
15-16 (2) Texas state agency; and
15-17 (3) Texas state branch.
15-18 (b) A foreign bank may change a lower class office into a
15-19 higher class office by applying for the higher class office
15-20 pursuant to Section 204.101. On approval of the application to
15-21 establish the higher class office and after all conditions to the
15-22 approval have been fulfilled, the foreign bank may change the lower
15-23 class office into the higher class office and the commissioner
15-24 shall issue a license authorizing the bank to maintain the higher
15-25 class office. The foreign bank shall promptly surrender any
15-26 license or registration previously issued by the commissioner in
15-27 connection with the lower class office.
15-28 (c) A foreign bank may change a higher class office into a
15-29 lower class office by applying for approval to close the higher
15-30 class office pursuant to Section 204.115. On approval of the
15-31 application to close the higher class office and after conditions
15-32 precedent to the closing have been fulfilled, the foreign bank may
15-33 change the higher class office into the lower class office, and the
15-34 commissioner shall issue a license or registration authorizing the
15-35 bank to maintain the lower class office.
15-36 (Sections 204.009-204.100 reserved for expansion
15-37 SUBCHAPTER B. DIRECT BRANCH AND AGENCY OFFICES OF
15-38 FOREIGN BANKS
15-39 Sec. 204.101. APPLICATION TO ESTABLISH BRANCH OR AGENCY.
15-40 (a) A foreign bank that desires to establish and maintain a Texas
15-41 state branch or agency shall submit an application to the
15-42 commissioner. The application must:
15-43 (1) be accompanied by all application fees and
15-44 deposits required by applicable rules;
15-45 (2) be in the form specified by the commissioner;
15-46 (3) be subscribed and acknowledged by an officer of
15-47 the foreign bank;
15-48 (4) have attached:
15-49 (A) a complete copy of the foreign bank's
15-50 application to the Board of Governors of the Federal Reserve System
15-51 under Section 7(d), International Banking Act (12 U.S.C. Section
15-52 3105(d));
15-53 (B) an authenticated copy of the foreign bank's
15-54 articles of incorporation and bylaws or other constitutive
15-55 documents and, if the copy is in a language other than English, an
15-56 English translation of the document, under the oath of the
15-57 translator; and
15-58 (C) evidence of compliance with Section 201.102;
15-59 (5) be submitted when the federal application is
15-60 submitted to the board of governors; and
15-61 (6) include on its face or in accompanying documents:
15-62 (A) the name of the foreign bank;
15-63 (B) the street address where the principal
15-64 office of the Texas state branch or agency is to be located and, if
15-65 different, the Texas state branch or agency's mailing address;
15-66 (C) the name and qualifications of each officer
15-67 and director of the foreign bank who will have control of all or
15-68 part of the business and affairs of the Texas state branch or
15-69 agency;
16-1 (D) a detailed statement of the foreign bank's
16-2 financial condition as of a date not more than 360 days before the
16-3 date of the application; and
16-4 (E) other information that:
16-5 (i) is necessary to enable the
16-6 commissioner to make the findings listed in Section 204.103;
16-7 (ii) is required by rules adopted under
16-8 this subtitle; or
16-9 (iii) the commissioner reasonably
16-10 requests.
16-11 (b) The finance commission may adopt rules prescribing
16-12 abbreviated application procedures and standards applicable to
16-13 applications by foreign banks that have already established an
16-14 initial Texas state branch or agency to establish additional
16-15 intrastate branches or agencies.
16-16 Sec. 204.102. HEARING AND DECISION ON APPLICATION.
16-17 (a) After the application is complete and accepted for filing and
16-18 all required fees and deposits have been paid, the commissioner
16-19 shall determine from the application and the initial investigation
16-20 whether the conditions set forth by Section 204.103 have been
16-21 established. The commissioner shall approve the application or set
16-22 the application for hearing.
16-23 (b) If the commissioner sets the application for hearing:
16-24 (1) the commissioner shall notify the Board of
16-25 Governors of the Federal Reserve System that the application has
16-26 been set for hearing as provided by federal regulations;
16-27 (2) the department shall participate as the opposing
16-28 party; and
16-29 (3) the commissioner shall conduct the hearing and one
16-30 or more prehearing conferences and opportunities for discovery as
16-31 the commissioner considers advisable and consistent with applicable
16-32 law.
16-33 (c) Information relating to the financial condition and
16-34 business affairs of the foreign bank and financial information
16-35 relating to its management and shareholders, except for previously
16-36 published statements and information, is confidential and may not
16-37 be considered in the public portion of the hearing or disclosed by
16-38 the commissioner or an employee of the department except as
16-39 provided by Subchapter D, Chapter 31.
16-40 (d) The commissioner shall make a finding from the record of
16-41 the hearing on each condition listed in Section 204.103 and enter
16-42 an order granting or denying the license. If the license is
16-43 denied, the commissioner shall inform the Board of Governors of the
16-44 Federal Reserve System of the order and the reasons the federal
16-45 application should be denied.
16-46 (e) The commissioner may make approval of an application
16-47 conditional. The commissioner shall include any conditions in the
16-48 order granting the license but may not issue the license until the
16-49 Texas state branch or agency has received the approval of the Board
16-50 of Governors of the Federal Reserve System. If the approval is
16-51 conditioned on a written commitment from the applicant offered to
16-52 and accepted by the commissioner, the commitment is enforceable
16-53 against the applicant.
16-54 Sec. 204.103. ISSUANCE OF LICENSE. (a) The commissioner
16-55 shall issue a license to a foreign bank to establish and maintain a
16-56 Texas state branch or agency if the commissioner finds after
16-57 reasonable inquiry that:
16-58 (1) all members of the management of the Texas state
16-59 branch or agency have sufficient banking experience, ability,
16-60 standing, competence, trustworthiness, and integrity to justify a
16-61 belief that the agency will operate in compliance with state law;
16-62 (2) the foreign bank has sufficient standing to
16-63 justify a belief that the Texas state branch or agency will be free
16-64 from improper or unlawful influence or interference with respect to
16-65 the office's operation in compliance with state law; and
16-66 (3) the foreign bank is acting in good faith and the
16-67 application does not contain a material misrepresentation.
16-68 (b) Each Texas state branch or agency shall post its license
16-69 in a conspicuous place at its office. A license issued under this
17-1 subchapter is not transferable or assignable.
17-2 Sec. 204.104. NO CONCURRENT FEDERAL BRANCH OR AGENCY.
17-3 (a) A foreign bank licensed under this subchapter to establish and
17-4 maintain a Texas state branch or agency may not concurrently
17-5 maintain a federal branch or federal agency in this state.
17-6 (b) A foreign bank which maintains a federal branch or
17-7 federal agency in this state may not concurrently be licensed under
17-8 this subchapter to maintain a Texas state branch or agency.
17-9 Sec. 204.105. POWERS OF BRANCH AND AGENCY. (a) A Texas
17-10 state branch or agency is subject to this subtitle and other laws
17-11 of this state applicable to banks as if the Texas state branch or
17-12 agency were a Texas state bank unless:
17-13 (1) this chapter or a rule adopted under this subtitle
17-14 provides otherwise; or
17-15 (2) the context of a provision or other information
17-16 indicates that a provision applies only to a bank organized under
17-17 the laws of a state or the United States.
17-18 (b) Among other exceptions to Subsection (a) that may be
17-19 required or authorized by the commissioner provided by this
17-20 subchapter or by rules adopted under this subtitle:
17-21 (1) a Texas state branch may not accept deposits of
17-22 less than $100,000 from citizens or residents of the United States,
17-23 other than credit balances that are incidental to or arise out of
17-24 its exercise of other lawful banking powers, unless the Federal
17-25 Deposit Insurance Corporation determines that specific deposit
17-26 taking activities in lesser amounts do not constitute domestic
17-27 retail deposit activities requiring deposit insurance protection
17-28 within the meaning of Section 6, International Banking Act (12
17-29 U.S.C. Section 3104);
17-30 (2) a Texas state agency may not accept deposits from
17-31 citizens or residents of the United States, other than credit
17-32 balances that are incidental to or arise out of its exercise of
17-33 other lawful banking powers, but may accept deposits from persons
17-34 who are neither citizens nor residents of the United States; and
17-35 (3) a limitation or restriction based on the capital
17-36 and certified surplus of a Texas state bank is considered to refer,
17-37 as applied to a Texas state branch or agency, to the dollar
17-38 equivalent of the capital and surplus of the foreign bank, and if
17-39 the foreign bank has more than one Texas state branch or agency in
17-40 this state, the business transacted by all the branches and
17-41 agencies must be aggregated in determining compliance with the
17-42 limitation.
17-43 (c) Subject to Subsections (a) and (b), a foreign bank
17-44 licensed to transact business in this state through a Texas state
17-45 branch or agency may:
17-46 (1) borrow and lend money with or without property as
17-47 security;
17-48 (2) purchase, sell, and make loans regardless of
17-49 whether the loans are secured by bonds or mortgages on real
17-50 property;
17-51 (3) engage in a foreign exchange transaction;
17-52 (4) issue, advise, confirm, and otherwise deal with a
17-53 letter of credit and pay, accept, or negotiate a draft drawn under
17-54 a letter of credit;
17-55 (5) accept a bill of exchange or draft;
17-56 (6) buy or acquire and sell or dispose of a bill of
17-57 exchange, draft, note, acceptance, or other obligation for the
17-58 payment of money;
17-59 (7) maintain a credit balance of money received at the
17-60 Texas state branch or agency incidental to or arising out of the
17-61 exercise of its authorized activities in this state if the money is
17-62 not intended to be a deposit and does not remain in the Texas state
17-63 branch or agency after the completion of all transactions to which
17-64 it relates;
17-65 (8) accept deposits to the extent permitted by
17-66 Subsection (b);
17-67 (9) receive money for transmission and transmit the
17-68 money from its authorized place of business in this state to any
17-69 other place;
18-1 (10) act as an indenture trustee or as a registrar,
18-2 paying agent, or transfer agent, on behalf of the issuer, for
18-3 equity or investment securities; and
18-4 (11) perform other activities that:
18-5 (A) are authorized by rules adopted to
18-6 accomplish the purposes of this subtitle; or
18-7 (B) the commissioner determines are analogous or
18-8 incidental to specific activities authorized by this section for a
18-9 Texas state branch or agency.
18-10 (d) A foreign bank licensed to transact business in this
18-11 state through a Texas state branch or agency may share the premises
18-12 of the Texas state branch or agency with another authorized office
18-13 of the foreign bank or a direct or indirect subsidiary of the
18-14 foreign bank if the books and records of the Texas state branch or
18-15 agency are kept separately from the books and records of the other
18-16 office.
18-17 (e) For purposes of this section, the term "resident of the
18-18 United States" means:
18-19 (1) an individual residing in the United States;
18-20 (2) a corporation, partnership, association, or other
18-21 entity organized in the United States; or
18-22 (3) a branch or office located in the United States of
18-23 an entity that is not organized in the United States.
18-24 Sec. 204.106. APPLICATION TO ACT AS FIDUCIARY. (a) Except
18-25 as provided by Section 204.105(c)(10), a foreign bank may not act
18-26 as a fiduciary at a Texas state branch or agency except by
18-27 obtaining a fiduciary license as provided by this section. A
18-28 foreign bank that intends to act as a fiduciary at a Texas state
18-29 branch or agency shall submit an application to the commissioner.
18-30 The application must:
18-31 (1) be accompanied by all application fees and
18-32 deposits required by applicable rules;
18-33 (2) be in the form specified by the commissioner;
18-34 (3) be subscribed and acknowledged by an officer of
18-35 the foreign bank;
18-36 (4) describe in detail:
18-37 (A) the proposed fiduciary activities;
18-38 (B) the names and relevant expertise of its
18-39 officers and employees that will conduct the fiduciary activities;
18-40 and
18-41 (C) the manner in which the fiduciary activities
18-42 will be captured in the books and records of the Texas state branch
18-43 or agency with due regard for separation of beneficial and legal
18-44 interests; and
18-45 (5) contain other information that:
18-46 (A) is necessary to enable the commissioner to
18-47 make the findings required by Subsection (c);
18-48 (B) is required by rules adopted under this
18-49 subtitle; or
18-50 (C) the commissioner reasonably requests.
18-51 (b) On or before the 60th day after the date the application
18-52 is complete and accepted for filing and all required fees and
18-53 deposits have been paid, the commissioner shall approve the
18-54 application or set the application for hearing. If the
18-55 commissioner sets the application for hearing, the department shall
18-56 participate as the opposing party and the commissioner shall
18-57 conduct the hearing and one or more prehearing conferences and
18-58 opportunities for discovery as the commissioner considers advisable
18-59 and consistent with applicable law.
18-60 (c) The commissioner may issue a license permitting the
18-61 foreign bank to engage in fiduciary activities if the commissioner
18-62 finds that the foreign bank will exercise its fiduciary powers in
18-63 accordance with the laws of this state and has sufficient fiduciary
18-64 and accounting expertise and controls to protect beneficial
18-65 interests under its control. The commissioner may make approval of
18-66 an application conditional by including conditions and limitations
18-67 in the order granting the license. If the approval is conditioned
18-68 on a written commitment from the applicant offered to and accepted
18-69 by the commissioner, the commitment is enforceable against the
19-1 applicant.
19-2 (d) A foreign bank that obtains the approval of the
19-3 commissioner under this section may engage in fiduciary activities
19-4 at its Texas state branch or agency to the same extent and in the
19-5 same manner as a Texas state bank could do so at the same location,
19-6 subject to any conditions or limitations applicable to the license.
19-7 (e) The commissioner may initiate an enforcement action
19-8 under Chapter 35 or may suspend or revoke the authority of a
19-9 foreign bank to engage in fiduciary activities in this state in the
19-10 same manner as a revocation of license under Section 204.118 if the
19-11 commissioner finds in writing that:
19-12 (1) conditions exist related to the fiduciary
19-13 activities of the foreign bank in this state which would authorize
19-14 the commissioner to revoke or suspend its license pursuant to
19-15 Section 204.117; or
19-16 (2) a fact or condition exists which, if it had
19-17 existed at the time of the foreign bank's original notice to engage
19-18 in fiduciary activities, would have resulted in the commissioner
19-19 denying authority to engage in fiduciary activities.
19-20 Sec. 204.107. FILING OF AMENDMENTS TO ARTICLES OF
19-21 INCORPORATION. If the articles of incorporation of a foreign bank
19-22 licensed to maintain a Texas state branch or agency are amended,
19-23 the foreign bank shall promptly file with the commissioner a copy
19-24 of the amendment, duly authenticated by the proper officer of the
19-25 country of the foreign bank's organization. The filing does not
19-26 enlarge or alter the business the foreign bank is authorized to
19-27 pursue in this state, authorize the foreign bank to transact
19-28 business in this state under a name other than the name set forth
19-29 in its license, or extend the duration of its corporate existence.
19-30 Sec. 204.108. AMENDED LICENSE FOR BRANCH OR AGENCY. (a) A
19-31 foreign bank licensed to establish and maintain a Texas state
19-32 branch or agency shall apply to the commissioner for an amended
19-33 license if it changes its corporate name, changes the duration of
19-34 its corporate existence, or desires to pursue in this state other
19-35 or additional purposes than those set forth in its prior
19-36 application for the foreign bank's license or amended license then
19-37 in effect.
19-38 (b) The requirements with respect to the form and contents
19-39 of an application under Subsection (a), the manner of its
19-40 execution, the issuance of an amended license, and the effect of
19-41 the amended license are the same as in the case of an initial
19-42 application for a license to establish and maintain a Texas state
19-43 branch or agency.
19-44 Sec. 204.109. RELOCATION OF OFFICE. (a) With the prior
19-45 written approval of the commissioner, a foreign bank licensed to
19-46 establish and maintain a Texas state branch or agency may relocate
19-47 the branch or agency office. A foreign bank that intends to
19-48 relocate a Texas state branch or agency office shall submit a
19-49 letter to the commissioner describing the address of the proposed
19-50 location, the reasons for relocation, and the manner of notifying
19-51 its customers of the relocation.
19-52 (b) On or before the 30th day after the date the foreign
19-53 bank's letter has been accepted for filing and any required fee has
19-54 been paid, the commissioner shall approve or deny the relocation.
19-55 The commissioner may not permit the foreign bank to relocate its
19-56 Texas state branch or agency office if the commissioner finds that
19-57 the proposed location and the manner of relocation and notification
19-58 will be deceptive or that the relocation will impede or tend to
19-59 impede the foreign bank's depositors and creditors in this state.
19-60 Sec. 204.110. SEPARATE ASSETS. (a) Each foreign bank
19-61 licensed to establish and maintain a Texas state branch or agency
19-62 in this state shall keep the assets of its business in this state
19-63 separate and apart from the assets of its business outside this
19-64 state.
19-65 (b) The depositors and creditors of a foreign bank arising
19-66 out of transactions with, and recorded on the books of, its Texas
19-67 state branch or agency are entitled to absolute preference and
19-68 priority over the depositors and creditors of the foreign bank's
19-69 offices located outside this state with respect to the assets of
20-1 the foreign bank in this state.
20-2 Sec. 204.111. DISCLOSURE OF LACK OF DEPOSIT INSURANCE. Each
20-3 foreign bank licensed to establish and maintain a Texas state
20-4 branch or agency shall give notice that deposits and credit
20-5 balances in the office are not insured by the Federal Deposit
20-6 Insurance Corporation.
20-7 Sec. 204.112. LIMITATIONS ON PAYMENT OF INTEREST ON
20-8 DEPOSITS. A foreign bank licensed to establish and maintain a
20-9 Texas state branch or agency is subject to the same limitations
20-10 with respect to the payment of interest on deposits as a state bank
20-11 that is a member of the Federal Reserve System.
20-12 Sec. 204.113. PLEDGE OF ASSETS. (a) In accordance with
20-13 rules adopted under this subtitle, a foreign bank licensed to
20-14 establish and maintain a Texas state branch or agency may be
20-15 required to keep on deposit, with unaffiliated banks in this state
20-16 that the foreign bank designates and the commissioner approves,
20-17 money and securities pledged to the commissioner in an aggregate
20-18 amount to be determined by the commissioner, valued at the lower of
20-19 principal amount or market value, consisting of:
20-20 (1) dollar deposits;
20-21 (2) bonds, notes, debentures, or other legally
20-22 created, general obligations of a state, an agency or political
20-23 subdivision of a state, the United States, or an instrumentality of
20-24 the United States;
20-25 (3) securities that this state, an agency or political
20-26 subdivision of this state, the United States, or an instrumentality
20-27 of the United States has unconditionally agreed to purchase,
20-28 insure, or guarantee;
20-29 (4) securities issued or guaranteed by the Federal
20-30 Home Loan Mortgage Corporation, the Federal National Mortgage
20-31 Association, the Government National Mortgage Association, the
20-32 Federal Agricultural Mortgage Corporation, or the Federal Farm
20-33 Credit Banks Funding Corporation;
20-34 (5) obligations of or issued or guaranteed by the
20-35 International Bank for Reconstruction and Development, the African
20-36 Development Bank, the Asian Development Bank, the InterAmerican
20-37 Development Bank, or the North American Development Bank; or
20-38 (6) other assets as may be permitted by rule.
20-39 (b) The assets deposited and the amount of the assets to be
20-40 maintained under Subsection (a) are subject to the conditions and
20-41 limitations the commissioner considers necessary or desirable for
20-42 the maintenance of a sound financial condition, the protection of
20-43 depositors, creditors, and the public interest in this state, and
20-44 the support of public confidence in the business of the Texas state
20-45 branch or agency. The commissioner may give credit to reserves
20-46 required to be maintained with a federal reserve bank in or outside
20-47 this state pursuant to federal law, in accordance with rules
20-48 adopted under this subtitle.
20-49 (c) While a foreign bank continues business in the ordinary
20-50 course, the foreign bank may collect interest on the money and
20-51 securities deposited under this section and from time to time
20-52 exchange, examine, and verify the securities.
20-53 Sec. 204.114. ASSET MAINTENANCE. (a) In accordance with
20-54 rules adopted under this subtitle, a foreign bank licensed to
20-55 establish and maintain a Texas state branch or agency shall at all
20-56 times satisfy the ratio of branch or agency assets to liabilities
20-57 determined by the commissioner, in the commissioner's sole
20-58 discretion, to be necessary or desirable with respect to the
20-59 foreign bank. The type of assets to be held in this state are
20-60 specified by Subsection (b) and the type of liabilities to be
20-61 included in the ratio are specified by Subsection (c).
20-62 (b) Assets to be held in this state for the purpose of
20-63 satisfying the ratio of assets to liabilities:
20-64 (1) include:
20-65 (A) currency, bonds, notes, debentures, drafts,
20-66 bills of exchange, or other evidences of indebtedness, including
20-67 loan participation agreements or certificates;
20-68 (B) other obligations payable in the United
20-69 States or in United States funds or, with the prior approval of the
21-1 commissioner, in funds freely convertible into United States funds;
21-2 and
21-3 (C) other assets the commissioner permits or as
21-4 may be specified by rule; and
21-5 (2) exclude obligations of a person for money borrowed
21-6 to the extent that the total of the obligations of the person
21-7 exceeds 10 percent of total assets considered for purposes of this
21-8 section.
21-9 (c) Liabilities included for purposes of calculating the
21-10 ratio of assets to liabilities:
21-11 (1) include all liabilities of the foreign bank
21-12 appearing in the books, accounts, or records of its Texas state
21-13 branch or agency, including acceptances; and
21-14 (2) exclude amounts due and other liabilities to other
21-15 offices, agencies, branches, and wholly owned subsidiaries of the
21-16 foreign bank, and other liabilities the commissioner determines.
21-17 The existence of a nominal number of directors' shares outstanding
21-18 does not cause a subsidiary to be considered less than wholly
21-19 owned.
21-20 (d) Subject to rules adopted under this subtitle, the
21-21 commissioner, in the commissioner's sole discretion, may vary the
21-22 ratio of assets to liabilities required by this section for a
21-23 foreign bank as may be necessary or desirable to reflect
21-24 differences among Texas branches or Texas agencies because of:
21-25 (1) the financial condition of Texas branch or agency
21-26 offices of the foreign bank;
21-27 (2) the financial condition of branch or agency
21-28 offices of the foreign bank located in other states;
21-29 (3) the general economic conditions prevalent in the
21-30 home country of the foreign bank; or
21-31 (4) the financial condition of the foreign bank
21-32 itself, including:
21-33 (A) the financial condition of its branches and
21-34 agencies located in other countries;
21-35 (B) the financial condition of its affiliated
21-36 bank and nonbank subsidiaries in the United States; and
21-37 (C) the financial condition of the foreign bank
21-38 on a worldwide consolidated basis or in its home country.
21-39 (e) For purposes of this section, assets must be valued at
21-40 the lower of principal amount or market value. The commissioner
21-41 may determine the value of a non-marketable security, loan, or
21-42 other asset or obligation held or owed to the foreign bank or its
21-43 Texas state branch or agency in this state. If the commissioner
21-44 cannot determine the value of an non-marketable asset, the asset
21-45 must be excluded from the ratio computation.
21-46 (f) The commissioner may require a foreign bank to deposit
21-47 the assets required to be held in this state pursuant to this
21-48 section with specific banks in this state designated by the
21-49 commissioner if, because of the existence or the potential
21-50 occurrence of unusual and extraordinary circumstances, the
21-51 commissioner considers it necessary or desirable for the
21-52 maintenance of a sound financial condition, the protection of
21-53 depositors, creditors, and the public interest in this state, and
21-54 the maintenance of public confidence in the business of a Texas
21-55 state branch or agency.
21-56 Sec. 204.115. VOLUNTARY CLOSURE OF BRANCH OR AGENCY. (a) A
21-57 foreign bank licensed to establish and maintain a Texas state
21-58 branch or agency may not close the office without filing an
21-59 application with, and obtaining the prior approval of, the
21-60 commissioner. An application by a foreign bank under this section
21-61 must be in the form and include the information the commissioner
21-62 requires.
21-63 (b) The commissioner shall approve the application if the
21-64 commissioner finds that the closing of the office will not be
21-65 substantially detrimental to the foreign bank's depositors and
21-66 creditors in this state. An application may be approved subject to
21-67 conditions imposed by the commissioner for the continued protection
21-68 of the foreign bank's depositors and creditors in this state,
21-69 including a condition that the foreign bank pledge assets in the
22-1 manner specified by Section 204.113 for a specified period of time.
22-2 (c) When an application by a foreign bank under this section
22-3 has been approved and all conditions precedent to the closing have
22-4 been fulfilled, the foreign bank may close the office and an
22-5 officer, manager, or agent of the foreign bank shall deliver to the
22-6 commissioner:
22-7 (1) all copies of examination reports or other
22-8 property of the department;
22-9 (2) a statement under oath by an authorized officer,
22-10 manager, or agent of the foreign bank that all deposit and other
22-11 liabilities of the Texas state branch or agency to depositors and
22-12 creditors in this state have been properly discharged by payment or
22-13 pledge or otherwise assumed or retained by a financial institution;
22-14 (3) the license issued by the commissioner;
22-15 (4) an appropriate board resolution closing the Texas
22-16 state branch or agency; and
22-17 (5) a statement of the location where the records of
22-18 the Texas state branch or agency will be kept after the closing.
22-19 Sec. 204.116. ENFORCEMENT. The commissioner may initiate an
22-20 enforcement action under Chapter 35 or a proceeding to revoke the
22-21 license of a Texas state branch or agency if the commissioner by
22-22 examination or other credible evidence finds that the foreign bank:
22-23 (1) does not currently meet the criteria established
22-24 by this chapter for the original issuance of a license;
22-25 (2) has refused to permit the commissioner to examine
22-26 its books, papers, accounts, records, or affairs in accordance with
22-27 Sections 204.002 and 204.003;
22-28 (3) has failed to make a report required under this
22-29 chapter or made a material false or misleading statement in the
22-30 report;
22-31 (4) has violated this subtitle, another law or rule
22-32 applicable to a foreign bank or a Texas state branch or agency, or
22-33 a final and enforceable order of the commissioner or the finance
22-34 commission;
22-35 (5) has misrepresented or concealed a material fact in
22-36 the original application for license;
22-37 (6) has violated a condition of its license or an
22-38 agreement between the foreign bank and the commissioner or the
22-39 department; or
22-40 (7) conducts business in an unsafe and unsound manner.
22-41 Sec. 204.117. PROCEDURE FOR REVOCATION. (a) Notice of a
22-42 revocation proceeding must:
22-43 (1) be in the form of a proposed order;
22-44 (2) be served on the foreign bank by personal delivery
22-45 or registered or certified mail, return receipt requested, to a
22-46 director, officer, manager, or employee of the foreign bank at a
22-47 Texas state branch or agency location, or to the registered agent
22-48 of the foreign bank;
22-49 (3) state the effective date of the proposed order,
22-50 which may not be before the 21st day after the date the proposed
22-51 order is mailed or delivered except as otherwise provided in
22-52 Section 204.118; and
22-53 (4) state the grounds for the proposed revocation with
22-54 reasonable certainty.
22-55 (b) Unless the foreign bank requests a hearing in writing on
22-56 or before the effective date of the proposed order, the order takes
22-57 effect as proposed and is final and nonappealable.
22-58 (c) A hearing requested on a proposed order shall be held
22-59 not later than the 30th day after the date the written request for
22-60 hearing is received by the department unless the parties agree to a
22-61 later hearing date. The department shall participate as the
22-62 opposing party, and the commissioner shall conduct the hearing and
22-63 one or more prehearing conferences and opportunities for discovery
22-64 as the commissioner considers advisable and consistent with
22-65 applicable statutes and rules. The foreign bank may not accept new
22-66 business during the pendency of the hearing unless the commissioner
22-67 gives prior written approval, except that it shall comply with any
22-68 stricter requirements imposed by Section 7(e), International
22-69 Banking Act (12 U.S.C. Section 3105(e)).
23-1 (d) Information relating to the financial condition and
23-2 business affairs of the foreign bank, except previously published
23-3 statements and information, is confidential and may not be
23-4 considered in the public portion of the hearing or disclosed by the
23-5 commissioner or an employee of the department except as provided by
23-6 Subchapter D, Chapter 31.
23-7 (e) Based on the record, the commissioner shall issue or
23-8 refuse to issue the proposed order. An issued order may contain
23-9 modifications indicated by the record to be necessary or desirable,
23-10 including modifications to impose penalties available under Chapter
23-11 35 in lieu of license revocation.
23-12 Sec. 204.118. IMMEDIATE SUSPENSION OR REVOCATION. (a) If
23-13 the commissioner finds that any of the factors set forth in Section
23-14 204.116 are true with respect to a foreign bank licensed to
23-15 maintain a Texas state branch or agency and that it is necessary
23-16 for the protection of the interests of creditors of the foreign
23-17 bank's business in this state or for the protection of the public
23-18 interest that the commissioner immediately suspend or revoke the
23-19 license of the foreign bank, the commissioner may issue, without
23-20 notice and hearing, an order suspending or revoking the license of
23-21 the foreign bank for a period of up to 90 days, pending
23-22 investigation or hearing under Section 204.117.
23-23 (b) An order issued under this section shall be served on
23-24 the foreign bank in the manner required by Section 204.117(a)(2).
23-25 Sec. 204.119. STATUS OF REVOKED LICENSE. Unless stayed by
23-26 the finance commission or district court that has jurisdiction over
23-27 an appeal, a final order of the commissioner revoking a license is
23-28 effective immediately and the foreign bank shall immediately cease
23-29 all activity in this state requiring a license. Subject to Section
23-30 204.120, all functions requiring a license must be immediately
23-31 transferred to a branch, affiliate, or agency of the foreign bank
23-32 that is located outside of this state and that has the power to
23-33 perform those functions under governing law. Continued activity in
23-34 this state of an unlicensed foreign bank is subject to Subchapter
23-35 C, Chapter 35.
23-36 Sec. 204.120. SEIZURE AND LIQUIDATION. (a) If the
23-37 commissioner finds that any of the factors set forth in Section
23-38 204.116 are true with respect to a foreign bank licensed to
23-39 establish and maintain a Texas state branch or agency, the
23-40 commissioner may by order immediately take possession of the
23-41 property and business of the foreign bank in this state if that
23-42 action is necessary or desirable for the protection of the
23-43 interests of the depositors and creditors of the foreign bank's
23-44 business in this state or for the protection of the public. The
23-45 commissioner shall retain possession until the foreign bank resumes
23-46 business in this state or is finally liquidated, except that the
23-47 commissioner may permit the foreign bank to resume business in this
23-48 state on conditions the commissioner requires. An order issued
23-49 under this section shall be served on the foreign bank in the
23-50 manner required by Section 204.117(a)(2).
23-51 (b) As soon as practicable after taking possession of the
23-52 property and business of a foreign bank pursuant to Subsection (a),
23-53 the commissioner shall initiate a receivership proceeding by filing
23-54 a copy of the order issued under this section in a district court
23-55 in Travis County to be governed by Chapter 36 as if the foreign
23-56 bank were a Texas state bank, except as otherwise provided by this
23-57 section. Notwithstanding the priorities established by Chapter 36,
23-58 the depositors and creditors of the Texas state branch or agency,
23-59 arising out of transactions with and recorded on the books of the
23-60 Texas state branch or agency, have an absolute preference and
23-61 priority over the creditors of the foreign bank's offices located
23-62 outside this state.
23-63 (c) An action initiated that seeks to directly or indirectly
23-64 affect the assets of the Texas state branch or agency is considered
23-65 to be an intervention in the receivership proceeding. Venue for an
23-66 action instituted to effect, contest, or otherwise intervene in the
23-67 liquidation of a Texas state branch or agency is in Travis County,
23-68 except that on motion filed and served concurrently with or before
23-69 the filing of the answer, the court may, on a finding of good
24-1 cause, transfer the action to the county of the Texas state branch
24-2 or agency location.
24-3 (d) The foreign bank may contest the commissioner's actions
24-4 as provided by this subsection. On or before the 10th day after
24-5 the date the commissioner has taken possession of the property and
24-6 business of a foreign bank pursuant to Subsection (a), the foreign
24-7 bank, acting through a majority of its directors, may intervene in
24-8 the action filed by the banking commissioner to challenge the
24-9 commissioner's closing of the foreign bank's Texas state branch or
24-10 agency and to enjoin the commissioner or other receiver from
24-11 liquidating its assets. The court may issue an ex parte order
24-12 restraining the commissioner or other receiver from liquidating the
24-13 foreign bank's assets pending a hearing on the injunction. The
24-14 commissioner or other receiver shall comply with the restraining
24-15 order but may petition the court for permission to liquidate an
24-16 asset as necessary to prevent its loss or diminution pending the
24-17 outcome of the injunction. The commissioner or other receiver may
24-18 not be required to post bond. The court shall hear this action as
24-19 quickly as possible and shall give it priority over other business.
24-20 The foreign bank or the commissioner or other receiver may appeal
24-21 the court's judgment as in other civil cases, except that the
24-22 commissioner or other receiver shall retain all seized foreign bank
24-23 assets pending a final appellate court order even if the
24-24 commissioner does not prevail in the trial court. If the
24-25 commissioner prevails in the trial court, liquidation of the state
24-26 trust company may proceed unless the trial court or appellate court
24-27 orders otherwise. If liquidation is enjoined or stayed pending
24-28 appeal, the trial court retains jurisdiction to permit liquidation
24-29 of an asset as necessary to prevent its loss or diminution pending
24-30 the outcome of the appeal.
24-31 (e) After the commissioner or other receiver has completed
24-32 the liquidation of the property and business of a foreign bank, the
24-33 commissioner or other receiver shall transfer any remaining assets
24-34 to the foreign bank in accordance with the court's orders, except
24-35 that:
24-36 (1) if the foreign bank has an office in another state
24-37 of the United States that is in liquidation and the assets of the
24-38 office appear to be insufficient to pay in full the creditors of
24-39 that office, the court shall order the commissioner or other
24-40 receiver to transfer to the liquidator of that office the amount of
24-41 the remaining assets that appears to be necessary to cover the
24-42 insufficiency; or
24-43 (2) if the foreign bank has two or more such offices
24-44 in liquidation and the amount of remaining assets is less than the
24-45 aggregate amount of insufficiencies with respect to the offices,
24-46 the court shall order the commissioner or other receiver to
24-47 distribute the remaining assets among the liquidators of the
24-48 offices in the manner the court finds equitable.
24-49 Sec. 204.121. DISSOLUTION. (a) If a foreign bank licensed
24-50 to maintain a Texas state branch or agency in this state is
24-51 dissolved, has its authority or existence terminated or canceled in
24-52 the jurisdiction of its incorporation, or has its authority to
24-53 maintain a branch or agency in this state terminated by the Board
24-54 of Governors of the Federal Reserve System under Section 7(e),
24-55 International Banking Act (12 U.S.C. Section 3105(e)), an officer,
24-56 manager, or agent of the foreign bank shall deliver to the
24-57 commissioner:
24-58 (1) a certified copy of:
24-59 (A) a certificate of the official responsible
24-60 for records of banking corporations of the foreign bank's
24-61 jurisdiction of incorporation attesting to the occurrence of
24-62 dissolution or of termination or cancellation of authority or
24-63 existence;
24-64 (B) an order or decree of a court directing the
24-65 dissolution of the foreign bank or the termination or cancellation
24-66 of its authority or existence; or
24-67 (C) an order of the Board of Governors of the
24-68 Federal Reserve System terminating its authority under Section
24-69 7(e), International Banking Act (12 U.S.C. Section 3105(e)); and
25-1 (2) the documents and information required by Section
25-2 204.115(c).
25-3 (b) The filing of the certificate, order, or decree has the
25-4 same effect provided by Section 204.119 as if the license issued
25-5 under this subchapter were revoked by the commissioner as of the
25-6 effective date of termination or cancellation specified in the
25-7 certificate, order, or decree unless the commissioner orders an
25-8 earlier effective date, subject to the procedural protections of
25-9 Section 204.117 or 204.118.
25-10 (Sections 204.122-204.200 reserved for expansion
25-11 SUBCHAPTER C. REPRESENTATIVE OFFICES OF FOREIGN BANK
25-12 Sec. 204.201. REGISTRATION OF REPRESENTATIVE OFFICE. (a) A
25-13 foreign bank may establish a Texas representative office if the
25-14 foreign bank files with the commissioner a verified statement of
25-15 registration. A statement of registration must:
25-16 (1) be accompanied by all registration fees and
25-17 deposits required by rule;
25-18 (2) be in the form specified by the commissioner;
25-19 (3) be subscribed and acknowledged by an officer of
25-20 the foreign bank;
25-21 (4) contain as an exhibit or attachment:
25-22 (A) a copy of the foreign bank's notice or
25-23 application submitted to the Board of Governors of the Federal
25-24 Reserve System under Section 10, International Banking Act (12
25-25 U.S.C. Section 3107), and, when issued, the order or notification
25-26 from the board of governors indicating that the representative
25-27 office has been approved;
25-28 (B) an authenticated copy of the foreign bank's
25-29 articles of incorporation and bylaws or other constitutive
25-30 documents and, if the copy is in a language other than English, an
25-31 English translation of the document, under the oath of the
25-32 translator; and
25-33 (C) evidence of compliance with Section 201.102;
25-34 (5) be submitted when the federal notice or
25-35 application is submitted to the board of governors; and
25-36 (6) directly or in exhibits or attachments contain:
25-37 (A) the name of the foreign bank;
25-38 (B) the street address and post office address
25-39 where each Texas representative office is to be located in this
25-40 state;
25-41 (C) the name and qualifications of each officer
25-42 and director of the foreign bank who will have charge of any aspect
25-43 of the business and affairs of the Texas representative office;
25-44 (D) a complete and detailed statement of the
25-45 financial condition of the foreign bank as of a date not more than
25-46 360 days before the date of the filing; and
25-47 (E) other information the commissioner requires.
25-48 (b) The finance commission may adopt rules prescribing
25-49 abbreviated registration procedures and standards for foreign banks
25-50 that have already established an initial Texas representative
25-51 office to establish additional Texas representative offices.
25-52 (c) A foreign bank that maintains a Texas state or federal
25-53 branch or agency in this state is not prohibited from establishing
25-54 or maintaining one or more Texas representative offices.
25-55 Sec. 204.202. PLACE OF BUSINESS. A Texas representative
25-56 office may engage in the business authorized by this subchapter at
25-57 each place of business registered with the commissioner. A Texas
25-58 representative office may change its location in this state by
25-59 filing a notice with the commissioner containing the street address
25-60 and post office address of the new location.
25-61 Sec. 204.203. PERMISSIBLE ACTIVITIES OF REPRESENTATIVE
25-62 OFFICE. (a) A registered Texas representative office of a foreign
25-63 bank may:
25-64 (1) solicit loans and in connection with a loan:
25-65 (A) assemble credit information about the
25-66 borrower;
25-67 (B) inspect and appraise property;
25-68 (C) obtain property title information; and
25-69 (D) prepare a loan application;
26-1 (2) solicit purchasers for loans from the foreign
26-2 bank;
26-3 (3) solicit persons to contract for servicing the
26-4 foreign bank loans;
26-5 (4) conduct research;
26-6 (5) perform services as liaison for customers and
26-7 correspondents of the foreign bank;
26-8 (6) execute loan documents relating to permitted loans
26-9 with the written approval of the foreign bank;
26-10 (7) perform back office administrative functions as
26-11 may be more specifically defined by rule; and
26-12 (8) engage in other activities approved by the
26-13 commissioner or permitted by rule.
26-14 (b) A representative office may not solicit or accept credit
26-15 balances or deposits or make final credit decisions.
26-16 (c) A Texas representative office that is or becomes a
26-17 regional administrative office of the foreign bank, as may be
26-18 defined more fully by rule, may engage in credit approval
26-19 activities if:
26-20 (1) the foreign bank gives prior written notice to the
26-21 commissioner not later than the 30th day before the date the Texas
26-22 representative office engages in credit approval activities; and
26-23 (2) the commissioner does not object within the 30-day
26-24 period to the conduct of the activities by the Texas representative
26-25 office.
26-26 (d) Written notice under Subsection (c) must be in a form
26-27 and contain the information the commissioner requires.
26-28 Sec. 204.204. ENFORCEMENT. The commissioner may initiate an
26-29 enforcement action under Chapter 35 or a proceeding to revoke the
26-30 registration of a representative office if the commissioner by
26-31 examination or other credible evidence finds that the foreign bank:
26-32 (1) has refused to permit the commissioner to examine
26-33 the books, papers, accounts, records, or affairs of a Texas
26-34 representative office in accordance with Sections 204.002 and
26-35 204.003;
26-36 (2) has violated this subtitle, another law or rule
26-37 applicable to a foreign bank or a Texas representative office, or a
26-38 final and enforceable order of the commissioner or the finance
26-39 commission;
26-40 (3) has misrepresented or concealed a material fact in
26-41 the original registration;
26-42 (4) has violated a condition of an agreement between
26-43 the foreign bank and the commissioner, a bank supervisory agency,
26-44 or another state regulatory agency; or
26-45 (5) conducts business in an unsafe and unsound manner.
26-46 Sec. 204.205. PROCEDURE FOR REVOCATION. (a) Notice of a
26-47 revocation proceeding must:
26-48 (1) be in the form of a proposed order;
26-49 (2) be served on the foreign bank by personal delivery
26-50 or registered or certified mail, return receipt requested, to a
26-51 director, officer, or employee of the foreign bank at a Texas
26-52 representative office location, or to the registered agent of the
26-53 foreign bank;
26-54 (3) state the effective date of the proposed order,
26-55 which may not be before the 21st day after the date the proposed
26-56 order is mailed or delivered; and
26-57 (4) state the grounds for the proposed revocation with
26-58 reasonable certainty.
26-59 (b) Unless the foreign bank requests a hearing in writing on
26-60 or before the effective date of the proposed order, the order takes
26-61 effect as proposed and is final and nonappealable.
26-62 (c) A hearing requested on a proposed order shall be held
26-63 not later than the 30th day after the date the written request for
26-64 hearing is received by the commissioner unless the parties agree to
26-65 a later hearing date. The department shall participate as the
26-66 opposing party, and the commissioner shall conduct the hearing and
26-67 one or more prehearing conferences and opportunities for discovery
26-68 as the commissioner considers advisable and consistent with
26-69 applicable statutes and rules. During the pendency of the hearing
27-1 and unless the commissioner gives prior written approval, the
27-2 foreign bank may not accept new business from this state.
27-3 (d) Information relating to the financial condition and
27-4 business affairs of the foreign bank, except previously published
27-5 statements and information, is confidential and may not be
27-6 considered in the public portion of the hearing or disclosed by the
27-7 commissioner or an employee of the department except as provided by
27-8 Subchapter D, Chapter 31.
27-9 (e) Based on the record, the commissioner shall issue or
27-10 refuse to issue the proposed order. An issued order may contain
27-11 modifications indicated by the record to be necessary or desirable,
27-12 including modifications to impose penalties available under Chapter
27-13 35 in lieu of revocation of registration.
27-14 Sec. 204.206. EFFECT OF REVOKED REGISTRATION. A foreign
27-15 bank that has had its registration under this subchapter revoked
27-16 shall cease all activities in this state. Continued activity in
27-17 this state of an unregistered foreign bank is subject to Subchapter
27-18 C, Chapter 35.
27-19 Sec. 204.207. DISSOLUTION. (a) If a foreign bank with a
27-20 registered Texas representative office is dissolved, has its
27-21 authority or existence terminated or canceled in the jurisdiction
27-22 of its incorporation, or has its authority to maintain its Texas
27-23 representative office terminated by the Board of Governors of the
27-24 Federal Reserve System under Section 10(b), International Banking
27-25 Act (12 U.S.C. Section 3107(b)), an officer, manager, or agent of
27-26 the foreign bank shall deliver to the commissioner a certified copy
27-27 of:
27-28 (1) a certificate of the official responsible for
27-29 records of banking corporations of the foreign bank's jurisdiction
27-30 of incorporation attesting to the occurrence of dissolution or of
27-31 termination or cancellation of authority or existence;
27-32 (2) an order or decree of a court directing the
27-33 dissolution of the foreign bank or the termination or cancellation
27-34 of its authority or existence; or
27-35 (3) an order of the Board of Governors of the Federal
27-36 Reserve System terminating its authority under Section 10(b),
27-37 International Banking Act (12 U.S.C. Section 3107(b)).
27-38 (b) The filing of the certificate, order, or decree has the
27-39 same effect under Section 204.206 as if the registration made under
27-40 this subchapter were revoked by the commissioner.
27-41 ARTICLE 2. CONFORMING AMENDMENTS TO FINANCE CODE
27-42 SECTION 2.001. Section 12.110(a), Finance Code, is amended
27-43 to read as follows:
27-44 (a) The banking commissioner or an officer or employee of
27-45 the department commits an offense if the person knowingly:
27-46 (1) discloses information or permits access to a file
27-47 or record of the department in violation of Subchapter D, Chapter
27-48 31;
27-49 (2) becomes directly or indirectly indebted to, or
27-50 financially interested in, an entity supervised or regulated by the
27-51 banking commissioner [a state bank, foreign bank agency, or trust
27-52 company]; or
27-53 (3) purchases an asset owned by an entity supervised
27-54 or regulated by the banking commissioner [a state bank or trust
27-55 company] in the possession of the banking commissioner or other
27-56 receiver for purposes of liquidation.
27-57 SECTION 2.002. Sections 31.002(a)(2), (8), (50), and (52),
27-58 Finance Code, are amended to read as follows:
27-59 (2) "Bank" means a state or national bank. If the
27-60 context requires, the term includes a bank as defined by Section
27-61 201.002(a)(4) that is organized under the laws of another state or
27-62 country.
27-63 (8) "Branch" means a location of a bank, other than
27-64 the bank's home office, at which the bank engages in the business
27-65 of banking. The term does not include:
27-66 (A) a drive-in facility located not more than
27-67 2,000 feet from the nearest wall of the home office or an approved
27-68 branch office of the bank;
27-69 (B) a night depository;
28-1 (C) an electronic terminal subject to Section
28-2 59.201;
28-3 (D) a loan production office subject to Section
28-4 32.204;
28-5 (E) a state or federally licensed armored car
28-6 service or other courier service transporting items for deposit or
28-7 payment, unless:
28-8 (i) the risk of loss of items in the
28-9 custody of the service is borne by the employing bank; or
28-10 (ii) the items in the custody of the
28-11 service are considered to be in customer accounts at the employing
28-12 bank or federally insured through the employing bank;
28-13 (F) a bank acting as an agent for another [a]
28-14 depository institution [affiliate] as provided by Section
28-15 59.005(a); or
28-16 (G) other offices as determined by rule.
28-17 (50) "State bank" means a banking association or
28-18 limited banking association organized or reorganized under this
28-19 subtitle, including an association organized under the laws of this
28-20 state before September 1, 1995, with the express power to receive
28-21 and accept deposits and possessing other rights and powers granted
28-22 by this subtitle expressly or by implication. The term does not
28-23 include a savings association, savings bank, or credit union. If
28-24 the context requires, the term includes a bank as defined by
28-25 Section 201.002(a)(4) that is organized under the laws of another
28-26 state or country.
28-27 (52) "State savings bank" means a savings bank
28-28 organized under or subject to Subtitle C. If the context requires,
28-29 the term includes a savings bank organized under the laws of
28-30 another state.
28-31 SECTION 2.003. Section 31.005(b), Finance Code, is amended
28-32 to read as follows:
28-33 (b) Subsection (a) does not apply to[:]
28-34 [(1)] a depository institution or other [authorized to
28-35 conduct business in this state;]
28-36 [(2) a foreign bank agency;]
28-37 [(3) a loan production office or representative office
28-38 of a foreign bank corporation or an out-of-state bank established
28-39 in compliance with this subtitle; or]
28-40 [(4) another] entity organized under the laws of this
28-41 state, another state, the United States, or a foreign sovereign
28-42 state to the extent that the depository institution or other entity
28-43 is:
28-44 (1) [(A) the entity is] authorized under its charter
28-45 or the laws of this state or the United States to use a term, word,
28-46 character, ideogram, phonogram, or phrase prohibited by Subsection
28-47 (a); and
28-48 (2) [(B) the entity is] authorized by the laws of this
28-49 state or the United States to conduct the activities in which it
28-50 [the entity] is engaged in this state.
28-51 SECTION 2.004. Section 31.007(a), Finance Code, is amended
28-52 to read as follows:
28-53 (a) An officer, director, manager, managing participant, or
28-54 employee of a bank that has its main office or a branch located in
28-55 this state with fewer than 500 shareholders or participants or of a
28-56 bank holding company with fewer than 500 shareholders or
28-57 participants that controls a bank that has its main office or a
28-58 branch located in this state is exempt from the registration and
28-59 licensing provisions of The Securities Act (Article 581-1 et seq.,
28-60 Vernon's Texas Civil Statutes) with respect to that person's
28-61 participation in a transaction, including a sale, involving
28-62 securities issued by:
28-63 (1) the bank or bank holding company of which that
28-64 person is an officer, director, manager, managing participant, or
28-65 employee;
28-66 (2) a bank holding company that controls the bank of
28-67 which that person is an officer, director, manager, managing
28-68 participant, or employee; or
28-69 (3) a bank controlled by the bank holding company of
29-1 which that person is an officer, director, manager, managing
29-2 participant, or employee.
29-3 SECTION 2.005. Sections 31.102 and 31.103, Finance Code, are
29-4 amended to read as follows:
29-5 Sec. 31.102. ISSUANCE OF INTERPRETIVE STATEMENTS. (a) The
29-6 banking commissioner[:]
29-7 [(1)] may issue interpretive statements containing
29-8 matters of general policy to guide the public and state banks,
29-9 and[;]
29-10 [(2) shall file the statements for publication in the
29-11 Texas Register; and]
29-12 [(3)] may amend or repeal a published interpretive
29-13 statement by issuing an amended statement or notice of repeal of a
29-14 statement [and filing the statement or notice for publication in
29-15 the Texas Register].
29-16 (b) An interpretive statement may be disseminated by
29-17 newsletter, via an electronic medium such as the internet, in a
29-18 volume of statutes or related materials published by the banking
29-19 commissioner or others, or by other means reasonably calculated to
29-20 notify persons affected by the interpretive statement. Notice of
29-21 an amended or withdrawn statement must be disseminated in a
29-22 substantially similar manner as the affected statement was
29-23 originally disseminated [The secretary of state shall publish a
29-24 filed statement or notice in the Texas Register and a designated
29-25 chapter of the Texas Administrative Code].
29-26 Sec. 31.103. ISSUANCE OF OPINION. (a) In response to a
29-27 specific request from a member of the public or the banking
29-28 industry, the banking commissioner may issue an opinion directly or
29-29 through the deputy banking commissioner or a department attorney.
29-30 (b) If the banking commissioner determines that the opinion
29-31 is useful for the general guidance of the public, state banks, or
29-32 trust companies, the commissioner may disseminate the opinion by
29-33 newsletter, via an electronic medium such as the internet, in a
29-34 volume of statutes or related materials published by the banking
29-35 commissioner or others, or by other means reasonably calculated to
29-36 notify persons affected by the opinion [file the opinion for
29-37 publication in the Texas Register]. A published opinion must be
29-38 redacted to preserve the confidentiality of the requesting party
29-39 unless the requesting party consents to be identified in the
29-40 published opinion.
29-41 (c) The banking commissioner may amend or repeal a published
29-42 opinion by issuing an amended opinion or notice of repeal of an
29-43 opinion and disseminating [filing] the opinion or notice in a
29-44 substantially similar manner as the affected statement or opinion
29-45 was originally disseminated [for publication in the Texas
29-46 Register]. The requesting party, however, may rely on the original
29-47 opinion if:
29-48 (1) all material facts were originally disclosed to
29-49 the banking commissioner;
29-50 (2) the safety and soundness of the affected bank will
29-51 not be affected by further reliance on the original opinion; and
29-52 (3) the text and interpretation of relevant, governing
29-53 provisions of this subtitle or Chapter 12 have not been changed by
29-54 legislative or judicial action.
29-55 [(d) The secretary of state shall publish the filed opinions
29-56 and notices in the Texas Register and a designated chapter of the
29-57 Texas Administrative Code.]
29-58 SECTION 2.006. Subchapter A, Chapter 32, Finance Code, is
29-59 amended by adding Section 32.010 to read as follows:
29-60 Sec. 32.010. ADDITIONAL POWERS. (a) Notwithstanding
29-61 another law, a Texas state bank may perform an act, own property,
29-62 or offer a product or service that is at the time permissible
29-63 within the United States for a depository institution organized
29-64 under federal law or the law of this state or another state, if the
29-65 banking commissioner approves the exercise of the power as provided
29-66 by this section, subject to the same limitations and restrictions
29-67 applicable to the other depository institution by pertinent law,
29-68 except to the extent the limitations and restrictions are modified
29-69 by rules adopted under Subsection (e). This section may not be
30-1 used by a Texas state bank to alter or negate the application of
30-2 the laws of this state with respect to:
30-3 (1) establishment and maintenance of a branch in this
30-4 state or another state or country;
30-5 (2) sale of insurance products and services in this
30-6 state;
30-7 (3) permissible interest rates and loan fees
30-8 chargeable in this state;
30-9 (4) fiduciary duties owed to a client or customer by
30-10 the bank in its capacity as fiduciary in this state;
30-11 (5) consumer protection laws applicable to
30-12 transactions in this state; or
30-13 (6) real estate development, marketing, and sales
30-14 activities in this state.
30-15 (b) A state bank that intends to exercise a power, directly
30-16 or through a subsidiary, granted by Subsection (a) that is not
30-17 otherwise authorized for state banks under the statutes of this
30-18 state shall submit a letter to the banking commissioner describing
30-19 in detail the power that the bank proposes to exercise and the
30-20 specific authority of another depository institution to exercise
30-21 the power. The bank shall attach copies, if available, of relevant
30-22 law, regulations, and interpretive letters. The bank may begin to
30-23 exercise the proposed power after the 30th day after the date the
30-24 banking commissioner receives the bank's letter unless the banking
30-25 commissioner specifies an earlier or later date or prohibits the
30-26 activity. The banking commissioner may prohibit the bank from
30-27 exercising the power only if the banking commissioner finds that:
30-28 (1) specific authority does not exist for another
30-29 depository institution to exercise the proposed power;
30-30 (2) if the state bank is insured by the Federal
30-31 Deposit Insurance Corporation, the state bank is prohibited from
30-32 exercising the power pursuant to Section 24, Federal Deposit
30-33 Insurance Act (12 U.S.C. Section 1831a), as amended, and 12 C.F.R.
30-34 Part 362; or
30-35 (3) the exercise of the power by the bank would
30-36 adversely affect the safety and soundness of the bank.
30-37 (c) The banking commissioner may extend the 30-day period
30-38 under Subsection (b) if the banking commissioner determines that
30-39 the bank's letter raises issues requiring additional information or
30-40 additional time for analysis. If the 30-day period is extended,
30-41 the bank may exercise the proposed power only on prior written
30-42 approval by the banking commissioner, except that the banking
30-43 commissioner must approve or prohibit the proposed power or convene
30-44 a hearing under Section 31.201 not later than the 60th day after
30-45 the date the banking commissioner receives the bank's letter. If a
30-46 hearing is convened, the banking commissioner must approve or
30-47 prohibit the proposed power not later than the 30th day after the
30-48 date the hearing is completed.
30-49 (d) A state bank that is denied the requested power by the
30-50 banking commissioner under this section may appeal as provided by
30-51 Sections 31.202, 31.203, and 31.204 or may resubmit a letter under
30-52 this section with additional information or authority relevant to
30-53 the banking commissioner's determination. A denial is immediately
30-54 final for purposes of appeal.
30-55 (e) To effectuate this section, the finance commission may
30-56 adopt rules implementing the method or manner in which a state bank
30-57 exercises specific powers granted under this section, including
30-58 rules regarding the exercise of a power that would be prohibited to
30-59 state banks under state law but for this section. The finance
30-60 commission may not adopt rules under this subsection unless it
30-61 considers the factors listed in Section 31.003(b) and finds that:
30-62 (1) the conditions for prohibition by the banking
30-63 commissioner under Subsection (b) do not exist; and
30-64 (2) if the rights and privileges would be prohibited
30-65 to state banks under other state law, the rules contain adequate
30-66 safeguards and controls, consistent with safety and soundness, to
30-67 address the concern of the legislature evidenced by the state law
30-68 the rules would affect.
30-69 (f) The exercise of a power by a state bank in compliance
31-1 with and in the manner authorized by this section is not a
31-2 violation of any statute of this state.
31-3 SECTION 2.007. Section 32.202(a), Chapter 32, Finance Code,
31-4 is amended to read as follows:
31-5 (a) Each state bank must have and continuously maintain in
31-6 this state a home office. The home office must be a location at
31-7 which the bank does business with the public and keeps its
31-8 corporate books and records. At least one officer of the bank must
31-9 maintain an office at the home office. In addition to the
31-10 registered agent for the bank, if one is maintained pursuant to
31-11 Section 201.103, [and] each officer at the home office is an agent
31-12 for service of process for the bank.
31-13 SECTION 2.008. Subchapter D, Chapter 32, Finance Code, is
31-14 amended by adding Section 32.304 to read as follows:
31-15 Sec. 32.304. LIMITATION ON CONTROL OF DEPOSITS. (a) A
31-16 merger is not permitted under this subchapter if, on consummation
31-17 of the transaction, the resulting state bank, including all insured
31-18 depository institution affiliates of the resulting state bank,
31-19 would control 20 percent or more of the total amount of deposits in
31-20 this state held by all insured depository institutions in this
31-21 state.
31-22 (b) On request of the banking commissioner the applicant
31-23 shall provide supplemental information to the banking commissioner
31-24 to aid in a determination under this section, including information
31-25 that is more current than or in addition to information in the most
31-26 recently available summary of deposits, reports of condition, or
31-27 similar reports filed with or produced by state or federal
31-28 authorities.
31-29 (c) In this section, "deposit" and "insured depository
31-30 institution" have the meanings assigned by Section 3, Federal
31-31 Deposit Insurance Act (12 U.S.C. Section 1813), as amended.
31-32 SECTION 2.009. Subchapter E, Chapter 32, Finance Code, is
31-33 amended by adding Section 32.406 to read as follows:
31-34 Sec. 32.406. LIMITATION ON CONTROL OF DEPOSITS. (a) A
31-35 purchase of assets is not permitted under Section 32.401 if, on
31-36 consummation of the transaction, the acquiring state bank,
31-37 including all insured depository institution affiliates of the
31-38 resulting state bank, would control 20 percent or more of the total
31-39 amount of deposits in this state held by all insured depository
31-40 institutions in this state.
31-41 (b) On request of the banking commissioner the applicant
31-42 shall provide supplemental information to the banking commissioner
31-43 to aid in a determination under this section, including information
31-44 that is more current than or in addition to information in the most
31-45 recently available summary of deposits, reports of condition, or
31-46 similar reports filed with or produced by state or federal
31-47 authorities.
31-48 (c) In this section, "deposit" and "insured depository
31-49 institution" have the meanings assigned by Section 3, Federal
31-50 Deposit Insurance Act (12 U.S.C. Section 1813), as amended.
31-51 SECTION 2.010. Subchapter F, Chapter 32, Finance Code, is
31-52 amended to read as follows:
31-53 SUBCHAPTER F. EXIT OF STATE BANK OR ENTRY OF ANOTHER
31-54 FINANCIAL INSTITUTION
31-55 Sec. 32.501. MERGER[, REORGANIZATION,] OR CONVERSION OF
31-56 STATE BANK INTO ANOTHER FINANCIAL INSTITUTION [NATIONAL BANK OR
31-57 SAVINGS BANK OR SAVINGS ASSOCIATION]. (a) Subject to Subtitle G,
31-58 a [A] state bank may act as necessary under and to the extent
31-59 permitted by the laws of the United States, [or] this state,
31-60 another state, or another country to merge[, reorganize,] or
31-61 convert into another financial institution, as that term is defined
31-62 by Section 201.101 [a national bank, state or federal savings bank,
31-63 or state or federal savings association].
31-64 (b) The merger[, reorganization,] or conversion by the state
31-65 bank must be made and approval of its board, shareholders, or
31-66 participants must be obtained in accordance with the Texas Business
31-67 Corporation Act as if the state bank were a domestic corporation
31-68 and all other parties to the transaction, if any, were foreign
31-69 corporations and other entities, except as provided by rule. For
32-1 purposes of this subsection, a conversion is considered a merger
32-2 into the successor form of financial institution.
32-3 (c) The state bank does not cease to be a state bank subject
32-4 to the supervision of the banking commissioner unless:
32-5 (1) the banking commissioner has been given written
32-6 notice of the intention to merge[, reorganize,] or convert before
32-7 the 31st day before the date of the proposed transaction;
32-8 (2) the bank has published notice of the transaction,
32-9 in the form and frequency specified by the banking commissioner,
32-10 in:
32-11 (A) a newspaper of general circulation published
32-12 in the county of its home office or, if such a newspaper is not
32-13 published in the county, in an adjacent county; and
32-14 (B) other locations that the banking
32-15 commissioner considers appropriate;
32-16 (3) the bank has filed with the banking commissioner:
32-17 (A) a copy of the application filed with the
32-18 successor regulatory authority, including a copy of each contract
32-19 evidencing or implementing the merger[, reorganization,] or
32-20 conversion, or other documents sufficient to show compliance with
32-21 applicable law;
32-22 (B) a certified copy of all minutes of board
32-23 meetings and shareholder or participant meetings at which action
32-24 was taken regarding the merger[, reorganization,] or conversion;
32-25 and
32-26 (C) a publisher's certificate showing
32-27 publication of the required notice;
32-28 (4) the banking commissioner determines that:
32-29 (A) all deposit and other liabilities of the
32-30 state bank are fully discharged, assumed, or otherwise retained by
32-31 the successor form of financial institution;
32-32 (B) any conditions imposed by the banking
32-33 commissioner for the protection of depositors and creditors have
32-34 been met or otherwise resolved; and
32-35 (C) any required filing fees have been paid; and
32-36 (5) the bank has received a certificate of authority
32-37 to do business as the successor financial institution [a national
32-38 bank, state or federal savings bank, or state or federal savings
32-39 association].
32-40 (d) Section 32.304 applies to a proposed merger under this
32-41 section.
32-42 Sec. 32.502. CONVERSION OF FINANCIAL INSTITUTION INTO STATE
32-43 BANK. (a) A financial institution, as that term is defined by
32-44 Section 201.101, may apply to the banking commissioner for
32-45 conversion into a state bank on a form prescribed by the banking
32-46 commissioner and accompanied by any required fee if the institution
32-47 follows the procedures prescribed by the laws of the United States,
32-48 [or] this state, another state, or another country governing the
32-49 exit of the financial institution for the purpose of conversion
32-50 into a state bank from the regulatory system applicable before the
32-51 conversion. A banking association or limited banking association
32-52 may convert its organizational form under this section.
32-53 (b) A financial [An] institution applying to convert into a
32-54 state bank may receive a certificate of authority to do business as
32-55 a state bank if the banking commissioner finds that:
32-56 (1) the financial institution is not engaging in a
32-57 pattern or practice of unsafe and unsound banking practices;
32-58 (2) the financial institution has adequate
32-59 capitalization for a state bank to engage in business at the same
32-60 locations as the financial institution is engaged in business
32-61 before the conversion;
32-62 (3) the financial institution can be expected to
32-63 operate profitably after the conversion;
32-64 (4) the officers, directors, managers, and managing
32-65 participants of the financial institution as a group have
32-66 sufficient banking experience, ability, standing, competence,
32-67 trustworthiness, and integrity to justify a belief that the
32-68 financial institution will operate as a state bank in compliance
32-69 with law; [and]
33-1 (5) each principal shareholder or participant has
33-2 sufficient experience, ability, standing, competence,
33-3 trustworthiness, and integrity to justify a belief that the
33-4 financial institution will be free from improper or unlawful
33-5 influence or interference with respect to the financial
33-6 institution's operation as a state bank in compliance with law; and
33-7 (6) if the converting financial institution did not
33-8 have general depository powers and the state bank will have those
33-9 powers, the factors set forth in Section 32.003(b) are satisfied.
33-10 (c) The banking commissioner may:
33-11 (1) request additional information considered
33-12 necessary to an informed decision under this section;
33-13 (2) perform an examination of the converting financial
33-14 institution at the expense of the converting financial institution;
33-15 and
33-16 (3) require that examination fees be paid before a
33-17 certificate of authority is issued.
33-18 (d) In connection with the application, the converting
33-19 financial institution must:
33-20 (1) submit a statement of the law governing the exit
33-21 of the financial institution from the regulatory system applicable
33-22 before the conversion and the terms of the transition into a state
33-23 bank; and
33-24 (2) demonstrate that all applicable law has been fully
33-25 satisfied.
33-26 SECTION 2.011. Section 33.005, Finance Code, is amended to
33-27 read as follows:
33-28 Sec. 33.005. EXEMPTIONS. The following acquisitions are
33-29 exempt from Section 33.001:
33-30 (1) an acquisition of securities in connection with
33-31 the exercise of a security interest or otherwise in full or partial
33-32 satisfaction of a debt previously contracted for in good faith and
33-33 the acquiring person files written notice of acquisition with the
33-34 banking commissioner before the person votes the securities
33-35 acquired;
33-36 (2) an acquisition of voting securities in any class
33-37 or series by a controlling person who has previously complied with
33-38 and received approval under this subchapter or who was identified
33-39 as a controlling person in a prior application filed with and
33-40 approved by the banking commissioner;
33-41 (3) an acquisition or transfer by operation of law,
33-42 will, or intestate succession and the acquiring person files
33-43 written notice of acquisition with the banking commissioner before
33-44 the person votes the securities acquired;
33-45 (4) a transaction subject to Chapter 202 [38]; and
33-46 (5) a transaction exempted by the banking commissioner
33-47 or by rules adopted under this subtitle because the transaction is
33-48 not within the purposes of this subchapter or the regulation of the
33-49 transaction is not necessary or appropriate to achieve the
33-50 objectives of this subchapter.
33-51 SECTION 2.0115. Section 33.103, Finance Code, is amended by
33-52 adding Subsection (f) to read as follows:
33-53 (f) The banking commissioner in the exercise of discretion
33-54 may waive or reduce the residency requirements for directors set
33-55 forth in Subsection (a).
33-56 SECTION 2.012. Section 34.301, Finance Code, is amended by
33-57 adding Subsection (c) to read as follows:
33-58 (c) To the extent provided by Section 4.102(c), Business &
33-59 Commerce Code, the laws of this state govern a deposit contract
33-60 between a bank and a consumer account holder if the branch or
33-61 separate office of the bank that accepts the deposit contract is
33-62 located in this state.
33-63 SECTION 2.013. Section 35.003(a), Finance Code, is amended
33-64 to read as follows:
33-65 (a) The banking commissioner has grounds to remove a present
33-66 or former officer, director, manager, managing participant, or
33-67 employee of a state bank from office or employment in, or prohibit
33-68 a controlling shareholder or participant or other person
33-69 participating in the affairs of a state bank from further
34-1 participation in the affairs of, a state bank[, trust company, or
34-2 other entity chartered or licensed by the banking commissioner
34-3 under the laws of this state] if the banking commissioner
34-4 determines from examination or other credible evidence that:
34-5 (1) the person:
34-6 (A) intentionally committed or participated in
34-7 commission of an act described by Section 35.002(a) with regard to
34-8 the affairs of the bank; or
34-9 (B) violated a final cease and desist order
34-10 issued in response to the same or a similar act;
34-11 (2) because of this action by the person:
34-12 (A) the bank has suffered or will probably
34-13 suffer financial loss or other damage;
34-14 (B) the interests of the bank's depositors have
34-15 been or could be prejudiced; or
34-16 (C) the person has received financial gain or
34-17 other benefit by reason of the action; and
34-18 (3) the action:
34-19 (A) involves personal dishonesty on the part of
34-20 the person; or
34-21 (B) demonstrates wilful or continuing disregard
34-22 for the safety or soundness of the bank.
34-23 SECTION 2.014. Section 35.007(a), Finance Code, is amended
34-24 to read as follows:
34-25 (a) Without the prior written approval of the banking
34-26 commissioner, a person subject to a final and enforceable removal
34-27 or prohibition order issued by the banking commissioner may not:
34-28 (1) serve as a director, officer, or employee of a
34-29 state bank, trust company, or other entity chartered or licensed by
34-30 the banking commissioner under the laws of this state, including an
34-31 interstate branch, trust office, or representative office in this
34-32 state of an out-of-state state bank, trust company, or foreign
34-33 bank;
34-34 (2) directly or indirectly participate in any manner
34-35 in the management of such an entity;
34-36 (3) directly or indirectly vote for a director of such
34-37 an entity; or
34-38 (4) solicit, procure, transfer, attempt to transfer,
34-39 vote, or attempt to vote a proxy, consent, or authorization with
34-40 respect to voting rights in such an entity.
34-41 SECTION 2.015. Section 35.201, Finance Code, is amended to
34-42 read as follows:
34-43 Sec. 35.201. INAPPLICABILITY. This subchapter does not
34-44 apply to a financial institution, as that term is defined by
34-45 Section 201.101, that lawfully maintains its main office or a
34-46 branch in this state [state or national bank, a state or federal
34-47 savings bank, a state or federal savings association, or a state or
34-48 federal credit union].
34-49 SECTION 2.016. Subchapter A, Chapter 59, Finance Code, is
34-50 amended to read as follows:
34-51 SUBCHAPTER A. GENERAL PROVISIONS
34-52 Sec. 59.001. DEFINITIONS. In this subchapter:
34-53 (1) "Civil action" means a civil proceeding pending in
34-54 a tribunal. The term does not include an examination or
34-55 enforcement proceeding initiated by:
34-56 (A) a governmental agency with primary
34-57 regulatory jurisdiction over a financial institution in possession
34-58 of a compliance review document;
34-59 (B) the Federal Deposit Insurance
34-60 Corporation or its successor; or
34-61 (C) the board of governors of the Federal
34-62 Reserve System or its successor.
34-63 (2) "Claim against a customer" means a writ of
34-64 attachment, writ of garnishment, notice of freeze, notice of levy,
34-65 notice of child support lien, notice of seizure, notice of
34-66 receivership, restraining order, injunction or other instrument
34-67 served on or delivered to a financial institution and purporting to
34-68 assert, establish, or perfect any interest in or claim against an
34-69 account, extension of credit, or product of the financial
35-1 institution held or established by the financial institution in the
35-2 name of the customer or for the benefit of the customer, or in the
35-3 name of the financial institution as the fiduciary, agent, or
35-4 custodian or in another representative capacity for the customer.
35-5 The term does not include citation or other process in a civil suit
35-6 in which the financial institution is made a defendant and against
35-7 which claims for affirmative relief are asserted, even though the
35-8 subject matter of the suit is an account, extension of credit, or
35-9 product of the financial institution held or established by the
35-10 financial institution in the name of a customer or in the name of
35-11 the financial institution as the fiduciary, agent, or custodian or
35-12 in another representative capacity for the customer.
35-13 (3) "Compliance review document" means a document
35-14 prepared by or for a compliance review committee acting pursuant to
35-15 Section 59.009.
35-16 (4) "Customer" means a person who uses, purchases, or
35-17 obtains an account, extension of credit, or product of a financial
35-18 institution or for whom a financial institution acts as a
35-19 fiduciary, agent, or custodian or in another representative
35-20 capacity.
35-21 (5) "Financial institution" has the meaning assigned
35-22 by Section 201.101, except that the term does not include a
35-23 financial institution organized under the laws of another state or
35-24 organized under federal law with its main office in another state
35-25 that does not maintain a branch or other office in this state.
35-26 (6) "Out-of-state financial institution" means a
35-27 financial institution, organized under the laws of another state or
35-28 organized under federal law with its main office in another state,
35-29 that has a branch or other office in this state.
35-30 (7) "Record" means financial or other information of a
35-31 customer maintained by a financial institution.
35-32 (8) "Record request" means a valid and enforceable
35-33 subpoena, request for production, or other instrument issued under
35-34 authority of a tribunal that compels production of a customer
35-35 record.
35-36 (9) "Texas financial institution" means a financial
35-37 institution organized under the laws of this state or organized
35-38 under federal law with its main office in this state.
35-39 (10) "Tribunal" means a court or other adjudicatory
35-40 tribunal with jurisdiction to issue a request for records,
35-41 including a government agency exercising adjudicatory functions and
35-42 an alternative dispute resolution mechanism, voluntary or required,
35-43 under which a party may compel the production of records. [OFFICE
35-44 OF OUT-OF-STATE BANK. (a) A bank that is not domiciled or
35-45 primarily located in this state may establish one or more offices
35-46 in this state for any lawful purpose. Before transacting business
35-47 in this state, the bank shall file with the secretary of state:]
35-48 [(1) an executed instrument, by its terms of
35-49 indefinite duration and irrevocable, appointing the secretary of
35-50 state as its agent for service of process on whom a notice or
35-51 process issued by a court in this state may be served in an action
35-52 or proceeding relating to the business of the bank in this state;
35-53 and]
35-54 [(2) a written certificate of designation specifying
35-55 the name and address of the officer, agent, or other person to whom
35-56 the notice or process should be forwarded by the secretary of
35-57 state.]
35-58 [(b) A bank may change a certificate of designation under
35-59 Subsection (a)(2) by filing an amended certificate of designation.]
35-60 [(c) The secretary of state shall collect the following
35-61 fees:]
35-62 [(1) $100 for indexing and filing the initial
35-63 certificate of designation and accompanying instruments required to
35-64 be filed by Subsection (a); and]
35-65 [(2) $15 for filing an amended certificate of
35-66 designation.]
35-67 [(d) On receipt of a notice or process, the secretary of
35-68 state shall promptly forward it by registered or certified mail,
35-69 return receipt requested, to the designated person. Failure of the
36-1 bank to maintain a designated person does not affect the validity
36-2 of service mailed to the most recently designated person at the
36-3 most recently designated address. Service of notice or process on
36-4 the secretary of state as agent for a bank described in this
36-5 section has the same effect as personal service made in this state
36-6 on a depository institution.]
36-7 [(e) A bank that complies with this section is not
36-8 transacting business in this state for purposes of Part Eight,
36-9 Texas Business Corporation Act.]
36-10 [(f) A bank described by Subsection (a) may not use any form
36-11 of advertising, including a sign or printed or broadcast material,
36-12 that implies or tends to imply that the bank is engaged in banking
36-13 business that the bank is not legally authorized to transact.]
36-14 Sec. 59.002. SLANDER OR LIBEL OF BANK. (a) A person
36-15 commits an offense if the person:
36-16 (1) knowingly makes, circulates, or transmits to
36-17 another person an untrue statement that is derogatory to the
36-18 financial condition of a bank located in this state; or
36-19 (2) with intent to injure a bank located in this
36-20 state, counsels, aids, procures, or induces another person to
36-21 knowingly make, circulate, or transmit to another person an untrue
36-22 statement that is derogatory to the financial condition of any bank
36-23 located in this state.
36-24 (b) An offense under this section is a state jail felony.
36-25 Sec. 59.003. AUTHORITY OF NOTARY PUBLIC. A notary public is
36-26 not disqualified from taking an acknowledgment or proof of a
36-27 written instrument as provided by Section 406.016, Government Code,
36-28 solely because of the person's ownership of stock or a
36-29 participation interest in or employment by a financial institution
36-30 [bank] that is an interested party to the underlying transaction.
36-31 Sec. 59.004. SUCCESSION OF TRUST POWERS. (a) If, at the
36-32 time of a merger, reorganization, conversion, [or] sale of
36-33 substantially all of its assets under Chapter 32 or other
36-34 applicable law, or sale of substantially all of its trust accounts
36-35 and related activities at a separate branch or other office, a
36-36 reorganizing or selling financial institution is acting as trustee,
36-37 guardian, executor, or administrator, or in another fiduciary
36-38 capacity, a [the] successor or purchasing financial institution
36-39 with sufficient fiduciary authority may [entity with fiduciary
36-40 powers may, without the necessity of judicial action or action by
36-41 the creator of the trust,] continue the office, trust, or fiduciary
36-42 relationship:
36-43 (1) without the necessity of judicial action or action
36-44 by the creator of the office, trust, or fiduciary relationship; and
36-45 (2) without regard to whether the successor or
36-46 purchasing financial institution meets qualification requirements
36-47 specified in an instrument creating the office, trust, or fiduciary
36-48 relationship other than a requirement related to geographic locale
36-49 of account administration, including requirements as to
36-50 jurisdiction of incorporation, location of principal office, or
36-51 type of financial institution.
36-52 (b) The successor or purchasing financial institution
36-53 [entity] may perform all the duties and exercise all the powers
36-54 connected with or incidental to the fiduciary relationship in the
36-55 same manner as if the successor or purchasing financial institution
36-56 [entity] had been originally designated as the fiduciary.
36-57 Sec. 59.005. AGENCY ACTIVITIES. (a) A state bank may, on
36-58 compliance with this section, agree to receive deposits, renew time
36-59 deposits, close loans, service loans, receive payments on loans and
36-60 other obligations, and perform other services, with the prior
36-61 approval of the banking commissioner, as an agent for another
36-62 financial institution.
36-63 (b) A state bank that proposes to enter into an agency
36-64 agreement under this section shall file a letter with the banking
36-65 commissioner, not later than 30 days before the effective date of
36-66 the agreement, setting forth:
36-67 (1) a notice of intention to enter into an agency
36-68 agreement with a financial institution;
36-69 (2) a description of the services proposed to be
37-1 performed under the agency agreement;
37-2 (3) a copy of the agency agreement; and
37-3 (4) other information the banking commissioner
37-4 requests.
37-5 (c) If a proposed service is not specifically designated in
37-6 Subsection (a) and has not previously been approved by rule or in
37-7 an opinion or interpretation issued by the banking commissioner,
37-8 the banking commissioner shall decide whether to approve the
37-9 offering of the service on or before the 30th day after the date of
37-10 receipt of the notice required by Subsection (b). In deciding
37-11 whether to approve a proposed service that is not specifically
37-12 designated by Subsection (a) or in a rule or prior opinion or
37-13 interpretation, the banking commissioner shall consider whether the
37-14 service would be consistent with applicable federal and state law
37-15 and the safety and soundness of the principal and agent.
37-16 (d) A proposed service subject to Subsection (c) is
37-17 considered approved if the banking commissioner does not take
37-18 action on the notice required by Subsection (b) within the time
37-19 limits specified by Subsection (c). The banking commissioner may
37-20 extend the 30-day period on a determination that the bank's letter
37-21 raises issues that require additional information or additional
37-22 time for analysis. If the period is extended, the bank may engage
37-23 in the proposed service only on prior written approval of the
37-24 banking commissioner.
37-25 (e) A state bank may not under an agency agreement:
37-26 (1) conduct an activity as agent that it would be
37-27 prohibited from conducting as a principal under applicable state or
37-28 federal law; or
37-29 (2) have an agent conduct an activity that the bank as
37-30 principal would be prohibited from conducting under applicable
37-31 state or federal law.
37-32 (f) The banking commissioner may order a state bank or
37-33 another financial institution subject to the banking commissioner's
37-34 enforcement powers to cease acting as an agent or principal under
37-35 an agency agreement that the banking commissioner finds to be
37-36 inconsistent with safe and sound banking practices.
37-37 (g) Notwithstanding another law, a state bank acting as an
37-38 agent for a financial institution in accordance with this section
37-39 is not considered to be a branch of that institution, and a
37-40 financial institution acting as an agent for a state bank in
37-41 accordance with this section is not considered to be a branch of
37-42 the state bank.
37-43 (h) This section does not affect:
37-44 (1) authority under another law for a depository
37-45 institution to act as an agent on behalf of another person or to
37-46 act as a principal in employing another person as agent; or
37-47 (2) whether an agent's activities on behalf of a
37-48 depository institution under another law would cause the agent to
37-49 be considered a branch of the depository institution. [AGENT FOR
37-50 AFFILIATE. (a) A bank subsidiary of a bank holding company may
37-51 receive deposits, renew time deposits, close loans, service loans,
37-52 and receive payments on loans and other obligations as an agent for
37-53 a depository institution affiliate. Notwithstanding any other
37-54 provision of law, a bank acting as an agent for a depository
37-55 institution affiliate as provided by this section is not considered
37-56 to be a branch of the affiliate.]
37-57 [(b) A depository institution may not:]
37-58 [(1) conduct an activity as an agent under Subsection
37-59 (a) that the institution is prohibited from conducting as a
37-60 principal under a law of this state or the United States; or]
37-61 [(2) as a principal, have an agent conduct an activity
37-62 under Subsection (a) that the institution is prohibited from
37-63 conducting under a law of this state or the United States.]
37-64 [(c) This section does not affect:]
37-65 [(1) the authority of a depository institution to act
37-66 as an agent on behalf of another depository institution under
37-67 another law; or]
37-68 [(2) whether a depository institution that conducts
37-69 activity as an agent on behalf of another depository institution
38-1 under another law is considered to be a branch of the other
38-2 institution.]
38-3 [(d) An agency relationship between depository institutions
38-4 under Subsection (a) must be on terms that are consistent with safe
38-5 and sound banking practices and applicable rules.]
38-6 Sec. 59.006. DISCOVERY OF CUSTOMER RECORDS. (a) This
38-7 section provides the exclusive method for compelled discovery of a
38-8 record of a financial institution relating to one or more
38-9 customers. This section does not create a right of privacy in a
38-10 record and does not apply to:
38-11 (1) a demand or inquiry from a state or federal
38-12 government agency authorized by law to conduct an examination of
38-13 the financial institution;
38-14 (2) a record request from a state or federal
38-15 government agency or instrumentality under statutory or
38-16 administrative authority that provides for, or is accompanied by, a
38-17 specific mechanism for discovery and protection of a customer
38-18 record of a financial institution, including a record request from
38-19 a federal agency subject to the Right to Financial Privacy Act of
38-20 1978 (12 U.S.C. Section 3401 et seq.), as amended, or from the
38-21 Internal Revenue Service under Section 1205, Internal Revenue Code
38-22 of 1986;
38-23 (3) a record request from or report to a government
38-24 agency arising out of the investigation or prosecution of a
38-25 criminal offense;
38-26 (4) a record request in connection with a garnishment
38-27 proceeding in which the financial institution is garnishee and the
38-28 customer is debtor;
38-29 (5) a record request by a duly appointed receiver for
38-30 the customer;
38-31 (6) an investigative demand or inquiry from a state
38-32 legislative investigating committee;
38-33 (7) an investigative demand or inquiry from the
38-34 attorney general of this state as authorized by law other than the
38-35 procedural law governing discovery in civil cases; or
38-36 (8) the voluntary use or disclosure of a record by a
38-37 financial institution subject to other applicable state or federal
38-38 law.
38-39 (b) A financial institution shall produce a record in
38-40 response to a record request only if:
38-41 (1) it is served with the record request not later
38-42 than the 24th day before the date that compliance with the record
38-43 request is required;
38-44 (2) before the financial institution complies with the
38-45 record request the requesting party pays the financial
38-46 institution's reasonable costs of complying with the record
38-47 request, including costs of reproduction, postage, research,
38-48 delivery, and attorney's fees, or posts a cost bond in an amount
38-49 estimated by the financial institution to cover those costs; and
38-50 (3) if the customer is not a party to the proceeding
38-51 in which the request was issued, the requesting party complies with
38-52 Subsections (c) and (d) and:
38-53 (A) the financial institution receives the
38-54 customer's written consent to release the record after a request
38-55 under Subsection (c)(3); or
38-56 (B) the tribunal takes further action based on
38-57 action initiated by the requesting party under Subsection (d).
38-58 (c) If the affected customer is not a party to the
38-59 proceeding in which the record request was issued, in addition to
38-60 serving the financial institution with a record request, the
38-61 requesting party shall:
38-62 (1) give notice stating the rights of the customer
38-63 under Subsection (e) and a copy of the request to each affected
38-64 customer in the manner and within the time provided by Rule 21a,
38-65 Texas Rules of Civil Procedure;
38-66 (2) file a certificate of service indicating that the
38-67 customer has been mailed or served with the notice and a copy of
38-68 the record request as required by this subsection with the tribunal
38-69 and the financial institution; and
39-1 (3) request the customer's written consent authorizing
39-2 the financial institution to comply with the request.
39-3 (d) If the customer that is not a party to the proceeding
39-4 does not execute the written consent requested under Subsection
39-5 (c)(3) on or before the date that compliance with the request is
39-6 required, the requesting party may by written motion seek an in
39-7 camera inspection of the requested record as its sole means of
39-8 obtaining access to the requested record. In response to a motion
39-9 for in camera inspection, the tribunal may inspect the requested
39-10 record to determine its relevance to the matter before the
39-11 tribunal. The tribunal may order redaction of portions of the
39-12 records that the tribunal determines should not be produced and
39-13 shall enter a protective order preventing the record that it orders
39-14 produced from being:
39-15 (1) disclosed to a person who is not a party to the
39-16 proceeding before the tribunal; and
39-17 (2) used by a person for any purpose other than
39-18 resolving the dispute before the tribunal.
39-19 (e) A customer that is a party to the proceeding bears the
39-20 burden of preventing or limiting the financial institution's
39-21 compliance with a record request subject to this section by seeking
39-22 an appropriate remedy, including filing a motion to quash the
39-23 record request or a motion for a protective order. Any motion
39-24 filed shall be served on the financial institution and the
39-25 requesting party before the date that compliance with the request
39-26 is required. A financial institution is not liable to its
39-27 customer or another person for disclosure of a record in compliance
39-28 with this section.
39-29 (f) A financial institution may not be required to produce a
39-30 record under this section before the later of:
39-31 (1) the 24th day after the date of receipt of the
39-32 record request as provided by Subsection (b)(1);
39-33 (2) the 15th day after the date of receipt of a
39-34 customer consent to disclose a record as provided by Subsection
39-35 (b)(3); or
39-36 (3) the 15th day after the date a court orders
39-37 production of a record after an in camera inspection of a requested
39-38 record as provided by Subsection (d).
39-39 (g) An order to quash or for protection or other remedy
39-40 entered or denied by the tribunal under Subsection (d) or (e) is
39-41 not a final order and an interlocutory appeal may not be taken.
39-42 [Civil discovery of a customer record maintained by a financial
39-43 institution is governed by Section 30.007, Civil Practice and
39-44 Remedies Code, as added by Chapter 914, Acts of the 74th
39-45 Legislature, Regular Session, 1995.]
39-46 Sec. 59.007. ATTACHMENT, INJUNCTION, EXECUTION, OR
39-47 GARNISHMENT. (a) An attachment, injunction, execution, or writ of
39-48 garnishment may not be issued against or served on a financial
39-49 institution that has its principal office or a branch in this state
39-50 to collect a money judgment or secure a prospective money judgment
39-51 against the financial institution before the judgment is final and
39-52 all appeals have been foreclosed by law.
39-53 (b) An attachment, injunction, execution, or writ of
39-54 garnishment issued to or served on a financial institution for the
39-55 purpose of collecting a money judgment or securing a prospective
39-56 money judgment against a customer of the financial institution is
39-57 governed by Section 59.008 and not this section.
39-58 Sec. 59.008. CLAIMS AGAINST CUSTOMERS OF FINANCIAL
39-59 INSTITUTIONS. (a) A claim against a customer of a financial
39-60 institution shall be delivered or served as otherwise required or
39-61 permitted by law at the address designated as the address of the
39-62 registered agent of the financial institution in a registration
39-63 filed with the secretary of state pursuant to Section 201.102, with
39-64 respect to an out-of-state financial institution, or Section
39-65 201.103, with respect to a Texas financial institution.
39-66 (b) If a financial institution files a registration
39-67 statement with the secretary of state pursuant to Section 201.102,
39-68 with respect to an out-of-state financial institution, or Section
39-69 201.103, with respect to a Texas financial institution, a claim
40-1 against a customer of the financial institution is not effective as
40-2 to the financial institution if the claim is served or delivered to
40-3 an address other than that designated by the financial institution
40-4 in the registration as the address of the financial institution's
40-5 registered agent.
40-6 (c) The customer bears the burden of preventing or limiting
40-7 a financial institution's compliance with or response to a claim
40-8 subject to this section by seeking an appropriate remedy, including
40-9 a restraining order, injunction, protective order, or other remedy,
40-10 to prevent or suspend the financial institution's response to a
40-11 claim against the customer.
40-12 (d) A financial institution that does not file a
40-13 registration with the secretary of state pursuant to Section
40-14 201.102, with respect to an out-of-state financial institution, or
40-15 Section 201.103, with respect to a Texas financial institution, is
40-16 subject to service or delivery of all claims against customers of
40-17 the financial institution as otherwise provided by law.
40-18 Sec. 59.009 [59.007]. COMPLIANCE REVIEW COMMITTEE. (a) A
40-19 financial institution or an affiliate of a financial institution,
40-20 including its holding company, may establish a compliance review
40-21 committee to test, review, or evaluate the financial institution's
40-22 conduct, transactions, or potential transactions for the purpose of
40-23 monitoring and improving or enforcing compliance with:
40-24 (1) a statutory or regulatory requirement;
40-25 (2) financial reporting to a governmental agency;
40-26 (3) the policies and procedures of the financial
40-27 institution or its affiliates; or
40-28 (4) safe, sound, and fair lending practices.
40-29 (b) Except as provided by Subsection (c):
40-30 (1) a compliance review document is confidential and
40-31 is not discoverable or admissible in evidence in a civil action;
40-32 (2) an individual serving on a compliance review
40-33 committee or acting under the direction of a compliance review
40-34 committee may not be required to testify in a civil action as to:
40-35 (A) the contents or conclusions of a compliance
40-36 review document; or
40-37 (B) an action taken or discussions conducted by
40-38 or for a compliance review committee; and
40-39 (3) a compliance review document or an action taken or
40-40 discussion conducted by or for a compliance review committee that
40-41 is disclosed to a governmental agency remains confidential and is
40-42 not discoverable or admissible in a civil action.
40-43 (c) Subsection (b)(2) does not apply to an individual who
40-44 has management responsibility for the operations, records,
40-45 employees, or activities being examined or evaluated by the
40-46 compliance review committee.
40-47 (d) This section does not limit the discovery or
40-48 admissibility in a civil action of a document that is not a
40-49 compliance review document.
40-50 [(e) In this section:]
40-51 [(1) "Civil action" means a civil proceeding pending
40-52 in a court or other adjudicatory tribunal with jurisdiction to
40-53 issue a request or subpoena for records, including a voluntary or
40-54 required alternative dispute resolution mechanism under which a
40-55 party may compel the production of records. The term does not
40-56 include an examination or enforcement proceeding initiated by:]
40-57 [(A) a governmental agency with primary
40-58 regulatory jurisdiction over a financial institution in possession
40-59 of a compliance review document;]
40-60 [(B) the Federal Deposit Insurance Corporation
40-61 or its successor; or]
40-62 [(C) the board of governors of the Federal
40-63 Reserve System or its successor.]
40-64 [(2) "Compliance review document" means a document
40-65 prepared by or for a compliance review committee.]
40-66 SECTION 2.017. Section 59.201, Finance Code, is amended to
40-67 read as follows:
40-68 Sec. 59.201. ELECTRONIC TERMINALS AUTHORIZED; SHARING OF
40-69 ELECTRONIC TERMINAL. (a) A person may install, maintain, and
41-1 operate one or more electronic terminals at any location in this
41-2 state for the convenience of customers of financial [depository]
41-3 institutions.
41-4 (b) Financial [Depository] institutions may agree in writing
41-5 to share in the use of an electronic terminal on a reasonable,
41-6 nondiscriminatory basis and on the condition that a financial
41-7 [depository] institution using an electronic terminal may be
41-8 required to meet necessary and reasonable technical standards and
41-9 to pay charges for the use of the electronic terminal. The
41-10 standards or charges imposed must be reasonable, fair, equitable,
41-11 and nondiscriminatory among the financial [depository]
41-12 institutions. Any charges imposed:
41-13 (1) may not exceed an equitable proportion of the cost
41-14 of establishing the electronic terminal, including provisions for
41-15 amortization of development costs and capital expenditures over a
41-16 reasonable period, and the cost of operation and maintenance of the
41-17 electronic terminal, plus a reasonable return on those costs; and
41-18 (2) must be related to the services provided to the
41-19 financial [depository] institution or its customers.
41-20 (c) This section does not apply to:
41-21 (1) an electronic terminal located at the domicile or
41-22 home office or a branch of a financial [depository] institution; or
41-23 (2) the use by a person of an electronic terminal,
41-24 regardless of location, solely to withdraw cash, make account
41-25 balance inquiries, or make transfers between the person's accounts
41-26 in the same financial [depository] institution.
41-27 (d) In this section, the term "financial institution" has
41-28 the meaning assigned by Section 201.101.
41-29 SECTION 2.018. Section 59.202(c)(3), Finance Code, is
41-30 amended to read as follows:
41-31 (3) "Financial institution" has the meaning assigned
41-32 by Section 201.101 [means a state, national, or private bank,
41-33 savings bank, savings association, thrift company, or credit
41-34 union].
41-35 SECTION 2.019. Section 59.301(7), Finance Code, is amended
41-36 to read as follows:
41-37 (7) "Financial institution" has the meaning assigned
41-38 by Section 201.101 [means a bank, savings association, credit
41-39 union, or savings bank].
41-40 SECTION 2.020. Section 152.202(a), Finance Code, is amended
41-41 to read as follows:
41-42 (a) Section 152.201 does not apply to:
41-43 (1) a federally insured financial institution, as that
41-44 term is defined by Section 201.101 [bank, credit union, savings and
41-45 loan association, or savings bank, whether the institution is state
41-46 or federal], if the institution does not sell checks, other than
41-47 traveler's checks,[:]
41-48 [(A) off premises; or]
41-49 [(B)] through an agent who is not directly or
41-50 indirectly owned by the institution unless the agent is also a
41-51 federally insured financial institution [bank, credit union,
41-52 savings and loan association, or savings bank];
41-53 (2) an agent or subagent of a license holder unless
41-54 the agent or subagent sells the license holder's checks
41-55 over-the-counter to the public and in the regular conduct of that
41-56 business receives or at any time has access to:
41-57 (A) a check of the license holder that is
41-58 returned after payment for verification, reconciliation, or
41-59 accounting; or
41-60 (B) a bank statement relating to a returned
41-61 check;
41-62 (3) a title company or attorney that issues an escrow
41-63 or trust fund check;
41-64 (4) the United States; or
41-65 (5) with the commissioner's prior written consent, a
41-66 person who:
41-67 (A) holds a license issued under Chapter 153;
41-68 (B) has a net worth of at least $250,000 and
41-69 meets the licensing requirements of this chapter;
42-1 (C) maintains a bond under Section 152.206 in
42-2 the minimum principal amount of $350,000; and
42-3 (D) sells checks only in conjunction with a
42-4 currency exchange or transmission transaction, as defined by
42-5 Chapter 153, and separates all proceeds from that transaction from
42-6 the sale of checks.
42-7 SECTION 2.021. Section 152.301(b), Finance Code, is amended
42-8 to read as follows:
42-9 (b) A surety bond or letter of credit required under
42-10 Subsection (a)(3) must be:
42-11 (1) in addition to any other bond or security required
42-12 by this chapter;
42-13 (2) issued by a bonding company or insurance company
42-14 authorized to do business in this state and acceptable to the
42-15 commissioner, in the case of a surety bond;
42-16 (3) issued by a federally insured financial
42-17 institution, as that term is defined by Section 201.101, that has
42-18 its main office or a branch in this state and is [state or national
42-19 bank, savings bank, or savings and loan association] acceptable to
42-20 the commissioner, in the case of a letter of credit; and
42-21 (4) payable to the commissioner on behalf of any
42-22 claimants against the license holder to secure the faithful
42-23 performance of the obligations of the license holder with respect
42-24 to the receipt, handling, and payment of money in connection with
42-25 the sale of checks.
42-26 SECTION 2.022. Section 153.117(a), Finance Code, is amended
42-27 to read as follows:
42-28 (a) The following persons are not required to be licensed
42-29 under this chapter:
42-30 (1) a federally insured financial institution, as that
42-31 term is defined by Section 201.101, that is [bank, foreign bank
42-32 agency, credit union, savings bank, or savings and loan
42-33 association, whether] organized under the laws of this state,
42-34 another state, or [of] the United States;
42-35 (2) a foreign bank branch or agency in the United
42-36 States established under the federal International Banking Act of
42-37 1978 (12 U.S.C. Section 3101 et seq.), as amended;
42-38 (3) a license holder under Chapter 152, except that
42-39 the license holder is required to comply with the other provisions
42-40 of this chapter to the extent [unless] the license holder engages
42-41 in currency exchange, transportation, or transmission transactions;
42-42 or
42-43 (4) [(3)] a person registered as a securities dealer
42-44 under The Securities Act (Article 581-1 et seq., Vernon's Texas
42-45 Civil Statutes).
42-46 SECTION 2.023. Sections 154.002(1)-(4), Finance Code, are
42-47 amended to read as follows:
42-48 (1) ["Bank" means a state or national bank.]
42-49 [(2)] "Commissioner" means the banking commissioner of
42-50 Texas.
42-51 (2) [(3)] "Department" means the Texas Department of
42-52 Banking.
42-53 (3) [(4)] "Earnings" means the amount in an account in
42-54 excess of the amount paid by the purchaser of a prepaid funeral
42-55 benefits contract that is deposited in the account as provided by
42-56 Section 154.253, including accrued interest, accrued income, and
42-57 enhanced or increased value.
42-58 (4) "Financial institution" has the meaning assigned
42-59 by Section 201.101.
42-60 SECTION 2.024. Section 154.253(a), Finance Code, is amended
42-61 to read as follows:
42-62 (a) Not later than the 30th day after the date of
42-63 collection, the money, other than money retained as provided by
42-64 Section 154.252, shall be deposited:
42-65 (1) in a financial institution that has its main
42-66 office or a branch [savings and loan association] in this state in
42-67 an interest-bearing account insured by the federal government; or
42-68 (2) in trust [in a bank in this state in an
42-69 interest-bearing account insured by the federal government; or]
43-1 [(3)] with [the trust department in] a financial
43-2 institution that has its main office or a branch located in this
43-3 state and is authorized to act as a fiduciary [bank in this state,
43-4 or in a trust company authorized to do business] in this state, to
43-5 be invested by the financial institution as trustee [trust
43-6 department or company] in accordance with this subchapter.
43-7 SECTION 2.025. Section 154.257(a), Finance Code, is amended
43-8 to read as follows:
43-9 (a) A permit holder or trustee, if the permit holder
43-10 deposits the money with a financial institution as trustee [bank
43-11 trust department or a trust company], shall:
43-12 (1) adopt a written investment plan consistent with
43-13 this section and Sections 154.256 and 154.258 that specifies the
43-14 quality, maturity, and diversification of investments;
43-15 (2) at least annually, review the adequacy and
43-16 implementation of the investment plan;
43-17 (3) maintain investment records covering each
43-18 transaction; and
43-19 (4) maintain the investment plan in the principal
43-20 offices of the permit holder and trustee.
43-21 SECTION 2.026. Section 154.258(a), Finance Code, is amended
43-22 to read as follows:
43-23 (a) Money in a prepaid funeral benefits trust may be
43-24 invested only in:
43-25 (1) demand deposits, savings accounts, certificates of
43-26 deposit, or other accounts issued by financial institutions [banks
43-27 or savings and loan associations organized under state or federal
43-28 law] if the amounts deposited in those accounts are fully covered
43-29 by federal deposit insurance or otherwise fully secured by a
43-30 separate fund of securities in the manner provided by Section
43-31 5.401, Texas Trust Company Act (Article 342a-5.401, Vernon's Texas
43-32 Civil Statutes), and rules adopted under that section;
43-33 (2) bonds, evidences of indebtedness, or obligations
43-34 of the United States or an instrumentality of the United States;
43-35 (3) bonds, evidences of indebtedness, or obligations
43-36 the principal and interest of which are guaranteed by the full
43-37 faith and credit of the United States;
43-38 (4) bonds of a state or local government that are
43-39 exempt from federal income taxation and that are rated:
43-40 (A) "Aa" or better by Moody's bond rating
43-41 service; or
43-42 (B) "AA" or better by Standard and Poor's bond
43-43 rating service;
43-44 (5) bonds, evidences of indebtedness, or obligations
43-45 of corporations organized under state or federal law and that are
43-46 rated:
43-47 (A) "A" or better by Moody's bond rating
43-48 service; or
43-49 (B) "A" or better by Standard and Poor's bond
43-50 rating service;
43-51 (6) notes, evidences of indebtedness, or participation
43-52 in notes or evidences of indebtedness, secured by a first lien on
43-53 real property located in the United States, if the amount of each
43-54 obligation does not exceed 90 percent of the value of the real
43-55 property securing that obligation;
43-56 (7) common stock of a corporation that is organized
43-57 under state or federal law and:
43-58 (A) has a net worth of at least $1 million; or
43-59 (B) will have a net worth of at least $1 million
43-60 after completion of a securities offering to which the trust is
43-61 subscribing;
43-62 (8) preferred stock of a corporation organized under
43-63 state or federal law and that is rated:
43-64 (A) "Baa" ["BAA"] or better by Moody's bond
43-65 rating service; or
43-66 (B) "BBB" or better by Standard and Poor's bond
43-67 rating service;
43-68 (9) investments not covered by this subsection,
43-69 including real property, oil and gas interests, and limited
44-1 partnerships;
44-2 (10) mutual funds, collective investment funds, or
44-3 similar participative investment funds, the assets of which are
44-4 invested only in investments that are permitted under this section
44-5 and that, if aggregated with other investments, meet the percentage
44-6 limitations specified by this section; and
44-7 (11) other investments the department approves in
44-8 writing.
44-9 SECTION 2.027. Section 154.353(a), Finance Code, is amended
44-10 to read as follows:
44-11 (a) The fund may be deposited with:
44-12 (1) the comptroller;
44-13 (2) a federally insured financial institution that has
44-14 its main office or a branch [bank] in this state; or
44-15 (3) in trust with [a savings and loan association in
44-16 this state;]
44-17 [(4) the trust department in] a financial institution
44-18 that has its main office or a branch in this state and is
44-19 authorized to act as a fiduciary [bank] in this state[; or]
44-20 [(5) a trust company authorized to do business in this
44-21 state].
44-22 SECTION 2.028. Section 271.001(a), Finance Code, is amended
44-23 to read as follows:
44-24 (a) A financial institution [in this state] that is required
44-25 to file a report with respect to a transaction in this state under
44-26 the Currency and Foreign Transactions Reporting Act (31 U.S.C.
44-27 Section 5311 et seq.), 31 C.F.R. Part 103, or 12 C.F.R. Section
44-28 21.11, and their subsequent amendments, shall file a copy of the
44-29 report with the attorney general.
44-30 SECTION 2.029. Section 271.002(a), Finance Code, is amended
44-31 to read as follows:
44-32 (a) A person engaged in a trade or business who, in the
44-33 course of the trade or business, receives more than $10,000 in one
44-34 transaction or in two or more related transactions in this state
44-35 and who is required to file a return under Section 6050I, Internal
44-36 Revenue Code of 1986 (26 U.S.C. Section 6050I), or 26 C.F.R.
44-37 Section 1.6050I-1, and their subsequent amendments, shall file a
44-38 copy of the return with the attorney general.
44-39 SECTION 2.030. Sections 274.001, 274.002, and 274.003,
44-40 Finance Code, are amended to read as follows:
44-41 Sec. 274.001. DEFINITIONS. In this chapter:
44-42 (1) "Bank" has the meaning assigned by Section 2(c),
44-43 Bank Holding Company Act of 1956 (12 U.S.C. Section 1841(c)) as
44-44 amended, excluding a bank that does not have its main office or a
44-45 branch located in this state.
44-46 (2) "Bank holding company" has the meaning assigned by
44-47 Section 2(a), Bank Holding Company Act of 1956 (12 U.S.C. Section
44-48 1841(a)), as amended.
44-49 (3) [(2)] "Commissioner" means the banking
44-50 commissioner of Texas.
44-51 (4) [(3)] "Fiduciary" means an entity responsible for
44-52 managing a fiduciary account.
44-53 (5) [(4)] "Fiduciary account" means an account with a
44-54 situs of administration in this state involving the exercise of a
44-55 corporate purpose specified by Section 151.052 or 151.103.
44-56 Sec. 274.002. AFFILIATED BANK. A bank is affiliated with a
44-57 subsidiary trust company if[:]
44-58 [(1) the bank is a state or national bank that has its
44-59 main office in this state; and]
44-60 [(2)] more than 50 percent of the bank's voting stock
44-61 is directly or indirectly owned by a bank holding company that owns
44-62 more than 50 percent of the voting stock of the subsidiary trust
44-63 company.
44-64 Sec. 274.003. SUBSIDIARY TRUST COMPANY. An entity is a
44-65 subsidiary trust company of a bank holding company if:
44-66 (1) the entity is a:
44-67 (A) corporation incorporated under Subchapter B,
44-68 Chapter 151; or
44-69 (B) [national] bank that[:]
45-1 [(i)] is organized to conduct a trust
45-2 business and any incidental business or to exercise trust powers;
45-3 and
45-4 [(ii) has its main office in this state;
45-5 or]
45-6 [(C) state bank that is organized to exercise
45-7 trust powers and has its main office in this state; and]
45-8 (2) more than 50 percent of the voting stock of the
45-9 entity is directly or indirectly owned by the bank holding company.
45-10 SECTION 2.031. Section 274.101(a), Finance Code, is amended
45-11 to read as follows:
45-12 (a) A subsidiary trust company may enter into an agreement
45-13 with an affiliated bank of the company to substitute the company as
45-14 fiduciary for the bank in each fiduciary account listed in the
45-15 agreement, provided the situs of account administration is not
45-16 moved outside of this state without the express written consent of
45-17 all persons entitled to notice under Sections 274.103(a) and (c).
45-18 SECTION 2.032. Section 274.102, Finance Code, is amended to
45-19 read as follows:
45-20 Sec. 274.102. SITUS OF ACCOUNT ADMINISTRATION. The situs of
45-21 administration of a fiduciary account is the county in this state
45-22 in which the fiduciary maintains the office that is primarily
45-23 responsible for dealing with the parties involved in the account.
45-24 SECTION 2.033. Sections 341.001(1), (2), and (8), Finance
45-25 Code, are amended to read as follows:
45-26 (1) "Authorized lender" means a person who holds a
45-27 license issued under Chapter 342, a bank, or a savings [and loan]
45-28 association.
45-29 (2) "Bank" means a person:
45-30 (A) organized as a state bank [doing business]
45-31 under Subtitle A, Title 3, or under similar laws of another state
45-32 if the deposits of a bank from another state are insured by the
45-33 Federal Deposit Insurance Corporation; or
45-34 (B) organized as a national bank under 12 U.S.C.
45-35 Section 21 et seq., as subsequently amended.
45-36 (8) "Savings [and loan] association" means a person:
45-37 (A) organized as a state savings and loan
45-38 association or savings bank [doing business] under Subtitle B or C,
45-39 Title 3, or under similar laws of another state if the deposits of
45-40 the savings association from another state are insured by the
45-41 Federal Deposit Insurance Corporation; or
45-42 (B) organized as a federal savings and loan
45-43 association or savings bank under the Home Owners' Loan Act (12
45-44 U.S.C. Section 1461 et seq.), as subsequently amended.
45-45 SECTION 2.034. Section 341.103, Finance Code, is amended to
45-46 read as follows:
45-47 Sec. 341.103. REGULATION OF SAVINGS [AND LOAN] ASSOCIATIONS.
45-48 (a) The savings and loan commissioner shall enforce this subtitle
45-49 relating to the regulation of state savings [and loan] associations
45-50 operating under this subtitle.
45-51 (b) The official exercising authority over the operation of
45-52 federal savings [and loan] associations equivalent to the authority
45-53 exercised by the savings and loan commissioner over state savings
45-54 [and loan] associations may enforce this subtitle relating to the
45-55 regulation of a federal savings [and loan] association operating
45-56 under this subtitle.
45-57 SECTION 2.035. Section 345.001(1), Finance Code, is amended
45-58 to read as follows:
45-59 (1) "Credit card issuer" means a person who issues an
45-60 identification device, including a card or plate, that is used to
45-61 obtain goods or services under a retail credit card arrangement,
45-62 other than a person who is:
45-63 (A) a bank, savings [and loan] association, or
45-64 credit union;
45-65 (B) licensed to do business under Chapter 342;
45-66 or
45-67 (C) regularly and principally engaged in the
45-68 business of lending money for personal, family, or household
45-69 purposes.
46-1 SECTION 2.036. Section 393.002(a), Finance Code, is amended
46-2 to read as follows:
46-3 (a) This chapter does not apply to:
46-4 (1) a person:
46-5 (A) authorized to make a loan or grant an
46-6 extension of consumer credit under the laws of this state or the
46-7 United States; and
46-8 (B) subject to regulation and supervision by
46-9 this state or the United States;
46-10 (2) a lender approved by the United States secretary
46-11 of housing and urban development for participation in a mortgage
46-12 insurance program under the National Housing Act (12 U.S.C. Section
46-13 1701 et seq.);
46-14 (3) a bank or savings [and loan] association the
46-15 deposits or accounts of which are eligible to be insured by the
46-16 Federal Deposit Insurance Corporation or a subsidiary of the bank
46-17 or association;
46-18 (4) a credit union doing business in this state;
46-19 (5) a nonprofit organization exempt from taxation
46-20 under Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C.
46-21 Section 501(c)(3));
46-22 (6) a real estate broker or salesman licensed under
46-23 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
46-24 Statutes) who is acting within the course and scope of that
46-25 license;
46-26 (7) an individual licensed to practice law in this
46-27 state who is acting within the course and scope of the individual's
46-28 practice as an attorney;
46-29 (8) a broker-dealer registered with the Securities and
46-30 Exchange Commission or the Commodity Futures Trading Commission
46-31 acting within the course and scope of that regulation;
46-32 (9) a consumer reporting agency; or
46-33 (10) a person whose primary business is making loans
46-34 secured by liens on real property.
46-35 SECTION 2.037. Section 393.402(a), Finance Code, is amended
46-36 to read as follows:
46-37 (a) The surety account of a credit services organization
46-38 must be held in trust at a federally insured bank or savings [and
46-39 loan] association located in this state.
46-40 SECTION 2.038. Section 394.103, Finance Code, is amended to
46-41 read as follows:
46-42 Sec. 394.103. EXCEPTIONS. A debt-pooling contract entered
46-43 into by the following is not void because of Section 394.102:
46-44 (1) a bank, savings [and loan] association, trust
46-45 company, or credit union doing business under the laws of this
46-46 state or the United States;
46-47 (2) an attorney at law;
46-48 (3) a judicial officer or other person acting under
46-49 the orders of a court of this state or the United States;
46-50 (4) an agency, instrumentality, or subdivision of this
46-51 state or the United States;
46-52 (5) a retail merchants association or nonprofit trade
46-53 association formed to collect accounts and exchange credit
46-54 information; or
46-55 (6) a nonprofit organization providing debt-counseling
46-56 services to residents of this state.
46-57 ARTICLE 3. MULTISTATE TRUST BUSINESS
46-58 SECTION 3.001. The Texas Trust Company Act (Article
46-59 342a-1.001 et seq., Vernon's Texas Civil Statutes) is amended by
46-60 adding Chapter 9 to read as follows:
46-61 CHAPTER 9. MULTISTATE TRUST BUSINESS
46-62 SUBCHAPTER A. GENERAL PROVISIONS
46-63 Sec. 9.001. DEFINITIONS. (a) In this chapter:
46-64 (1) "Acquire" means an act that results in direct or
46-65 indirect control by an out-of-state trust company of a state trust
46-66 institution, including an act that causes the company to:
46-67 (A) merge with the state trust institution;
46-68 (B) assume direct or indirect ownership of a
46-69 controlling interest in any class of voting shares of the state
47-1 trust institution; or
47-2 (C) assume direct ownership or control of all or
47-3 substantially all of the accounts of a state trust institution.
47-4 (2) "Bank" means:
47-5 (A) a state bank chartered under Chapter 32,
47-6 Finance Code, or the laws of another state;
47-7 (B) a national bank chartered under federal law;
47-8 or
47-9 (C) a foreign bank that is organized under the
47-10 laws of a territory of the United States, Puerto Rico, Guam,
47-11 American Samoa, or the Virgin Islands, and that has its deposits
47-12 insured by the Federal Deposit Insurance Corporation.
47-13 (3) "Branch" has the meaning assigned by Section
47-14 31.002(a), Finance Code.
47-15 (4) "Credit union" means a credit union chartered
47-16 under Chapter 122, Finance Code, the laws of another state, or
47-17 federal law.
47-18 (5) "De novo trust office" means a trust office
47-19 located in a host state that:
47-20 (A) is originally established by a trust company
47-21 as a trust office; and
47-22 (B) does not become a trust office of the trust
47-23 company as a result of an acquisition or conversion of another
47-24 trust institution.
47-25 (6) "Foreign bank" has the meaning assigned by Section
47-26 1(b)(7), federal International Banking Act of 1978 (12 U.S.C.
47-27 3101(7)), as amended.
47-28 (7) "Home state" means:
47-29 (A) with respect to a federally chartered trust
47-30 institution or a foreign bank, the state in which the institution
47-31 maintains its principal office; and
47-32 (B) with respect to another trust institution,
47-33 the state which chartered the institution.
47-34 (8) "Home state regulator" means the supervisory
47-35 agency with primary responsibility for chartering and supervising a
47-36 trust company.
47-37 (9) "Host state" means a state, other than the home
47-38 state of a trust company, or a foreign country in which the trust
47-39 company maintains or seeks to acquire or establish an office.
47-40 (10) "Office" means, with respect to a trust company,
47-41 the principal office, a trust office, or a representative trust
47-42 office.
47-43 (11) "Out-of-state trust company" means a trust
47-44 company:
47-45 (A) whose home state is another state; or
47-46 (B) that is chartered under the laws of a
47-47 foreign country.
47-48 (12) "Principal office" means:
47-49 (A) with respect to a state trust company, its
47-50 home office as defined by Section 1.002(a); and
47-51 (B) with respect to a bank, savings bank,
47-52 savings association, foreign bank, or out-of-state trust company,
47-53 its main office or principal place of business in the United
47-54 States.
47-55 (13) "Representative trust office" means an office at
47-56 which a trust company has been authorized by the banking
47-57 commissioner to engage in activities other than acting as a
47-58 fiduciary as provided by Subchapter C.
47-59 (14) "Savings association" means a savings and loan
47-60 association chartered under Chapter 62, Finance Code, the laws of
47-61 another state, or federal law.
47-62 (15) "Savings bank" means a savings bank chartered
47-63 under Chapter 92, Finance Code, the laws of another state, or
47-64 federal law.
47-65 (16) "State" means any state of the United States, the
47-66 District of Columbia, any territory of the United States, Puerto
47-67 Rico, Guam, American Samoa, the Trust Territory of the Pacific
47-68 Islands, the Virgin Islands, and the Northern Mariana Islands.
47-69 (17) "State trust institution" means a trust
48-1 institution whose home state is this state.
48-2 (18) "Supervisory agency" means:
48-3 (A) an agency of another state or a foreign
48-4 country with primary responsibility for chartering and supervising
48-5 a trust institution; and
48-6 (B) with respect to a federally chartered trust
48-7 institution or foreign bank, the Office of the Comptroller of the
48-8 Currency, the Federal Deposit Insurance Corporation, the Board of
48-9 Governors of the Federal Reserve System, the Office of Thrift
48-10 Supervision, or the National Credit Union Administration, as
48-11 applicable.
48-12 (19) "Trust company" means a state trust company or a
48-13 company chartered under the laws of another state or a foreign
48-14 country to conduct a trust business that is not a bank, credit
48-15 union, savings association, savings bank, or foreign bank.
48-16 (20) "Trust institution" means a bank, credit union,
48-17 foreign bank, savings association, savings bank, or trust company
48-18 that is authorized by its charter to conduct a trust business.
48-19 (21) "Trust office" means an office, other than the
48-20 principal office, at which a trust company is licensed by the
48-21 banking commissioner to conduct a trust business.
48-22 (b) The definitions provided by Section 1.002(a) of this Act
48-23 apply to this chapter to the extent not inconsistent with this
48-24 chapter.
48-25 (c) The definitions shall be liberally construed to
48-26 accomplish the purposes of this chapter.
48-27 (d) The finance commission by rule may adopt other
48-28 definitions to accomplish the purposes of this chapter.
48-29 Sec. 9.002. COMPANIES AUTHORIZED TO CONDUCT A TRUST
48-30 BUSINESS. (a) A company may not conduct a trust business in this
48-31 state unless the company is a trust institution and is:
48-32 (1) a state trust company chartered pursuant to this
48-33 Act;
48-34 (2) a bank, savings association, savings bank, or
48-35 credit union that maintains its principal office or a branch in
48-36 this state in accordance with governing law, or another office in
48-37 this state with the power to conduct a trust business to the extent
48-38 permitted by rule;
48-39 (3) a trust company chartered under the laws of
48-40 another state or a foreign country that has a trust office in this
48-41 state licensed by the banking commissioner pursuant to this
48-42 chapter; or
48-43 (4) a foreign bank with an office in this state that
48-44 is authorized to act as a fiduciary pursuant to Section 204.106,
48-45 Finance Code.
48-46 (b) Notwithstanding Subsection (a), a trust institution that
48-47 does not maintain a principal office, branch, or trust office in
48-48 this state may act as a fiduciary in this state to the extent
48-49 permitted by Section 105A, Probate Code.
48-50 (c) A company does not engage in the trust business in this
48-51 state in a manner requiring a charter or license under this Act by
48-52 engaging in an activity identified in Section 3.022 of this Act,
48-53 except that the registration requirements of Section 9.202 of this
48-54 Act may apply to a trust representative office engaging in the
48-55 activity.
48-56 Sec. 9.003. INTERSTATE TRUST BUSINESS OF STATE TRUST
48-57 COMPANY. Subject to the approval of the banking commissioner
48-58 pursuant to Section 3.203 of this Act, a state trust company may
48-59 engage in the trust business in another state or a foreign country
48-60 at a trust office or a trust representative office to the extent
48-61 permitted by and subject to applicable laws of the state or foreign
48-62 country.
48-63 Sec. 9.004. TRUST BUSINESS OF OUT-OF-STATE TRUST COMPANY.
48-64 (a) An out-of-state trust company that establishes or maintains an
48-65 office in this state under this chapter may conduct any activity at
48-66 the office that would be authorized under the laws of this state
48-67 for a state trust company to conduct at the office.
48-68 (b) Before establishing an office in this state, an
48-69 out-of-state trust company must comply with Section 201.102,
49-1 Finance Code.
49-2 Sec. 9.005. DESIGNATION OF TRUSTEE AND GOVERNING LAW.
49-3 (a) Unless another law restricts the designation of trustee, a
49-4 person residing in this state may designate a trust institution to
49-5 act as a fiduciary on behalf of the person.
49-6 (b) Unless another law specifies governing law and except as
49-7 provided in Subsection (c), if a trust or its subject matter bears
49-8 a reasonable relation to this state and also to another state or a
49-9 foreign country, a trust institution and its affected client may
49-10 agree that the law of this state or of the other state or country
49-11 governs their rights and duties, including the law of a state or a
49-12 foreign country where the affected client resides or where the
49-13 trust institution has its principal office.
49-14 (c) Notwithstanding Subsection (b), a trust institution is
49-15 subject to Sections 113.052 and 113.053, Property Code, with
49-16 respect to a trust if the trust is established by a client that
49-17 resides in this state and is solicited from or accepted by an
49-18 office of the trust institution in this state.
49-19 Sec. 9.006. TAXATION. An out-of-state trust institution
49-20 doing business in this state is subject to the franchise tax to the
49-21 extent provided by Chapter 171, Tax Code.
49-22 Sec. 9.007. SEVERABILITY. The provisions of this chapter or
49-23 applications of those provisions are severable as provided by
49-24 Section 312.013(c), Government Code.
49-25 SUBCHAPTER B. OUT-OF-STATE TRUST COMPANY TRUST OFFICE
49-26 Sec. 9.101. TRUST OFFICES IN THIS STATE. An out-of-state
49-27 trust company may engage in a trust business at an office in this
49-28 state only if it establishes and maintains a trust office in this
49-29 state as permitted by this subchapter.
49-30 Sec. 9.102. ESTABLISHING AN INTERSTATE TRUST OFFICE.
49-31 (a) An out-of-state trust company that does not operate a trust
49-32 office in this state may not establish and maintain a de novo trust
49-33 office in this state unless:
49-34 (1) a state trust company would be permitted to
49-35 establish a de novo trust office in the home state or foreign
49-36 country of the out-of-state trust company; and
49-37 (2) a bank whose home state is this state would be
49-38 permitted to establish a de novo branch in the home state or
49-39 foreign country of the out-of-state trust company.
49-40 (b) Subject to Subsection (a), a de novo trust office may be
49-41 established in this state under this section through the
49-42 acquisition of a trust office in this state of an existing trust
49-43 institution.
49-44 Sec. 9.103. ACQUIRING AN INTERSTATE TRUST OFFICE. (a) An
49-45 out-of-state trust company that does not operate a trust office in
49-46 this state and that meets the requirements of this subchapter may
49-47 acquire an existing trust institution in this state and after the
49-48 acquisition operate and maintain the acquired institution as a
49-49 trust office in this state, subject to Subchapter A, Chapter 4 of
49-50 this Act, or Subchapter A, Chapter 33, Finance Code, if applicable.
49-51 If the institution to be acquired is a bank or a state savings
49-52 bank, Section 203.005, Finance Code, applies to the transaction.
49-53 (b) An out-of-state trust institution that does not operate
49-54 a trust office in this state may not establish and maintain a trust
49-55 office in this state through the acquisition of a trust office of
49-56 an existing trust institution except as provided by Section 9.102
49-57 of this Act. This section does not affect or prohibit a trust
49-58 institution, other entity, or person from chartering a state trust
49-59 company pursuant to Section 3.001 of this Act.
49-60 Sec. 9.104. REQUIREMENT OF NOTICE. An out-of-state trust
49-61 company desiring to establish and maintain a de novo trust office
49-62 or acquire an existing trust institution in this state and to
49-63 operate and maintain the acquired institution as a trust office
49-64 pursuant to this subchapter shall provide written notice of the
49-65 proposed transaction to the banking commissioner on or after the
49-66 date on which the out-of-state trust company applies to the home
49-67 state regulator for approval to establish and maintain or acquire
49-68 the trust office. The filing of the notice shall be preceded or
49-69 accompanied by a copy of the resolution adopted by the board
50-1 authorizing the additional office and the filing fee, if any,
50-2 prescribed by law. The written notice must contain sufficient
50-3 information to enable an informed decision under Section 9.105 of
50-4 this Act.
50-5 Sec. 9.105. CONDITIONS FOR APPROVAL. (a) A trust office of
50-6 an out-of-state trust company may be acquired or established in
50-7 this state under this subchapter if:
50-8 (1) the out-of-state trust company confirms in writing
50-9 to the banking commissioner that while it maintains a trust office
50-10 in this state, it will comply with all applicable laws of this
50-11 state;
50-12 (2) the out-of-state trust company provides
50-13 satisfactory evidence to the banking commissioner of compliance
50-14 with Section 201.102, Finance Code, and the applicable requirements
50-15 of its home state regulator for acquiring or establishing and
50-16 maintaining the office;
50-17 (3) all filing fees have been paid as required by law;
50-18 and
50-19 (4) the banking commissioner finds that:
50-20 (A) applicable conditions of Section 9.102 or
50-21 9.103 of this Act have been met; and
50-22 (B) if a state bank is being acquired, the
50-23 applicable requirements of Subchapter A, Chapter 33, and Section
50-24 203.005, Finance Code, have been met, or if a state trust company
50-25 is being acquired, the applicable requirements of Subchapter A,
50-26 Chapter 4 of this Act have been met; and
50-27 (C) any conditions imposed by the banking
50-28 commissioner pursuant to Subsection (b) have been satisfied.
50-29 (b) The banking commissioner may condition approval of a
50-30 trust office on compliance by the out-of-state trust company with
50-31 any requirement applicable to formation of a state trust company
50-32 pursuant to Sections 3.003(b) and 3.007 of this Act.
50-33 (c) If all requirements of Subsection (a) have been met, the
50-34 out-of-state trust company may commence business at the trust
50-35 office on the 61st day after the date the banking commissioner
50-36 notifies the company that the notice required by Section 9.104 of
50-37 this Act has been accepted for filing, unless the banking
50-38 commissioner specifies an earlier or later date.
50-39 (d) The 60-day period of review may be extended by the
50-40 banking commissioner on a determination that the written notice
50-41 raises issues that require additional information or additional
50-42 time for analysis. If the period of review is extended, the
50-43 out-of-state trust company may establish the office only on prior
50-44 written approval by the banking commissioner.
50-45 (e) If all requirements of Subsection (a) have been met, the
50-46 banking commissioner may otherwise deny approval of the office if
50-47 the banking commissioner finds that the out-of-state trust company
50-48 lacks sufficient financial resources to undertake the proposed
50-49 expansion without adversely affecting its safety or soundness or
50-50 that the proposed office is contrary to the public interest. In
50-51 acting on the notice, the banking commissioner shall consider the
50-52 views of the appropriate supervisory agencies.
50-53 Sec. 9.106. ADDITIONAL TRUST OFFICES. An out-of-state trust
50-54 company that maintains a trust office in this state under this
50-55 subchapter may establish or acquire additional trust offices or
50-56 representative trust offices in this state to the same extent that
50-57 a state trust company may establish or acquire additional offices
50-58 in this state pursuant to the procedures for establishing or
50-59 acquiring the offices set forth in Section 3.203 of this Act.
50-60 SUBCHAPTER C. OUT-OF-STATE TRUST INSTITUTION
50-61 REPRESENTATIVE TRUST OFFICE
50-62 Sec. 9.201. REPRESENTATIVE TRUST OFFICE BUSINESS. (a) An
50-63 out-of-state trust institution may establish a representative trust
50-64 office as permitted by this subchapter to:
50-65 (1) solicit, but not accept, fiduciary appointments;
50-66 (2) act as a fiduciary in this state to the extent
50-67 permitted for a foreign corporate fiduciary by Section 105A,
50-68 Probate Code;
50-69 (3) perform ministerial duties with respect to
51-1 existing clients and accounts of the trust institution;
51-2 (4) engage in an activity permitted by Section 3.022
51-3 of this Act; and
51-4 (5) the extent not acting as a fiduciary:
51-5 (A) receive for safekeeping personal property of
51-6 every description;
51-7 (B) act as assignee, bailee, conservator,
51-8 custodian, escrow agent, registrar, receiver, or transfer agent;
51-9 and
51-10 (C) act as financial advisor, investment advisor
51-11 or manager, agent, or attorney-in-fact in any agreed capacity.
51-12 (b) Except as provided by Subsection (a), a trust
51-13 representative office may not act as a fiduciary or otherwise
51-14 engage in the trust business in this state.
51-15 (c) Subject to the requirements of this subchapter, an
51-16 out-of-state trust institution may establish and maintain
51-17 representative trust offices anywhere in this state.
51-18 Sec. 9.202. REGISTRATION OF REPRESENTATIVE TRUST OFFICE.
51-19 (a) Except as provided by Subsection (e) with respect to a credit
51-20 union, a savings association, or a savings bank, an out-of-state
51-21 trust institution that does not maintain a branch or trust office
51-22 in this state and that desires to establish or acquire and maintain
51-23 a representative trust office shall:
51-24 (1) file a notice on a form prescribed by the banking
51-25 commissioner, setting forth:
51-26 (A) the name of the out-of-state trust
51-27 institution;
51-28 (B) the location of the proposed office; and
51-29 (C) satisfactory evidence that the notificant is
51-30 a trust institution;
51-31 (2) pay the filing fee, if any, prescribed by law; and
51-32 (3) submit a copy of the resolution adopted by the
51-33 board authorizing the representative trust office and a copy of the
51-34 trust institution's registration filed with the secretary of state
51-35 pursuant to Section 201.102, Finance Code.
51-36 (b) The notificant may commence business at the
51-37 representative trust office on the 31st day after the date the
51-38 banking commissioner receives the notice unless the banking
51-39 commissioner specifies an earlier or later date.
51-40 (c) The 30-day period of review may be extended by the
51-41 banking commissioner on a determination that the written notice
51-42 raises issues that require additional information or additional
51-43 time for analysis. If the period of review is extended, the
51-44 out-of-state trust institution may establish the representative
51-45 trust office only on prior written approval by the banking
51-46 commissioner.
51-47 (d) The banking commissioner may deny approval of the
51-48 representative trust office if the banking commissioner finds that
51-49 the notificant lacks sufficient financial resources to undertake
51-50 the proposed expansion without adversely affecting its safety or
51-51 soundness or that the proposed office would be contrary to the
51-52 public interests. In acting on the notice, the banking
51-53 commissioner shall consider the views of the appropriate
51-54 supervisory agencies.
51-55 (e) A credit union, savings association, or savings bank
51-56 that does not maintain a branch in this state and desires to
51-57 establish or acquire and maintain a representative trust office
51-58 shall comply with this section, except that the notice required by
51-59 Subsection (a) must be filed with, and the duties and
51-60 responsibilities of the banking commissioner under Subsections
51-61 (b)-(d) shall be performed by:
51-62 (1) the Texas credit union commissioner, with respect
51-63 to a credit union; or
51-64 (2) the Texas savings and loan commissioner, with
51-65 respect to a savings association or savings bank.
51-66 (f) An out-of-state trust institution that fails to register
51-67 as required by this section is subject to Subchapter C, Chapter 6
51-68 of this Act.
52-1 SUBCHAPTER D. SUPERVISION OF OUT-OF-STATE TRUST COMPANY
52-2 Sec. 9.301. COOPERATIVE AGREEMENTS; FEES. (a) To carry out
52-3 the purposes of this Act, the banking commissioner may:
52-4 (1) enter into cooperative, coordinating, or
52-5 information sharing agreements with another supervisory agency or
52-6 an organization affiliated with or representing one or more
52-7 supervisory agencies;
52-8 (2) with respect to periodic examination or other
52-9 supervision or investigation, accept reports of examination or
52-10 investigation by, and reports submitted to, another supervisory
52-11 agency in lieu of conducting examinations or investigations or
52-12 receiving reports as might otherwise be required or permissible
52-13 under this Act;
52-14 (3) enter into contracts with another supervisory
52-15 agency having concurrent regulatory or supervisory jurisdiction to
52-16 engage the services of the agency for reasonable compensation to
52-17 assist in connection with the banking commissioner's performance of
52-18 official duties under this Act or other law, or to provide services
52-19 to the agency for reasonable compensation in connection with the
52-20 agency's performance of official duties under law, except that
52-21 Chapter 2254, Government Code, does not apply to such contracts;
52-22 (4) enter into joint examinations or joint enforcement
52-23 actions with another supervisory agency having concurrent
52-24 regulatory or supervisory jurisdiction, except that the banking
52-25 commissioner may independently take action under Section 9.305 of
52-26 this Act if the banking commissioner determines that the action is
52-27 necessary to carry out the banking commissioner's responsibilities
52-28 under this Act or to enforce compliance with the laws of this
52-29 state; and
52-30 (5) assess supervisory and examination fees to be paid
52-31 by an out-of-state trust company that maintains one or more offices
52-32 in this state in connection with the banking commissioner's
52-33 performance of duties under this Act.
52-34 (b) Supervisory or examination fees assessed by the banking
52-35 commissioner in accordance with this Act may be shared with another
52-36 supervisory agency or an organization affiliated with or
52-37 representing one or more supervisory agencies in accordance with an
52-38 agreement between the banking commissioner and the agency or
52-39 organization. The banking commissioner may also receive a portion
52-40 of supervisory or examination fees assessed by another supervisory
52-41 agency in accordance with an agreement between the banking
52-42 commissioner and the agency.
52-43 Sec. 9.302. EXAMINATIONS; PERIODIC REPORTS. (a) To the
52-44 extent consistent with Section 9.301 of this Act, the banking
52-45 commissioner may make examinations of a trust office or trust
52-46 representative office established and maintained in this state by
52-47 an out-of-state trust company pursuant to this chapter as the
52-48 banking commissioner considers necessary to determine whether the
52-49 office is being operated in compliance with the laws of this state
52-50 and in accordance with safe and sound fiduciary practices. The
52-51 provisions of Section 2.002 of this Act apply to the examinations.
52-52 (b) The finance commission may by rule prescribe
52-53 requirements for periodic reports regarding a trust office or trust
52-54 representative office in this state. The required reports must be
52-55 provided by the trust institution maintaining the office.
52-56 Reporting requirements under this subsection must be appropriate
52-57 for the purpose of enabling the banking commissioner to discharge
52-58 the responsibilities of the banking commissioner under this
52-59 chapter.
52-60 Sec. 9.303. INTERPRETIVE STATEMENTS AND OPINIONS.
52-61 (a) Subject to Subsection (b), to encourage the effective
52-62 coordination and implementation of home state laws and host state
52-63 laws with respect to interstate trust business, the banking
52-64 commissioner, directly or through the deputy banking commissioner
52-65 or a department attorney in the manner provided by Sections 2.001
52-66 and 2.0011 of this Act, and with the effect provided by Section
52-67 2.0012 of this Act, may issue:
52-68 (1) an interpretive statement for the general guidance
52-69 of trust institutions in this state and the general public; or
53-1 (2) an opinion interpreting or determining the
53-2 applicability of laws of this state to the trust business and the
53-3 operation of a branch, trust office, or another office in this
53-4 state of an out-of-state trust institution, or in other states by
53-5 state trust companies.
53-6 (b) With respect to the trust business of a credit union,
53-7 savings association, or savings bank, the duties and
53-8 responsibilities of the banking commissioner under Subsection (a)
53-9 shall be performed by:
53-10 (1) the Texas credit union commissioner, with respect
53-11 to a credit union; or
53-12 (2) the Texas savings and loan commissioner, with
53-13 respect to a savings association or savings bank.
53-14 Sec. 9.304. CONFIDENTIAL INFORMATION. Information obtained
53-15 directly or indirectly by the banking commissioner relative to the
53-16 financial condition or business affairs of a trust institution,
53-17 other than the public portions of a report of condition or income
53-18 statement, or a present, former, or prospective shareholder,
53-19 participant, officer, director, manager, affiliate, or service
53-20 provider of the trust institution, whether obtained through
53-21 application, examination, or otherwise, and each related file or
53-22 record of the department is confidential and may not be disclosed
53-23 by the banking commissioner or an employee of the department except
53-24 as expressly provided by Subchapter B, Chapter 2 of this Act.
53-25 Sec. 9.305. ENFORCEMENT; APPEALS. (a) If the banking
53-26 commissioner determines that an out-of-state trust company has
53-27 violated this Act or other applicable law of this state, the
53-28 banking commissioner may take all enforcement actions the banking
53-29 commissioner would be empowered to take if the out-of-state trust
53-30 company were a state trust company, except that the banking
53-31 commissioner shall promptly give notice to the home state regulator
53-32 of each enforcement action to be taken against an out-of-state
53-33 trust company and, to the extent practicable, shall consult and
53-34 cooperate with the home state regulator in pursuing and resolving
53-35 the enforcement action. An out-of-state trust company may appeal a
53-36 final order or other decision of the banking commissioner under
53-37 this Act as provided by Section 3.010 of this Act.
53-38 (b) Notwithstanding Subsection (a) of this section, the
53-39 banking commissioner may enforce this Act against a trust
53-40 institution by appropriate action in the courts, including an
53-41 action for injunctive relief, if the banking commissioner concludes
53-42 the action is necessary or desirable.
53-43 Sec. 9.306. NOTICE OF SUBSEQUENT EVENT. Each out-of-state
53-44 trust company that has established and maintains an office in this
53-45 state pursuant to this Act shall give written notice, at least 30
53-46 days before the effective date of the event, or, in the case of an
53-47 emergency transaction, a shorter period before the effective date
53-48 consistent with applicable state or federal law, to the banking
53-49 commissioner of:
53-50 (1) a merger or other transaction that would cause a
53-51 change of control with respect to the trust company, with the
53-52 result that an application would be required to be filed with the
53-53 home state regulator or a federal supervisory agency;
53-54 (2) a transfer of all or substantially all of the
53-55 trust accounts or trust assets of the out-of-state trust company to
53-56 another person; or
53-57 (3) the closing or disposition of an office in this
53-58 state.
53-59 ARTICLE 4. CONFORMING AMENDMENTS TO TRUST LAW
53-60 SECTION 4.001. Sections 1.002(a)(11), (46), and (52)-(54),
53-61 Texas Trust Company Act (Article 342a-1.001 et seq., Vernon's Texas
53-62 Civil Statutes), are amended to read as follows:
53-63 (11) "Company" means a [includes a bank, trust
53-64 company,] corporation, partnership, association, business trust,
53-65 [or] another trust, or a similar organization, including a trust
53-66 institution.
53-67 (46) "State trust company" or "trust company" means a
53-68 trust association or limited trust association organized or
53-69 reorganized under this Act, including an association organized
54-1 under the laws of this state before September 1, 1997. If the
54-2 context or circumstances require, the term includes a trust company
54-3 organized under the laws of another state that lawfully maintains a
54-4 trust office in this state in accordance with Chapter 9 of this
54-5 Act.
54-6 (52) "Unauthorized trust activity" means an act or
54-7 practice within this state by a company [person] without a charter,
54-8 license, permit, registration, or other authority issued or granted
54-9 by the banking commissioner or other appropriate regulatory
54-10 authority for which such a charter, license, permit, registration,
54-11 or other authority is required to conduct trust business.
54-12 (53) "Trust institution" means a bank, credit union,
54-13 foreign bank, savings association, savings bank, or trust company
54-14 that is authorized by its charter to conduct a trust business.
54-15 (54) "Undivided profits" means the part of equity
54-16 capital of a state trust company equal to the balance of its net
54-17 profits, income, gains, and losses since the date of its formation
54-18 minus subsequent distributions to shareholders or participants and
54-19 transfers to surplus or capital under share dividends or
54-20 appropriate board resolutions. The term includes amounts allocated
54-21 to undivided profits as a result of a merger.
54-22 (55) [(54)] "Voting security" means a share,
54-23 participation share, or other evidence of proprietary interest in a
54-24 state trust company or other company that has as an attribute the
54-25 right to vote or participate in the election of the board of the
54-26 trust company or other company, regardless of whether the right is
54-27 limited to the election of fewer than all of the board members.
54-28 The term includes a security that is convertible or exchangeable
54-29 into a voting security and a nonvoting participation share of a
54-30 managing participant.
54-31 SECTION 4.002. Section 1.003(a), Texas Trust Company Act
54-32 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
54-33 amended to read as follows:
54-34 (a) The finance commission may adopt rules to accomplish the
54-35 purposes of this Act, including rules necessary or reasonable to:
54-36 (1) implement and clarify this Act;
54-37 (2) preserve or protect the safety and soundness of
54-38 state trust companies;
54-39 (3) grant the same rights and privileges to state
54-40 trust companies with respect to the exercise of fiduciary powers
54-41 that are or may be granted to a trust institution that maintains
54-42 its principal office or a branch or trust office [state or national
54-43 bank that is domiciled] in this state [and exercising fiduciary
54-44 powers];
54-45 (4) provide for recovery of the cost of maintenance
54-46 and operation of the department and the cost of enforcing this Act
54-47 through the imposition and collection of ratable and equitable fees
54-48 for notices, applications, and examinations; and
54-49 (5) facilitate the fair hearing and adjudication of
54-50 matters before the banking commissioner and the finance commission.
54-51 SECTION 4.003. Section 2.001, Texas Trust Company Act
54-52 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
54-53 amended to read as follows:
54-54 Sec. 2.001. ISSUANCE OF INTERPRETIVE STATEMENTS [AND
54-55 OPINIONS]. (a) The banking commissioner may issue interpretive
54-56 statements containing matters of general policy for the guidance of
54-57 the general public and state trust companies, and[. The banking
54-58 commissioner shall file the statements for publication in the Texas
54-59 Register. The banking commissioner] may amend or repeal a
54-60 published interpretive statement by issuing an amended statement or
54-61 notice of repeal of a statement [and filing the statement or notice
54-62 for publication in the Texas Register. The secretary of state
54-63 shall publish the filed statements and notices in the Texas
54-64 Register and in a designated chapter of the Texas Administrative
54-65 Code].
54-66 (b) An interpretive statement may be disseminated by
54-67 newsletter, via an electronic medium such as the internet, in a
54-68 volume of statutes or related materials published by the banking
54-69 commissioner or others, or by other means reasonably calculated to
55-1 notify persons affected by the interpretive statement. Notice of
55-2 an amended or withdrawn statement must be published in a
55-3 substantially similar manner as the affected statement was
55-4 originally published.
55-5 Sec. 2.0011. ISSUANCE OF OPINION. (a) In response to a
55-6 specific request from a member of the public or industry, the [The]
55-7 banking commissioner may issue an opinion [in response to a
55-8 specific request from a member of the public or the state trust
55-9 company industry] directly or through the deputy banking
55-10 commissioner or the department's attorneys.
55-11 (b) If the banking commissioner determines that the opinion
55-12 is useful for the general guidance of trust companies and the
55-13 general public, the banking commissioner may disseminate [file] the
55-14 opinion by newsletter, via an electronic medium such as the
55-15 internet, in a volume of statutes or related materials published by
55-16 the banking commissioner or others, or by other means reasonably
55-17 calculated to notify persons affected by the opinion [for
55-18 publication in the Texas Register]. A published opinion must be
55-19 redacted to preserve [in a manner that preserves] the
55-20 confidentiality of the requesting party, unless the requesting
55-21 party consents to be identified in the published opinion.
55-22 (c) The banking commissioner may amend or repeal a published
55-23 opinion by issuing an amended opinion or notice of repeal of an
55-24 opinion and disseminating [filing] the opinion or notice in a
55-25 substantially similar manner as the affected statement or opinion
55-26 was originally published. The [for publication in the Texas
55-27 Register, except that the] requesting party, however, may rely on
55-28 the original opinion if:
55-29 (1) all material facts were originally disclosed to
55-30 the banking commissioner;
55-31 (2) the[, considerations of] safety and soundness of
55-32 the affected trust company will not be affected by [companies are
55-33 not implicated with respect to] further [and prospective] reliance
55-34 on the original opinion; [,] and
55-35 (3) the text and interpretation of relevant governing
55-36 provisions of this Act have not been changed by legislative or
55-37 judicial action. [The secretary of state shall publish the filed
55-38 opinions and notices in the Texas Register and a designated chapter
55-39 of the Texas Administrative Code.]
55-40 Sec. 2.0012. EFFECT OF INTERPRETIVE STATEMENT OR OPINION.
55-41 [(c)] An interpretive statement or opinion issued under this
55-42 section does not have the force of law and is not a rule for the
55-43 purposes of Chapter 2001, Government Code, unless adopted by the
55-44 finance commission as provided by Chapter 2001, Government Code.
55-45 An interpretive statement or opinion is an administrative
55-46 construction of this Act entitled to great weight if the
55-47 construction is reasonable and does not conflict with this Act.
55-48 SECTION 4.004. Section 3.001(a), Texas Trust Company Act
55-49 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
55-50 amended to read as follows:
55-51 (a) Subject to the other provisions of this chapter, one or
55-52 more persons may organize and charter a state trust company as a
55-53 state trust association or a limited trust association. A state
55-54 trust company may engage in the trust business by [perform any act
55-55 as a fiduciary that a state bank or national bank exclusively
55-56 exercising trust powers may perform under the laws of this state,
55-57 including]:
55-58 (1) acting as trustee under a written agreement;
55-59 (2) receiving money and other property in its capacity
55-60 as trustee for investment in real or personal property;
55-61 (3) acting as trustee and performing the fiduciary
55-62 duties committed or transferred to it by order of a court of
55-63 competent jurisdiction;
55-64 (4) acting as executor, administrator, or trustee of
55-65 the estate of a deceased person;
55-66 (5) acting as a custodian, guardian, conservator, or
55-67 trustee for a minor or incapacitated person;
55-68 (6) acting as a successor fiduciary to a trust
55-69 [depository] institution or other fiduciary;
56-1 (7) receiving for safekeeping personal property;
56-2 (8) acting as custodian, assignee, transfer agent,
56-3 escrow agent, registrar, or receiver;
56-4 (9) acting as investment advisor, agent, or attorney
56-5 in fact according to an applicable agreement;
56-6 (10) exercising additional powers expressly conferred
56-7 by rule of the finance commission; and
56-8 (11) exercising any incidental power that is
56-9 reasonably necessary to enable it to fully exercise the powers
56-10 expressly conferred according to commonly accepted fiduciary
56-11 customs and usages.
56-12 SECTION 4.005. Section 3.005(e), Texas Trust Company Act
56-13 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
56-14 amended to read as follows:
56-15 (e) Chapter 2001, Government Code, does not apply to a
56-16 charter application filed for the purpose of assuming all or any
56-17 portion of the assets, liabilities, and accounts of a trust [any
56-18 depository] institution [or state trust company] considered by the
56-19 banking commissioner to be in hazardous condition.
56-20 SECTION 4.006. Section 3.022, Texas Trust Company Act
56-21 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
56-22 amended to read as follows:
56-23 Sec. 3.022. ACTIVITIES NOT REQUIRING CHARTER. Subject to
56-24 Subchapter C, Chapter 9 of this Act, a [A] company does not engage
56-25 in the trust business in a manner requiring a state charter by:
56-26 (1) acting in a manner authorized by law and in the
56-27 scope of authority as an agent of a trust institution [state trust
56-28 company];
56-29 (2) rendering a service customarily performed as an
56-30 attorney in a manner approved and authorized by the Supreme Court
56-31 of Texas or State Bar of Texas;
56-32 (3) acting as trustee under a deed of trust made only
56-33 as security for the payment of money or for the performance of
56-34 another act;
56-35 (4) conducting [a trust] business as a trust
56-36 institution [under a charter that authorizes the exercise of trust
56-37 powers as a depository institution,] if the exercise of fiduciary
56-38 [trust] powers in this state by the trust [depository] institution
56-39 is not otherwise prohibited by law;
56-40 (5) engaging in a business regulated by the Office of
56-41 Consumer Credit Commissioner, except as limited by rules adopted by
56-42 the finance commission;
56-43 (6) receiving and distributing rents and proceeds of
56-44 sale as a licensed real estate broker on behalf of a principal in a
56-45 manner authorized by the Texas Real Estate Commission;
56-46 (7) engaging in a securities transaction or providing
56-47 an investment advisory service as a licensed and registered dealer,
56-48 salesman, or advisor to the extent that the activity is regulated
56-49 by the State Securities Board or the Securities and Exchange
56-50 Commission;
56-51 (8) engaging in the sale and administration of an
56-52 insurance product by an insurance company or agent licensed by the
56-53 Texas Department of Insurance to the extent that the activity is
56-54 regulated by the Texas Department of Insurance;
56-55 (9) engaging in the lawful sale of prepaid funeral
56-56 benefits under a permit issued by the banking commissioner under
56-57 Chapter 154, Finance Code [512, Acts of the 54th Legislature,
56-58 Regular Session, 1955 (Article 548b, Vernon's Texas Civil
56-59 Statutes)];
56-60 (10) engaging in the lawful business of a perpetual
56-61 care cemetery corporation under Chapter 712, Health and Safety
56-62 Code;
56-63 (11) engaging as a principal or agent in the lawful
56-64 sale of checks under a license issued by the banking commissioner
56-65 under The Sale of Checks Act, Chapter 152, Finance Code [(Article
56-66 489d, Vernon's Texas Civil Statutes)];
56-67 (12) acting as trustee under a voting trust as
56-68 provided by Article 2.30, Texas Business Corporation Act;
56-69 (13) acting as trustee by a public, private, or
57-1 independent institution of higher education or a university system,
57-2 as defined by Section 61.003, Education Code, including an
57-3 affiliated foundation or corporation of such an institution or
57-4 system acting as trustee as provided by the Education Code;
57-5 (14) engaging in another activity expressly excluded
57-6 from the application of this Act by rule of the finance commission;
57-7 (15) rendering services customarily performed by a
57-8 certified accountant in a manner authorized by the Texas State
57-9 Board of Public Accountancy;
57-10 (16) serving as trustee of a charitable trust as
57-11 provided by Article 2.31, Texas Non-Profit Corporation Act (Article
57-12 1396-2.31, Vernon's Texas Civil Statutes);
57-13 (17) performing escrow or settlement services if
57-14 licensed under Chapter 9, Insurance Code; [or]
57-15 (18) acting as a qualified intermediary in a tax
57-16 deferred exchange under 26 U.S.C. Section 1031 and applicable
57-17 regulations; or
57-18 (19) providing permitted services at a trust
57-19 representative office established in this state pursuant to
57-20 Subchapter C, Chapter 9 of this Act.
57-21 SECTION 4.007. Section 3.203(a), Texas Trust Company Act
57-22 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
57-23 amended to read as follows:
57-24 (a) A state trust company may establish and maintain
57-25 additional offices [anywhere in this state] by filing a written
57-26 notice with the banking commissioner setting forth the name of the
57-27 state trust company, the street address of the proposed additional
57-28 office, a description of the activities proposed to be conducted at
57-29 the additional office, and a copy of the resolution adopted by the
57-30 board authorizing the additional office.
57-31 SECTION 4.008. Section 3.302(c), Texas Trust Company Act
57-32 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
57-33 amended to read as follows:
57-34 (c) The banking commissioner may approve the merger if:
57-35 (1) each resulting state trust company will be solvent
57-36 and have adequate capitalization for its business and location;
57-37 (2) each resulting state trust company has in all
57-38 respects complied with the statutes and rules relating to the
57-39 organization of a state trust company;
57-40 (3) all obligations and liabilities of each trust
57-41 company that is a party to the merger have been properly discharged
57-42 or otherwise lawfully assumed or retained by a trust institution
57-43 [company] or other fiduciary;
57-44 (4) each surviving, new, or acquiring person that is
57-45 not authorized to engage in the trust business will not engage in
57-46 the trust business and has in all respects complied with the laws
57-47 of this state; and
57-48 (5) all conditions imposed by the banking commissioner
57-49 have been satisfied or otherwise resolved.
57-50 SECTION 4.009. Section 3.401, Texas Trust Company Act
57-51 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
57-52 amended to read as follows:
57-53 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER TRUST
57-54 INSTITUTION [COMPANY]. (a) A state trust company, with the prior
57-55 written approval of the banking commissioner, may purchase all or
57-56 substantially all of the assets of another trust [regulated
57-57 financial] institution, including the right to control accounts
57-58 established with the trust institution [state trust company].
57-59 Except as otherwise expressly provided by this section or another
57-60 statute, the purchase of all or part of the assets of the trust
57-61 institution does not make the purchasing state trust company
57-62 responsible for any liability or obligation of the selling trust
57-63 institution that the purchasing state trust company does not
57-64 expressly assume. Except as otherwise provided by this Act, this
57-65 subchapter does not govern or prohibit the purchase by a state
57-66 trust company of all or part of the assets of a corporation or
57-67 other entity that is not a trust institution [state trust company].
57-68 (b) To make a purchase under this section, an application in
57-69 the form required by the banking commissioner must be filed with
58-1 the banking commissioner. The banking commissioner shall
58-2 investigate the condition of the purchaser and seller and may
58-3 require the submission of additional information as considered
58-4 necessary to make an informed decision. The banking commissioner
58-5 shall approve the purchase if:
58-6 (1) the acquiring state trust company will be solvent
58-7 and have sufficient capitalization for its business and location;
58-8 (2) the acquiring state trust company has complied
58-9 with all applicable statutes and rules;
58-10 (3) all obligations and liabilities of each trust
58-11 institution [company] that is a party to the purchase or sale of
58-12 assets have been properly discharged or otherwise lawfully assumed
58-13 or retained by a trust institution [company] or other fiduciary;
58-14 (4) all conditions imposed by the banking commissioner
58-15 have been satisfied or otherwise resolved; and
58-16 (5) all fees and costs have been paid.
58-17 (c) A purchase is effective on the date of approval unless
58-18 the purchase agreement provides for and the banking commissioner
58-19 consents to a different effective date.
58-20 (d) The acquiring state trust company shall succeed by
58-21 operation of law to all of the rights, privileges, and obligations
58-22 of the selling trust institution under each account included in the
58-23 assets acquired.
58-24 SECTION 4.010. Section 3.405, Texas Trust Company Act
58-25 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
58-26 amended by adding Subsection (e) to read as follows:
58-27 (e) The acquiring trust institution shall succeed by
58-28 operation of law to all of the rights, privileges, and obligations
58-29 of the selling state trust company under each account included in
58-30 the assets acquired.
58-31 SECTION 4.011. Subchapter F, Chapter 3, Texas Trust Company
58-32 Act (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
58-33 amended to read as follows:
58-34 SUBCHAPTER F. [STATE TRUST REGULATORY SYSTEM:]
58-35 EXIT OF STATE TRUST COMPANY OR
58-36 ENTRY OF ANOTHER TRUST INSTITUTION
58-37 Sec. 3.501. MERGER[, REORGANIZATION,] OR CONVERSION OF STATE
58-38 TRUST COMPANY INTO ANOTHER TRUST INSTITUTION [NATIONAL BANK]
58-39 EXERCISING FIDUCIARY POWERS. (a) Subject to Chapter 9 of this
58-40 Act, a [A] state trust company may act as necessary and to the
58-41 extent permitted by [under] the laws of the United States, [or]
58-42 this state, another state, or another country to merge[,
58-43 reorganize,] or convert into another form of trust institution [a
58-44 national bank exercising fiduciary powers].
58-45 (b) The merger [, reorganization,] or conversion must be
58-46 made and approval of the state trust company's board, shareholders,
58-47 or participants must be obtained in accordance with the Texas
58-48 Business Corporation Act as if the state trust company were a
58-49 domestic corporation and all other parties to the transaction, if
58-50 any, were foreign corporations or other entities, except as may be
58-51 otherwise provided by rules. For purposes of this subsection, a
58-52 conversion is considered a merger into the successor trust
58-53 institution [national bank exercising fiduciary powers].
58-54 (c) The state trust company does not cease to be a state
58-55 trust company subject to the supervision of the banking
58-56 commissioner unless:
58-57 (1) the banking commissioner has been given written
58-58 notice of the intention to merge[, reorganize,] or convert before
58-59 the 31st day before the date of the proposed transaction;
58-60 (2) the state trust company has published notice of
58-61 the transaction, in the form and frequency specified by the banking
58-62 commissioner, in a newspaper of general circulation published in
58-63 the county of its home office or, if such a newspaper is not
58-64 published in the county, in an adjacent county and in other
58-65 locations that the banking commissioner considers appropriate;
58-66 (3) the state trust company has filed with the banking
58-67 commissioner:
58-68 (A) a copy of the application filed with the
58-69 successor regulatory authority, including a copy of each contract
59-1 evidencing or implementing the merger[, reorganization,] or
59-2 conversion, or other documents sufficient to show compliance with
59-3 applicable law;
59-4 (B) a certified copy of all minutes of board
59-5 meetings and shareholder or participant meetings at which action
59-6 was taken regarding the merger[, reorganization,] or conversion;
59-7 and
59-8 (C) a publisher's certificate showing
59-9 publication of the required notice;
59-10 (4) the banking commissioner determines that:
59-11 (A) all accounts and liabilities of the state
59-12 trust company are fully discharged, assumed, or otherwise retained
59-13 by the successor trust institution [national bank exercising
59-14 fiduciary powers];
59-15 (B) any conditions imposed by the banking
59-16 commissioner for the protection of clients and creditors have been
59-17 met or otherwise resolved; and
59-18 (C) any required filing fees have been paid; and
59-19 (5) the state trust company has received a certificate
59-20 of authority to do business as the successor trust institution [a
59-21 national bank exercising fiduciary powers].
59-22 Sec. 3.502. CONVERSION OF TRUST INSTITUTION INTO STATE TRUST
59-23 COMPANY. (a) A trust institution may apply to the banking
59-24 commissioner for conversion into a state trust company on a form
59-25 prescribed by the banking commissioner and accompanied by any
59-26 required fee if the trust institution follows the procedures
59-27 prescribed by the laws of the United States, this state, another
59-28 state, or another country governing the exit of the trust
59-29 institution for the purpose of conversion into a state trust
59-30 company from the regulatory system applicable before the
59-31 conversion. A trust association or limited trust association may
59-32 convert its organizational form under this section.
59-33 (b) A trust institution applying to convert into a state
59-34 trust company may receive a certificate of authority to do business
59-35 as a state trust company if the banking commissioner finds that:
59-36 (1) the trust institution is not engaging in a pattern
59-37 or practice of unsafe and unsound fiduciary or banking practices;
59-38 (2) the trust institution has adequate capitalization
59-39 for a state trust company to act as a fiduciary at the same
59-40 locations as the trust institution is acting as a fiduciary before
59-41 the conversion;
59-42 (3) the trust institution can be expected to operate
59-43 profitably after the conversion;
59-44 (4) the officers and directors of the trust
59-45 institution as a group have sufficient banking experience, ability,
59-46 standing, competence, trustworthiness, and integrity to justify a
59-47 belief that the trust institution will operate as a state trust
59-48 company in compliance with law; and
59-49 (5) each principal shareholder has sufficient
59-50 experience, ability, standing, competence, trustworthiness, and
59-51 integrity to justify a belief that the trust institution will be
59-52 free from improper or unlawful influence or interference with
59-53 respect to the trust institution's operation as a state trust
59-54 company in compliance with law.
59-55 (c) The banking commissioner may:
59-56 (1) request additional information considered
59-57 necessary to an informed decision under this section;
59-58 (2) perform an examination of the converting trust
59-59 institution at the expense of the converting trust institution; and
59-60 (3) require that examination fees be paid before a
59-61 certificate of authority is issued.
59-62 (d) In connection with the application, the converting trust
59-63 institution must:
59-64 (1) submit a statement of the law governing the exit
59-65 of the trust institution from the regulatory system applicable
59-66 before the conversion and the terms of the transition into a state
59-67 trust company; and
59-68 (2) demonstrate that all applicable law has been fully
59-69 satisfied.
60-1 SECTION 4.012. Section 6.003(a), Texas Trust Company Act
60-2 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
60-3 amended to read as follows:
60-4 (a) The banking commissioner has grounds to remove a present
60-5 or former officer, director, manager, managing participant, or
60-6 employee of a state trust company from office or employment in, or
60-7 prohibit a controlling shareholder or participant or other person
60-8 [participating in the affairs of the state trust company] from
60-9 further participation in the affairs of, the state trust company[,
60-10 state bank, or other entity chartered or licensed by the banking
60-11 commissioner under the laws of this state,] if the banking
60-12 commissioner determines from examination or other credible evidence
60-13 that:
60-14 (1) the person committed, participated, or acted, in
60-15 other than an inadvertent or unintentional manner, as described by
60-16 Section 6.002(a) of this Act with regard to the affairs of the
60-17 state trust company, or violated a final cease and desist order
60-18 issued in response to the same or a similar act;
60-19 (2) because of this action by the person:
60-20 (A) the state trust company has suffered or will
60-21 probably suffer financial loss or other damage;
60-22 (B) the interests of the trust company's clients
60-23 have been or could be prejudiced; or
60-24 (C) the person has received financial gain or
60-25 other benefit by reason of the violation; and
60-26 (3) this action by the person:
60-27 (A) involves personal dishonesty on the part of
60-28 the person; or
60-29 (B) demonstrates wilful or continuing disregard
60-30 for the safety or soundness of the state trust company.
60-31 SECTION 4.013. Section 6.007(a), Texas Trust Company Act
60-32 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
60-33 amended to read as follows:
60-34 (a) Without the prior written approval of the banking
60-35 commissioner, a person subject to a final and enforceable removal
60-36 or prohibition order issued by the banking commissioner:
60-37 (1) may not serve as a director, officer, or employee
60-38 of a [any] state trust company, state bank, or other entity
60-39 chartered or licensed by the banking commissioner under the laws of
60-40 this state while the order is in effect, including an interstate
60-41 branch, trust office, or representative office in this state of an
60-42 out-of-state state bank, trust company, or foreign bank;
60-43 (2) may not directly or indirectly participate in any
60-44 manner in the management of such an entity;
60-45 (3) may not directly or indirectly vote for a director
60-46 of such an entity;
60-47 (4) may not solicit, procure, transfer, attempt to
60-48 transfer, vote, or attempt to vote a proxy, consent, or
60-49 authorization with respect to voting rights in such an entity; and
60-50 (5) remains entitled to receive dividends or a share
60-51 of profits, return of contribution, or other distributive benefit
60-52 from such an entity with respect to voting securities in the entity
60-53 owned by the person.
60-54 SECTION 4.014. Section 6.202(b), Texas Trust Company Act
60-55 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
60-56 amended to read as follows:
60-57 (b) This section does not apply to:
60-58 (1) a trust institution [state or national bank, a
60-59 state or federal savings bank, a state or federal savings
60-60 association, a state or federal credit union, or a depository or
60-61 trust company institution] authorized under this Act to conduct a
60-62 trust business in this state; and
60-63 (2) another entity organized under the laws of this
60-64 state, another state, the United States, or a foreign sovereign
60-65 state to the extent that:
60-66 (A) the entity is authorized under its charter
60-67 or the laws of this state or the United States to use a term, word,
60-68 character, ideogram, phonogram, or phrase prohibited by Subsection
60-69 (a) of this section; and
61-1 (B) the entity is authorized by the laws of this
61-2 state or the United States to conduct the activities in which the
61-3 entity is engaged in this state.
61-4 SECTION 4.015. Section 7.101(b), Texas Trust Company Act
61-5 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
61-6 amended to read as follows:
61-7 (b) Unless the banking commissioner directs or consents
61-8 otherwise, the home office and all additional trust [branch]
61-9 offices of the state trust company shall remain open for business
61-10 during normal business hours until the last date specified in
61-11 published notices for presentation of claims, withdrawal of
61-12 accounts, and redemption of property.
61-13 SECTION 4.016. Section 7.102(c), Texas Trust Company Act
61-14 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
61-15 amended to read as follows:
61-16 (c) The state trust company shall publish notice in a
61-17 newspaper of general circulation in each community where its home
61-18 office or an additional trust office [a branch] is located at least
61-19 once each week for eight consecutive weeks or at other times
61-20 specified by the banking commissioner or rules adopted under this
61-21 Act. The notice must state that the state trust company is
61-22 liquidating, that clients, depositors, and creditors must present
61-23 their claims for payment on or before a specific date, and that all
61-24 safe deposit box holders and bailors of property left with the
61-25 state trust company should remove their property on or before a
61-26 specified date. The dates selected by the state trust company must
61-27 be approved by the banking commissioner and must allow the affairs
61-28 of the state trust company to be wound up as quickly as feasible
61-29 and allow creditors, clients, and owners of property adequate time
61-30 for presentation of claims, withdrawal of accounts, and redemption
61-31 of property. The banking commissioner may adjust the dates with or
61-32 without republication of notice if additional time appears needed
61-33 for these activities.
61-34 SECTION 4.017. Section 7.105(d), Texas Trust Company Act
61-35 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
61-36 amended to read as follows:
61-37 (d) After distribution of all remaining assets, the state
61-38 trust company shall:
61-39 (1) file with the department, under the oath or
61-40 affirmation of a majority of its board or managing participants,
61-41 another affidavit accompanied by schedules showing the distribution
61-42 to each shareholder, participant, or participant-transferee; and
61-43 (2) tender to the department:
61-44 (A) all copies of reports of examination of the
61-45 state trust company in its possession; and
61-46 (B) its original charter, or an affidavit
61-47 stating that the original charter is lost, and any [branch]
61-48 certificates of authority for additional trust offices.
61-49 SECTION 4.018. Section 7.205(a), Texas Trust Company Act
61-50 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
61-51 amended to read as follows:
61-52 (a) As soon as reasonably practicable after initiation of
61-53 the receivership proceeding, the receiver shall publish notice, in
61-54 a newspaper of general circulation in each community where the
61-55 state trust company's home office or any additional trust office is
61-56 [and a branch are] located. The notice must state that the state
61-57 trust company has been closed for liquidation, that clients and
61-58 creditors must present their claims for payment on or before a
61-59 specific date, and that all safe deposit box holders and bailors of
61-60 property left with the state trust company should remove their
61-61 property not later than a specified date. The receiver shall
61-62 select the dates to allow the affairs of the state trust company to
61-63 be wound up as quickly as feasible while allowing creditors,
61-64 clients, and owners of property adequate time for presentation of
61-65 claims, withdrawal of accounts, and redemption of property, but may
61-66 not select a date before the 121st day after the date of the
61-67 notice. The receiver may adjust the dates with the approval of the
61-68 court with or without republication of notice if additional time
61-69 appears needed for these activities.
62-1 SECTION 4.019. Section 8.002, Texas Trust Company Act
62-2 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
62-3 amended to read as follows:
62-4 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. [(a)] An
62-5 attachment, injunction, or execution for the purpose of collecting
62-6 a money judgment or securing a prospective money judgment against a
62-7 trust institution, including a state trust company or a trust
62-8 institution organized under the laws of another state that lawfully
62-9 maintains an office in this state, or against a client of or client
62-10 account in the trust institution, is governed by Sections 59.007
62-11 and 59.008, Finance Code [may not be issued against a state trust
62-12 company located in this state before the judgment is final and all
62-13 appeals have been exhausted or foreclosed by law.]
62-14 [(b) This section does not affect an attachment, injunction,
62-15 execution, or writ of garnishment issued to or served on a state
62-16 trust company for the purpose of collecting a money judgment or
62-17 securing a prospective money judgment against a client of or client
62-18 account in the state trust company].
62-19 SECTION 4.020. Section 8.004, Texas Trust Company Act
62-20 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
62-21 amended to read as follows:
62-22 Sec. 8.004. AUTHORITY TO ACT AS NOTARY PUBLIC. A notary
62-23 public is not disqualified from taking an acknowledgement or proof
62-24 of a written instrument as provided by Section 406.016, Government
62-25 Code, solely because of the person's ownership of stock or
62-26 participation interest in or employment by a [state] trust
62-27 institution [company] that is an interested party in the underlying
62-28 transaction, including a state trust company or a trust institution
62-29 organized under the laws of another state that lawfully maintains
62-30 an office in this state.
62-31 SECTION 4.021. Section 8.005(a), Texas Trust Company Act
62-32 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
62-33 amended to read as follows:
62-34 (a) An officer, director, manager, managing participant, or
62-35 employee of a [state] trust institution [company] with fewer than
62-36 500 shareholders or participants, including a state trust company
62-37 or a trust institution organized under the laws of another state
62-38 that lawfully maintains an office in this state, or a holding
62-39 company with fewer than 500 shareholders or participants that
62-40 controls a [state] trust institution, [company] is exempt from the
62-41 registration and licensing provisions of The Securities Act
62-42 (Article 581-1 et seq., Vernon's Texas Civil Statutes) with respect
62-43 to that person's participation in a sale or other transaction
62-44 involving securities issued by the [state] trust institution
62-45 [company] or the holding company of which that person is an
62-46 officer, director, manager, managing participant, or employee.
62-47 SECTION 4.022. Section 8.006, Texas Trust Company Act
62-48 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
62-49 amended to read as follows:
62-50 Sec. 8.006. SUCCESSION OF TRUST POWERS. (a) If, [a
62-51 reorganizing or selling state trust company] at the time of a
62-52 merger, reorganization, conversion, [or] sale of substantially all
62-53 of its assets under Chapter 3 or Chapter 9 of this Act or other
62-54 applicable law, or sale of substantially all of its trust accounts
62-55 and related activities at a separate branch or trust office, a
62-56 reorganizing or selling trust institution is acting as trustee,
62-57 guardian, executor, or administrator, or in another fiduciary
62-58 capacity, a [the] successor or purchasing trust institution with
62-59 sufficient fiduciary authority may [entity with fiduciary powers
62-60 may, without the necessity of judicial action or action by the
62-61 creator of the trust,] continue the office, trust, or fiduciary
62-62 relationship:
62-63 (1) without the necessity of judicial action or action
62-64 by the creator of the office, trust, or fiduciary relationship; and
62-65 (2) without regard to whether the successor or
62-66 purchasing trust institution meets qualification requirements
62-67 specified in an instrument creating the office, trust, or fiduciary
62-68 relationship other than a requirement related to geographic locale
62-69 of account administration, including requirements as to
63-1 jurisdiction of incorporation, location of principal office, or
63-2 type of financial institution.
63-3 (b) The successor or purchasing trust institution [entity]
63-4 may perform all the duties and exercise all the powers connected
63-5 with or incidental to the fiduciary relationship in the same manner
63-6 as if the successor or purchasing trust institution [entity] had
63-7 been originally designated as the fiduciary.
63-8 SECTION 4.023. Section 8.007, Texas Trust Company Act
63-9 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
63-10 amended to read as follows:
63-11 Sec. 8.007. DISCOVERY OF CLIENT RECORDS. Civil discovery of
63-12 a client record maintained by a trust institution, including a
63-13 state trust company or a trust institution organized under the laws
63-14 of another state that lawfully maintains an office in this state,
63-15 is governed by Section 59.006, Finance Code [30.007, Civil Practice
63-16 and Remedies Code, as added by Chapter 914, Acts of the 74th
63-17 Legislature, Regular Session, 1995].
63-18 SECTION 4.024. Section 8.008, Texas Trust Company Act
63-19 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
63-20 amended to read as follows:
63-21 Sec. 8.008. COMPLIANCE REVIEW COMMITTEE. A trust company
63-22 may establish a compliance review committee as provided by Section
63-23 59.009, Finance Code [(a) In this section:]
63-24 [(1) "Civil action" means a civil proceeding pending
63-25 in a court or other adjudicatory tribunal with jurisdiction to
63-26 issue a request or subpoena for records, including an alternative
63-27 dispute resolution mechanism, voluntary or required, under which a
63-28 party may compel the production of records. The term does not
63-29 include an examination or enforcement proceeding initiated by the
63-30 Federal Deposit Insurance Corporation or its successor and the
63-31 board of governors of the Federal Reserve System or its successor,
63-32 in exercise of their jurisdiction.]
63-33 [(2) "Compliance review document" means a document
63-34 prepared for or created by a compliance review committee.]
63-35 [(b) A state trust company or an affiliate of a state trust
63-36 company, including its holding company, may establish a compliance
63-37 review committee to test, review, or evaluate the institution's
63-38 conduct, transactions, or potential transactions for the purpose of
63-39 monitoring and improving or enforcing compliance with:]
63-40 [(1) a statutory or regulatory requirement;]
63-41 [(2) financial reporting to a governmental agency;]
63-42 [(3) the policies and procedures of the state trust
63-43 company or its affiliates; or]
63-44 [(4) safe, sound, and fair lending practices.]
63-45 [(c) Except as provided by Subsection (d) of this section:]
63-46 [(1) a compliance review document is confidential and
63-47 is not discoverable or admissible in evidence in a civil action;]
63-48 [(2) an individual serving on a compliance review
63-49 committee or acting under the direction of a compliance review
63-50 committee may not be required to testify in a civil action as to
63-51 the contents or conclusions of a compliance review document or as
63-52 to an action taken or discussions conducted by or for a compliance
63-53 review committee; and]
63-54 [(3) a compliance review document or an action taken
63-55 or discussion conducted by or for a compliance review committee
63-56 that is disclosed to a governmental agency remains confidential and
63-57 is not discoverable or admissible in a civil action.]
63-58 [(d) Subsection (c)(2) of this section does not apply to an
63-59 individual that has management responsibility for the operations,
63-60 records, employees, or activities being examined or evaluated by
63-61 the compliance review committee.]
63-62 [(e) This section does not limit the discovery or
63-63 admissibility in a civil action of a document that is not a
63-64 compliance review document].
63-65 SECTION 4.025. Section 8.009, Texas Trust Company Act
63-66 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes), is
63-67 amended to read as follows:
63-68 Sec. 8.009. PARITY. (a) A state trust company has the same
63-69 rights and privileges with respect to the exercise of fiduciary
64-1 powers that are or may be granted to a trust institution [state or
64-2 national bank] that maintains its principal office or a branch or
64-3 trust office [is domiciled] in this state, except that this section
64-4 may not be used by a state trust company to:
64-5 (1) diminish its otherwise applicable fiduciary duties
64-6 to a client under the laws of this state; or
64-7 (2) avoid otherwise applicable consumer protection
64-8 laws of this state [and exercising fiduciary powers].
64-9 (b) A state trust company that intends to exercise a right
64-10 or privilege with respect to the exercise of fiduciary powers
64-11 granted to a trust [regulated financial] institution described in
64-12 Subsection (a) of this section that is not authorized for state
64-13 trust companies under the statutes and rules of this state shall
64-14 submit a letter to the banking commissioner, describing in detail
64-15 the activity in which the state trust company intends to engage and
64-16 the specific authority for the trust [regulated financial]
64-17 institution described in Subsection (a) to undertake the proposed
64-18 activity and shall attach copies, if available, of relevant state
64-19 and federal law, including regulations and interpretive letters.
64-20 The state trust company may begin to perform the proposed activity
64-21 after the 30th day after the date the banking commissioner receives
64-22 the state trust company's letter unless the banking commissioner
64-23 specifies an earlier or later date or prohibits the activity. The
64-24 banking commissioner may prohibit the state trust company from
64-25 performing the activity only if the banking commissioner finds
64-26 that:
64-27 (1) a trust [regulated financial] institution
64-28 described in Subsection (a) of this section [that is domiciled in
64-29 this state] does not possess the specific right or privilege to
64-30 perform the activity the state trust company seeks to perform; or
64-31 (2) the performance of the activity by the state trust
64-32 company would adversely affect the safety and soundness of the
64-33 requesting state trust company.
64-34 (c) The banking commissioner may extend the 30-day period
64-35 under Subsection (b) of this section if the banking commissioner
64-36 determines that the state trust company's letter raises issues
64-37 requiring additional information or additional time for analysis.
64-38 If the 30-day period is extended, the state trust company may
64-39 perform the proposed activity only on prior written approval by the
64-40 banking commissioner, except that the banking commissioner must
64-41 approve or prohibit the proposed activity or convene a hearing
64-42 under Section 3.009 of this Act not later than the 60th day after
64-43 the date the commissioner receives the state trust company's
64-44 letter. If a hearing is covened under Section 3.009 of this Act,
64-45 the banking commissioner must approve or prohibit the proposed
64-46 activity not later than the 30th day after the date the hearing is
64-47 completed.
64-48 (d) A state trust company that is denied the requested right
64-49 or privilege to engage in an activity by the banking commissioner
64-50 under this section may appeal as provided by Section 3.010 of this
64-51 Act or may resubmit a letter under this subsection with additional
64-52 information or authority relevant to the banking commissioner's
64-53 determination. A denial is immediately final for purposes of
64-54 appeal.
64-55 (e) The finance commission may adopt rules implementing the
64-56 method or manner in which a state trust company exercises specific
64-57 rights and privileges, including rules regarding the exercise of
64-58 rights and privileges that would be prohibited to state trust
64-59 companies under state law except as provided by this section. The
64-60 finance commission may not adopt rules under this subsection unless
64-61 it finds that:
64-62 (1) trust [regulated financial] institutions described
64-63 in Subsection (a) [of this section that are domiciled in this
64-64 state] possess the rights or privileges to perform activities the
64-65 rules would permit state trust companies to perform; and
64-66 (2) if the rights and privileges would be prohibited
64-67 to state trust companies under other state law, the rules contain
64-68 adequate safeguards and controls, consistent with safety and
64-69 soundness, to address the concern of the legislature evidenced by
65-1 the state law the rules would impact.
65-2 (f) The exercise of rights and privileges by a state trust
65-3 company in compliance with and in the manner authorized by this
65-4 section is not a violation of any statute of this state.
65-5 SECTION 4.026. Section 115.002, Property Code, is amended to
65-6 read as follows:
65-7 Sec. 115.002. VENUE. (a) The venue of an action under
65-8 Section 115.001 of this Act is determined according to this
65-9 section.
65-10 (b) If there is a single, noncorporate trustee, an action
65-11 shall be brought [venue is] in the county in which:
65-12 (1) the trustee resides or has resided at any time
65-13 during the four-year period preceding the date the action is filed;
65-14 or
65-15 (2) the situs of administration of the trust is
65-16 maintained or has been maintained at any time during the four-year
65-17 period preceding the date the action is filed [the trustee's
65-18 residence is located].
65-19 (c) If there are multiple trustees or a corporate [any]
65-20 trustee, an action shall be brought [is a corporation, venue is] in
65-21 the county in which the situs of administration of the trust is
65-22 maintained or has been maintained at any time during the four-year
65-23 period preceding the date the action is filed, provided that an
65-24 action against a corporate trustee as defendant may be brought in
65-25 the county in which the corporate trustee maintains its principal
65-26 office in this state [the corporation's principal office is
65-27 located, or, if two or more corporations are trustees of the trust,
65-28 venue is in the county in which the principal office of any of the
65-29 corporations is located].
65-30 (d) For just and reasonable cause, including the location of
65-31 the records and the convenience of the parties and witnesses, the
65-32 court may transfer an action from a county of proper venue under
65-33 this section to another county of proper venue:
65-34 (1) on motion of a defendant or joined party, filed
65-35 concurrently with or before the filing of the answer or other
65-36 initial responsive pleading, and served in accordance with law; or
65-37 (2) on motion of an intervening party, filed not later
65-38 than the 20th day after the court signs the order allowing the
65-39 intervention, and served in accordance with law.
65-40 (e) Notwithstanding any other provision of this section, on
65-41 agreement by all parties the court may transfer an action from a
65-42 county of proper venue under this section to any other county.
65-43 (f) For the purposes of this section:
65-44 (1) "Corporate trustee" means an entity organized as a
65-45 financial institution or a corporation with the authority to act in
65-46 a fiduciary capacity.
65-47 (2) "Principal office" means an office of a corporate
65-48 trustee in this state where the decision makers for the corporate
65-49 trustee within this state conduct the daily affairs of the
65-50 corporate trustee. The mere presence of an agent or representative
65-51 of the corporate trustee does not establish a principal office.
65-52 The principal office of the corporate trustee may also be but is
65-53 not necessarily the same as the situs of administration of the
65-54 trust.
65-55 (3) "Situs of administration" means the location in
65-56 this state where the trustee maintains the office that is primarily
65-57 responsible for dealing with the settlor and beneficiaries of the
65-58 trust. The situs of administration may also be but is not
65-59 necessarily the same as the principal office of a corporate trustee
65-60 [If there are two or more trustees, none of which is a corporation,
65-61 venue is in the county in which the principal office of the trust
65-62 is maintained].
65-63 ARTICLE 5. PUBLIC DEPOSITS
65-64 SECTION 5.001. Section 4.102, Business & Commerce Code, is
65-65 amended by adding Subsection (c) to read as follows:
65-66 (c) Notwithstanding Section 1.105, the laws of this state
65-67 govern a deposit contract between a bank and a consumer account
65-68 holder if the branch or separate office of the bank that accepts
65-69 the deposit contract is located in this state. For purposes of
66-1 this subsection, "consumer account holder" means a natural person
66-2 who holds a deposit account primarily for personal, family, or
66-3 household purposes but does not include a natural person who holds
66-4 an account for another in a professional capacity.
66-5 SECTION 5.002. Section 45.201(2), Education Code, is amended
66-6 to read as follows:
66-7 (2) "Bank" means a [state bank authorized and
66-8 regulated under the laws of this state pertaining to banking, in
66-9 particular The Texas Banking Code (Article 342-101 et seq.,
66-10 Vernon's Texas Civil Statutes), a national] bank, a savings and
66-11 loan association, or a savings bank [authorized and regulated by
66-12 federal law, or a savings and loan association or savings bank]
66-13 organized under the laws of this state, another state, or federal
66-14 law that has its main office or a branch office in this state. The
66-15 term does not include any bank the deposits of which are not
66-16 insured by the Federal Deposit Insurance Corporation.
66-17 SECTION 5.003. Section 404.023, Government Code, is amended
66-18 to read as follows:
66-19 Sec. 404.023. DESIGNATION. The comptroller shall designate
66-20 one or more state depository banks that have main offices or
66-21 branches in centrally located cities in this state to be used for
66-22 clearing checks and other obligations due the state.
66-23 SECTION 5.004. Section 404.024(g), Government Code, is
66-24 amended to read as follows:
66-25 (g) To the extent practicable, the comptroller shall give
66-26 first consideration to [Texas] banks that maintain main offices or
66-27 branch offices in this state when investing in direct security
66-28 repurchase agreements.
66-29 SECTION 5.005. Section 404.031(f), Government Code, is
66-30 amended to read as follows:
66-31 (f) Instead of depositing pledged securities with the
66-32 comptroller, a state depository may deposit pledged securities with
66-33 a [the] Federal Reserve Bank [of Dallas] or a [the] Federal Home
66-34 Loan Bank [of Dallas]. The securities shall be held by the bank to
66-35 secure funds deposited by the comptroller in the state depository
66-36 pledging the securities. When the pledged securities are
66-37 deposited, the bank may apply book entry to the securities. The
66-38 records of the bank shall at all times reflect the name of the
66-39 state depository depositing the pledged securities, and the bank
66-40 shall issue an advice of transaction to the comptroller and the
66-41 state depository pledging the securities.
66-42 SECTION 5.006. Section 2257.024(a), Government Code, is
66-43 amended to read as follows:
66-44 (a) A public entity may contract with a bank that has its
66-45 main office or a branch office [domiciled] in this state to secure
66-46 a deposit of public funds.
66-47 SECTION 5.007. Section 2257.041(d), Government Code, is
66-48 amended to read as follows:
66-49 (d) A custodian must be approved by the public entity and
66-50 be:
66-51 (1) a state or national bank that:
66-52 (A) is designated by the comptroller as a state
66-53 depository;
66-54 (B) has its main office or a branch office [is
66-55 domiciled] in this state; and
66-56 (C) has a capital stock and permanent surplus of
66-57 $5 million or more;
66-58 (2) the Texas Treasury Safekeeping Trust Company;
66-59 (3) a Federal Reserve Bank or a branch of a Federal
66-60 Reserve Bank; or
66-61 (4) a federal home loan bank.
66-62 SECTION 5.008. Sections 105.001(1), (12), and (13), Local
66-63 Government Code, are amended to read as follows:
66-64 (1) "Bank" means a state bank or a national bank that
66-65 has its main office or a branch office [domiciled] in this state.
66-66 (12) "Savings association" means a [state] savings
66-67 association or savings bank organized under the laws of this state,
66-68 another state, or federal law that has its main office or a branch
66-69 office [or a federal savings association domiciled] in this state.
67-1 (13) "State bank" means a bank organized under the
67-2 laws of this state or another state [has the meaning assigned by
67-3 Section 1.002(a), Texas Banking Act].
67-4 SECTION 5.009. Section 116.001(1), Local Government Code,
67-5 is amended to read as follows:
67-6 (1) "Bank" means a:
67-7 (A) bank organized under the laws of this state,
67-8 another state, or federal law that has its main office or a branch
67-9 office in this state; or
67-10 (B) [banking corporation, association or an
67-11 individual banker,] savings and loan association or savings bank
67-12 organized under the laws of this state, another state, or [a
67-13 savings and loan association or savings bank organized under]
67-14 federal law that has its main office or a branch office in this
67-15 state.
67-16 SECTION 5.010. Section 131.001, Local Government Code, is
67-17 amended to read as follows:
67-18 Sec. 131.001. SPECIAL DEPOSITORY AUTHORIZED. If a financial
67-19 institution [bank] that is a depository under state law for the
67-20 public funds of a county, municipality, or district suspends
67-21 business or is taken charge of by a state or federal bank
67-22 regulatory agency [the banking commissioner of Texas or the federal
67-23 comptroller of the currency], the local government authority
67-24 authorized to select the original depository may select by contract
67-25 a special depository for the public funds in the suspended
67-26 financial institution [bank].
67-27 SECTION 5.011. Section 131.005(a), Local Government Code, is
67-28 amended to read as follows:
67-29 (a) The comptroller shall determine the amount of state
67-30 funds held by a county depository that suspends business or is
67-31 taken charge of by a state or federal bank regulatory agency [the
67-32 Banking Commissioner of Texas or the federal comptroller of the
67-33 currency]. The comptroller may:
67-34 (1) contract with a special depository selected by the
67-35 county authorities as provided by this subchapter for the custody
67-36 and payment of those funds; and
67-37 (2) approve a bond for the deposit contract.
67-38 SECTION 5.012. Section 131.901(a), Local Government Code, is
67-39 amended to read as follows:
67-40 (a) The governing body of a political subdivision, including
67-41 a county, municipality, school district, or other district, may not
67-42 designate a financial institution located outside the state as a
67-43 depository for funds under the governing body's jurisdiction. An
67-44 out-of-state financial institution is not considered to be located
67-45 outside this state to the extent the governing body designates a
67-46 branch office of such institution that is located in this state.
67-47 SECTION 5.013. Section 161.173(a), Natural Resources Code,
67-48 is amended to read as follows:
67-49 (a) Money in the fund that is not immediately committed to
67-50 paying principal of and interest on the bonds, to the purchase of
67-51 land, or to the payment of expenses as provided in this chapter may
67-52 be invested in:
67-53 (1) direct security repurchase agreements and reverse
67-54 security repurchase agreements made with state or national banks
67-55 that have main offices or branch offices [domiciled] in this state
67-56 or with primary dealers as approved by the Federal Reserve System;
67-57 (2) direct obligations of or obligations the principal
67-58 and interest of which are guaranteed by the United States;
67-59 (3) direct obligations of or obligations guaranteed by
67-60 the Federal Home Loan Banks, the Federal National Mortgage
67-61 Association, the Federal Farm Credit System, the Student Loan
67-62 Marketing Association, the Federal Home Loan Mortgage Corporation,
67-63 or a successor organization to one of those organizations;
67-64 (4) bankers' acceptances that:
67-65 (A) are eligible for purchase by members of the
67-66 Federal Reserve System;
67-67 (B) do not exceed 270 days to maturity; and
67-68 (C) are issued by a bank that has received the
67-69 highest short-term credit rating by a nationally recognized
68-1 investment rating firm;
68-2 (5) commercial paper that:
68-3 (A) does not exceed 270 days to maturity; and
68-4 (B) has received the highest short-term credit
68-5 rating by a nationally recognized investment rating firm;
68-6 (6) contracts written by the board in which the board
68-7 grants the purchaser the right to purchase securities in the
68-8 board's marketable securities portfolio at a specified price over a
68-9 specified period and for which the board is paid a fee and
68-10 specifically prohibits naked-option or uncovered option trading;
68-11 (7) obligations of a state or an agency, county, city,
68-12 or other political subdivision of a state and mutual funds composed
68-13 of these obligations;
68-14 (8) an investment instrument, obligation, or other
68-15 evidence of indebtedness the payment of which is directly or
68-16 indirectly guaranteed by the full faith and credit of the United
68-17 States;
68-18 (9) an investment, account, depository receipt, or
68-19 deposit that is fully:
68-20 (A) insured by the Federal Deposit Insurance
68-21 Corporation or its[, the Federal Savings and Loan Insurance
68-22 Corporation, or a] successor [organization to one of those
68-23 organizations]; or
68-24 (B) secured by securities described by
68-25 Subdivision (2), (3), or (8) of this subsection;
68-26 (10) a collateralized mortgage obligation fully
68-27 secured by securities or mortgages issued or guaranteed by the
68-28 Government National Mortgage Association (GNMA) or any entity
68-29 described by Subdivision (3) of this subsection;
68-30 (11) a security or evidence of indebtedness issued by
68-31 the Farm Credit System Financial Assistance Corporation, the
68-32 Private Export Funding Corporation, or the Export-Import Bank; and
68-33 (12) any other investment authorized for investment of
68-34 state funds by the comptroller under Section 404.024, Government
68-35 Code.
68-36 SECTION 5.014. Sections 223.010(b) and (d), Transportation
68-37 Code, are amended to read as follows:
68-38 (b) At the request of the contractor and with the approval
68-39 of the department and the comptroller, the amount retained may be
68-40 deposited under a trust agreement with a state or national bank
68-41 that has its main office or a branch office [domiciled] in this
68-42 state and is selected by the contractor.
68-43 (d) The bank, acting as escrow agent and by instructions
68-44 from the contractor, may reinvest the retained amount in a
68-45 certificate of deposit issued by a state or national bank that has
68-46 its main office or a branch office [domiciled] in this state, bank
68-47 time deposit, or other similar investment prescribed by the trust
68-48 agreement.
68-49 SECTION 5.015. Section 361.178, Transportation Code, is
68-50 amended to read as follows:
68-51 Sec. 361.178. FURNISHING OF INDEMNIFYING BONDS OR PLEDGE OF
68-52 SECURITIES. A bank or trust company that has its main office or a
68-53 branch office in [incorporated under the laws of] this state and
68-54 that acts as depository of the proceeds of bonds or of revenue may
68-55 furnish indemnifying bonds or pledge securities that the authority
68-56 requires.
68-57 ARTICLE 6. AMENDMENTS TO PROBATE CODE
68-58 SECTION 6.001. Section 3(d), Probate Code, is amended to
68-59 read as follows:
68-60 (d) "Corporate fiduciary" means a financial institution as
68-61 defined by Section 201.101, Finance Code, [trust company or bank]
68-62 having trust powers, existing or doing business under the laws of
68-63 this state, another state, or [of] the United States, which is
68-64 authorized by law to act under the order or appointment of any
68-65 court of record, without giving bond, as receiver, trustee,
68-66 executor, administrator, or, although without general depository
68-67 powers, depository for any moneys paid into court, or to become
68-68 sole guarantor or surety in or upon any bond required to be given
68-69 under the laws of this state.
69-1 SECTION 6.002. Section 105A, Probate Code, is amended to
69-2 read as follows:
69-3 Sec. 105A. APPOINTMENT AND SERVICE OF FOREIGN BANKS AND
69-4 TRUST COMPANIES IN FIDUCIARY CAPACITY. (a) A corporate fiduciary
69-5 that does not have its main office or a branch office in this
69-6 state, hereinafter called "foreign corporate fiduciaries" [Any bank
69-7 or trust company organized under the laws of, and having its
69-8 principal office in, the District of Columbia or any territory or
69-9 state of the United States of America, other than the State of
69-10 Texas, and any national bank having its principal office in the
69-11 District of Columbia or such territory or other state (all such
69-12 banks or trust companies being hereinafter sometimes called
69-13 "foreign banks or trust companies")], having the corporate power to
69-14 so act, may be appointed and may serve in the State of Texas as
69-15 trustee (whether of a personal or corporate trust), executor,
69-16 administrator, guardian of the estate, or in any other fiduciary
69-17 capacity, whether the appointment be by will, deed, agreement,
69-18 declaration, indenture, court order or decree, or otherwise, when
69-19 and to the extent that the home state of the corporate fiduciary
69-20 [District of Columbia or territory or other state in which such
69-21 foreign bank or trust company is organized and has its principal
69-22 office] grants authority to serve in like fiduciary capacity to a
69-23 corporate fiduciary whose home state is this state [bank or trust
69-24 company organized under the laws of, and having its principal
69-25 office in, the State of Texas, or to a national bank having its
69-26 principal office in the State of Texas].
69-27 (b) Before qualifying or serving in the State of Texas in
69-28 any fiduciary capacity, as aforesaid, such a foreign corporate
69-29 fiduciary [bank or trust company] shall file in the office of the
69-30 Secretary of the State of the State of Texas (1) a copy of its
69-31 charter, articles of incorporation or of association, and all
69-32 amendments thereto, certified by its secretary under its corporate
69-33 seal; (2) a duly executed instrument in writing, by its terms of
69-34 indefinite duration and irrevocable, appointing the Secretary of
69-35 State and his successors its agent for service of process upon whom
69-36 all notices and processes issued by any court of this state may be
69-37 served in any action or proceeding relating to any trust, estate,
69-38 fund or other matter within this state with respect to which such
69-39 foreign corporate fiduciary [bank or trust company] is acting in
69-40 any fiduciary capacity, including the acts or defaults of such
69-41 foreign corporate fiduciary [bank or trust company] with respect to
69-42 any such trust, estate or fund; and (3) a written certificate of
69-43 designation, which may be changed from time to time thereafter by
69-44 the filing of a new certificate of designation, specifying the name
69-45 and address of the officer, agent or other person to whom such
69-46 notice or process shall be forwarded by the Secretary of State.
69-47 Upon receipt of such notice or process, it shall be the duty of the
69-48 Secretary of State forthwith to forward same by registered or
69-49 certified mail to the officer, agent or other person so designated.
69-50 Service of notice or process upon the Secretary of State as agent
69-51 for such a foreign corporate fiduciary [bank or trust company]
69-52 shall in all ways and for all purposes have the same effect as if
69-53 personal service had been had within this state upon such foreign
69-54 corporate fiduciary [bank or trust company].
69-55 (c) [No foreign bank or trust company shall establish or
69-56 maintain any branch office, agency or other place of business
69-57 within this state, or shall in any way solicit, directly or
69-58 indirectly, any fiduciary business in this state of the types
69-59 embraced by subdivision (a) hereof. Except as authorized herein or
69-60 as may otherwise be authorized by the laws of this state, no
69-61 foreign bank or trust company shall act in a fiduciary capacity in
69-62 this state. Nothing in this Section shall be construed to
69-63 authorize foreign banks and trust companies to issue or to sell or
69-64 otherwise market or distribute in this state any investment
69-65 certificates, trust certificates, or other types of securities
69-66 (including without limiting the generality of the foregoing any
69-67 securities of the types authorized by Chapter 7 of the Insurance
69-68 Code of 1951 prior to the repeal thereof), or to conduct any
69-69 activities or exercise any powers of the type embraced and
70-1 regulated by the Texas Banking Act (Article 342-1.001 et seq.,
70-2 Vernon's Texas Civil Statutes) or the Texas Trust Company Act other
70-3 than those conducted and exercised in a fiduciary capacity under
70-4 the terms and conditions hereof.]
70-5 [(d)] Any foreign corporate fiduciary [bank or trust
70-6 company] acting in a fiduciary capacity in this state in strict
70-7 accordance with the provisions of this Section shall not be deemed
70-8 to be doing business in the State of Texas within the meaning of
70-9 Article 8.01 of the Texas Business Corporation Act; and shall be
70-10 deemed qualified to serve in such capacity under the provisions of
70-11 Section 105 of this Code. [; and notwithstanding other law shall
70-12 not be prohibited from using in its name and stationery the terms
70-13 "bank," "trust," or "bank and trust."]
70-14 (d) [(e)] The provisions hereof are in addition to, and not
70-15 a limitation on, the provisions of Subtitle G, Finance Code, and
70-16 the Texas Trust Company Act (Article 342a-1.001 et seq., Vernon's
70-17 Texas Civil Statutes) [Section 2 of Chapter 388, Acts of the 55th
70-18 Legislature, Regular Session, 1957].
70-19 (e) [(f)] Any foreign corporate fiduciary [bank or trust
70-20 Company] which shall violate any provision of this Section 105a
70-21 shall be guilty of a misdemeanor and, upon conviction thereof,
70-22 shall be subject to a fine of not exceeding Five Thousand Dollars
70-23 ($5,000.00), and may, in the discretion of the court, be prohibited
70-24 from thereafter serving in this state in any fiduciary capacity.
70-25 SECTION 6.003. Subsection 5, Section 194, Probate Code, is
70-26 amended to read as follows:
70-27 5. Agreement as to Deposit of Assets. It shall be
70-28 lawful, and the court may require such action when deemed in the
70-29 best interest of an estate, for a personal representative to agree
70-30 with the surety or sureties, either corporate or personal, for the
70-31 deposit of any or all cash, and safekeeping of other assets of the
70-32 estate in a financial institution as defined by Section 201.101,
70-33 Finance Code, with its main office or a branch office in this state
70-34 [domestic state or national bank, trust company, savings and loan
70-35 association, or other domestic corporate depository, duly
70-36 incorporated] and qualified to act as a depository in this State
70-37 [such] under the laws of this State or of the United States, if
70-38 such deposit is otherwise proper, in such manner as to prevent the
70-39 withdrawal of such moneys or other assets without the written
70-40 consent of the surety, or an order of the court made on such notice
70-41 to the surety as the court shall direct. No such agreement shall
70-42 in any manner release from or change the liability of the principal
70-43 or sureties as established by the terms of the bond.
70-44 SECTION 6.004. Section 389(b), Probate Code, is amended to
70-45 read as follows:
70-46 (b) If, at any time, the guardian of the estate shall have
70-47 on hand money belonging to the ward beyond that which may be
70-48 necessary for the education and maintenance of such ward or wards,
70-49 he shall invest such money as follows:
70-50 (1) In bonds or other obligations of the United
70-51 States;
70-52 (2) In tax-supported bonds of the State of Texas;
70-53 (3) In tax-supported bonds of any county, district,
70-54 political subdivision, or incorporated city or town in the State of
70-55 Texas; provided, that the bonds of counties, districts,
70-56 subdivisions, cities, and towns may be purchased only subject to
70-57 the following restrictions: the net funded debt of said issuing
70-58 unit shall not exceed ten per cent of the assessed value of taxable
70-59 property therein, "net funded debt" meaning the total funded debt
70-60 less sinking funds on hand; and further, in the case of cities or
70-61 towns, less that part of the debt incurred for acquisition or
70-62 improvement of revenue-producing utilities, the revenues of which
70-63 are not pledged to support other obligations; provided, however,
70-64 that these restrictions shall not apply to bonds issued for road
70-65 purposes in this state under authority of Section 52 of Article III
70-66 of the Constitution of Texas, which bonds are supported by a tax
70-67 unlimited as to rate or amount;
70-68 (4) In shares or share accounts of any state savings
70-69 [building] and loan association or savings bank with its main
71-1 office or a branch office in [organized under the laws of] this
71-2 state, provided the payment of such shares or share accounts is
71-3 insured by the Federal Deposit [Savings & Loan] Insurance
71-4 Corporation;
71-5 (5) In the shares or share accounts of any federal
71-6 savings and loan association or savings bank with its main office
71-7 or a branch office [domiciled] in this state, where the payment of
71-8 such shares or share accounts is insured by the Federal Deposit
71-9 [Savings & Loan] Insurance Corporation;
71-10 (6) In collateral bonds of companies incorporated
71-11 under the laws of the State of Texas, having a paid-in capital of
71-12 One Million Dollars or more, when such bonds are a direct
71-13 obligation of the company issuing them, and are specifically
71-14 secured by first mortgage real estate notes or other securities
71-15 pledged with a trustee; or
71-16 (7) In interest-bearing time deposits which may be
71-17 withdrawn on or before one year after demand in any bank doing
71-18 business in Texas where the payment of such time deposits is
71-19 insured by the Federal Deposit Insurance Corporation.
71-20 SECTION 6.005. Section 601(5), Probate Code, is amended to
71-21 read as follows:
71-22 (5) "Corporate fiduciary" means a financial
71-23 institution as defined by Section 201.101, Finance Code, [trust
71-24 company or bank] having trust powers, existing or doing business
71-25 under the laws of this state, another state, or [of] the United
71-26 States, that is authorized by law to act under the order or
71-27 appointment of any court of record, without giving bond, as a
71-28 guardian, receiver, trustee, executor, or administrator, or,
71-29 although without general depository powers, as a depository for any
71-30 money paid into court, or to become sole guarantor or surety in or
71-31 on any bond required to be given under the laws of this state.
71-32 SECTION 6.006. Sections 703(e) and (g), Probate Code, are
71-33 amended to read as follows:
71-34 (e) If the court considers it to be in the best interests of
71-35 the ward, the court may require that the guardian and the corporate
71-36 or personal sureties on the bond of the guardian of the ward agree
71-37 to deposit any or all cash and safekeeping of other assets of the
71-38 guardianship estate in a financial institution as defined by
71-39 Section 201.101, Finance Code, with its main office or a branch
71-40 office in this state [domestic state or national bank, trust
71-41 company, savings and loan association, or other domestic corporate
71-42 depository, duly incorporated] and qualified to act as a depository
71-43 in this state [national bank, trust company, savings and loan
71-44 association, or other domestic corporate depository] under the laws
71-45 of this state or of the United States, and, if the depository is
71-46 otherwise proper, the court may require the deposit to be made in a
71-47 manner so as to prevent the withdrawal of the money or other assets
71-48 in the guardianship estate without the written consent of the
71-49 surety or on court order made on the notice to the surety. An
71-50 agreement made by a guardian and the sureties on the bond of the
71-51 guardian under this section does not release from liability or
71-52 change the liability of the principal or sureties as established by
71-53 the terms of the bond.
71-54 (g) In lieu of giving a surety or sureties on a bond that is
71-55 required of the guardian, or for purposes of reducing the amount of
71-56 the bond, the guardian of an estate may deposit out of the
71-57 guardian's own assets cash or securities that are acceptable to the
71-58 court with a financial institution as defined by Section 201.101,
71-59 Finance Code, with its main office or a branch office in this state
71-60 [domestic state or national bank, trust company, savings and loan
71-61 association, or other domestic corporate depository or with any
71-62 other corporate depository approved by the court]. If the deposit
71-63 is otherwise proper, the deposit must be equal in amount or value
71-64 to the amount of the bond required or the bond shall be reduced by
71-65 the value of assets that are deposited.
71-66 SECTION 6.007. Section 855(b), Probate Code, is amended to
71-67 read as follows:
71-68 (b) If the guardian of the estate has on hand money that
71-69 belongs to the ward that exceeds that amount of money that may be
72-1 necessary for the education and maintenance of the ward, the
72-2 guardian shall invest the money as follows:
72-3 (1) in bonds or other obligations of the United
72-4 States;
72-5 (2) in tax-supported bonds of this state;
72-6 (3) except as limited by Subsections (c) and (d) of
72-7 this section, in tax-supported bonds of a county, district,
72-8 political subdivision, or incorporated city or town in this state;
72-9 (4) in shares or share accounts of a state savings
72-10 [building] and loan association or savings bank with its main
72-11 office or a branch office in [organized under the laws of] this
72-12 state if the payment of the shares or share accounts is insured by
72-13 the Federal Deposit [Savings and Loan] Insurance Corporation;
72-14 (5) in the shares or share accounts of a federal
72-15 savings and loan association or savings bank with its main office
72-16 or a branch office [domiciled] in this state if the payment of the
72-17 shares or share accounts is insured by the Federal Deposit [Savings
72-18 and Loan] Insurance Corporation;
72-19 (6) in collateral bonds of companies incorporated
72-20 under the laws of this state, having a paid-in capital of
72-21 $1,000,000 or more, when the bonds are a direct obligation of the
72-22 company that issues the bonds and are specifically secured by first
72-23 mortgage real estate notes or other securities pledged with a
72-24 trustee; or
72-25 (7) in interest-bearing time deposits that may be
72-26 withdrawn on or before one year after demand in a bank that does
72-27 business in this state where the payment of the time deposits is
72-28 insured by the Federal Deposit Insurance Corporation.
72-29 ARTICLE 7. CIVIL PROCESS
72-30 SECTION 7.001. Section 30.007, Civil Practice and Remedies
72-31 Code, is amended to read as follows:
72-32 Sec. 30.007. PRODUCTION OF FINANCIAL INSTITUTION RECORDS.
72-33 Civil discovery of a customer record maintained by a financial
72-34 institution is governed by Section 59.006, Finance Code.
72-35 [(a) In this section:]
72-36 [(1) "Customer" means a person who uses, purchases, or
72-37 obtains an account, extension of credit, or product of a financial
72-38 institution or for whom a financial institution acts as a
72-39 fiduciary, agent, or custodian or in another representative
72-40 capacity.]
72-41 [(2) "Financial institution" means a state or national
72-42 bank, state or federal savings and loan association, state or
72-43 federal savings bank, state or federal credit union, foreign bank,
72-44 foreign bank agency, or trust company.]
72-45 [(3) "Record" means financial or other information of
72-46 a customer maintained by a financial institution.]
72-47 [(4) "Record request" means a valid and enforceable
72-48 subpoena, request for production, or other instrument issued under
72-49 authority of a tribunal that compels production of a customer
72-50 record.]
72-51 [(5) "Tribunal" means a court or other adjudicatory
72-52 tribunal with jurisdiction to issue a request for records,
72-53 including a government agency exercising adjudicatory functions and
72-54 an alternative dispute resolution mechanism, voluntary or required,
72-55 under which a party may compel the production of records.]
72-56 [(b) This section provides the exclusive method for
72-57 compelled discovery of a record of a financial institution relating
72-58 to one or more customers, does not create a right of privacy in a
72-59 record, and does not apply to:]
72-60 [(1) a demand or inquiry from a state or federal
72-61 government agency authorized by law to conduct an examination of
72-62 the financial institution;]
72-63 [(2) a record request from a state or federal
72-64 government agency or instrumentality under statutory or
72-65 administrative authority that provides for, or is accompanied by, a
72-66 specific mechanism for discovery and protection of a customer
72-67 record of a financial institution, including a record request from
72-68 a federal agency subject to the Right to Financial Privacy Act of
72-69 1978 (12 U.S.C. Section 3401 et seq.) or from the Internal Revenue
73-1 Service under 26 U.S.C. Section 7609;]
73-2 [(3) a record request from or report to a government
73-3 agency arising out of the investigation or prosecution of a
73-4 criminal offense;]
73-5 [(4) a record request in connection with a garnishment
73-6 proceeding in which the financial institution is garnishee and the
73-7 customer is debtor;]
73-8 [(5) an investigative demand or inquiry from a state
73-9 legislative investigating committee;]
73-10 [(6) an investigative demand or inquiry from the
73-11 attorney general of this state as authorized by law other than the
73-12 procedural law governing discovery in civil cases; or]
73-13 [(7) the voluntary use or disclosure of a record by a
73-14 financial institution subject to other applicable state or federal
73-15 law.]
73-16 [(c) A financial institution shall produce a record in
73-17 response to a record request only if:]
73-18 [(1) it is served with the record request not later
73-19 than the 24th day before the date that compliance with the record
73-20 request is required;]
73-21 [(2) before the financial institution complies with
73-22 the record request the requesting party pays the financial
73-23 institution's reasonable costs of complying with the record
73-24 request, including costs of reproduction, postage, research,
73-25 delivery, and attorney's fees, or posts a cost bond in an amount
73-26 estimated by the financial institution to cover those costs; and]
73-27 [(3) when the customer is not a party to the
73-28 proceeding in which the request was issued, the requesting party
73-29 complies with Subsections (d) and (e) and:]
73-30 [(A) the financial institution receives the
73-31 customer's written consent to release the record after a request
73-32 under Subsection (d)(3); or]
73-33 [(B) the tribunal takes further action based on
73-34 action initiated by the requesting party under Subsection (e).]
73-35 [(d) If the affected customer is not a party to the
73-36 proceeding in which the record request was issued, in addition to
73-37 serving the financial institution with a record request, the
73-38 requesting party shall:]
73-39 [(1) give notice stating the rights of the customer
73-40 under Subsection (f) and a copy of the request to each affected
73-41 customer in the manner and within the time provided by Rule 21a,
73-42 Texas Rules of Civil Procedure;]
73-43 [(2) file a certificate of service indicating that the
73-44 customer has been mailed or served with the notice and a copy of
73-45 the record request as required by this subsection with the tribunal
73-46 and the financial institution; and]
73-47 [(3) request the customer's written consent
73-48 authorizing the financial institution to comply with the request.]
73-49 [(e) If the customer refuses to execute the written consent
73-50 or fails to respond to the requesting party's request under
73-51 Subsection (d)(3) on or before the date that compliance with the
73-52 request is required, the requesting party may by written motion
73-53 seek an in camera inspection of the requested record as its sole
73-54 means of obtaining access to the requested record. In response to
73-55 a motion for in camera inspection, the tribunal may inspect the
73-56 requested record to determine its relevance to the matter before
73-57 the tribunal. The tribunal may order redaction of portions of the
73-58 records that the tribunal determines should not be produced and
73-59 shall enter a protective order preventing the record that it orders
73-60 produced from being:]
73-61 [(1) disclosed to a person who is not a party to the
73-62 proceeding before the tribunal; and]
73-63 [(2) used by a person for any purpose other than
73-64 resolving the dispute before the tribunal.]
73-65 [(f) The customer bears the burden of preventing or limiting
73-66 the financial institution's compliance with a record request
73-67 subject to this section by seeking an appropriate remedy, including
73-68 filing a motion to quash the record request or a motion for a
73-69 protective order. The customer has standing to appear before the
74-1 tribunal for that purpose if the customer is not otherwise a party.
74-2 Any motion filed shall be served on the financial institution and
74-3 the requesting party before the date that compliance with the
74-4 request is required. A financial institution is not liable to its
74-5 customer or another person for disclosure of a record in compliance
74-6 with this section.]
74-7 [(g) A financial institution may not be required to produce
74-8 a record under this section before the later of:]
74-9 [(1) the 24th day after the date of receipt of the
74-10 record request as provided by Subsection (c)(1);]
74-11 [(2) the 15th day after the date of receipt of a
74-12 customer consent to disclose a record as provided by Subsection
74-13 (c)(3); or]
74-14 [(3) the 15th day after the date a court orders
74-15 production of a record after an in camera inspection of a requested
74-16 record as provided by Subsection (e).]
74-17 [(h) An order to quash or for protection or other remedy
74-18 entered or denied by the tribunal under Subsection (e) or (f) is
74-19 not a final order and an interlocutory appeal may not be taken.]
74-20 SECTION 7.002. Section 31.002, Civil Practice and Remedies
74-21 Code, is amended by adding Subsection (g) to read as follows:
74-22 (g) With respect to turnover of property held by a financial
74-23 institution in the name of or on behalf of the judgment debtor as
74-24 customer of the financial institution, the rights of a receiver
74-25 appointed under Subsection (b)(3) do not attach until the financial
74-26 institution receives service of a certified copy of the order of
74-27 receivership in the manner specified by Section 59.008, Finance
74-28 Code.
74-29 SECTION 7.003. Subchapter C, Chapter 61, Civil Practice and
74-30 Remedies Code, is amended by adding Section 61.045 to read as
74-31 follows:
74-32 Sec. 61.045. ATTACHMENT OF PERSONALTY HELD BY FINANCIAL
74-33 INSTITUTION. Service of a writ of attachment on a financial
74-34 institution relating to personal property held by the financial
74-35 institution in the name of or on behalf of a customer of the
74-36 financial institution is governed by Section 59.008, Finance Code.
74-37 SECTION 7.004. Chapter 63, Civil Practice and Remedies Code,
74-38 is amended by adding Section 63.008 to read as follows:
74-39 Sec. 63.008. FINANCIAL INSTITUTION AS GARNISHEE. Service of
74-40 a writ of garnishment on a financial institution named as the
74-41 garnishee in the writ is governed by Section 59.008, Finance Code.
74-42 SECTION 7.005. Subchapter C, Chapter 64, Civil Practice and
74-43 Remedies Code, is amended by adding Section 64.036 to read as
74-44 follows:
74-45 Sec. 64.036. RECEIVERSHIP PROPERTY HELD BY FINANCIAL
74-46 INSTITUTION. Service or delivery of a notice of receivership, or a
74-47 demand or instruction by or on behalf of a receiver, relating to
74-48 receivership property held by a financial institution in the name
74-49 of or on behalf of a customer of the financial institution is
74-50 governed by Section 59.008, Finance Code.
74-51 SECTION 7.006. Subchapter A, Chapter 65, Civil Practice and
74-52 Remedies Code, is amended by adding Section 65.002 to read as
74-53 follows:
74-54 Sec. 65.002. RESTRAINING ORDER OR INJUNCTION AFFECTING
74-55 CUSTOMER OF FINANCIAL INSTITUTION. Service or delivery of a
74-56 restraining order or injunction affecting property held by a
74-57 financial institution in the name of or on behalf of a customer of
74-58 the financial institution is governed by Section 59.008, Finance
74-59 Code.
74-60 SECTION 7.007. Section 157.317(a), Family Code, is amended
74-61 to read as follows:
74-62 (a) A lien attaches to all real and personal property not
74-63 exempt under the Texas Constitution, including a claim for
74-64 negligence, personal injury, or workers' compensation, or an
74-65 insurance award for the claim, owned by the obligor on or after the
74-66 date the lien notice or abstract of judgment is filed with the
74-67 county clerk of the county in which the property is located, with
74-68 the court clerk as to property or claims in litigation, or, as to
74-69 property of the obligor in the possession or control of a third
75-1 party, from the date the lien notice is filed with that party.
75-2 Service of a lien notice on a financial institution relating to
75-3 property held by the financial institution in the name of or on
75-4 behalf of an obligor who is a customer of the financial institution
75-5 is governed by Section 59.008, Finance Code.
75-6 SECTION 7.008. Section 111.017, Tax Code, is amended to read
75-7 as follows:
75-8 Sec. 111.017. SEIZURE AND SALE OF PROPERTY. Before the
75-9 expiration of three years after a person becomes delinquent in the
75-10 payment of any amount under this title, the comptroller may seize
75-11 and sell at public auction real and personal property of the
75-12 person. A seizure made to collect the tax is limited only to
75-13 property of the person that is not exempt from execution. Service
75-14 or delivery of a notice of seizure under this section affecting
75-15 property held by a financial institution in the name of or on
75-16 behalf of a delinquent who is a customer of the financial
75-17 institution is governed by Section 59.008, Finance Code.
75-18 SECTION 7.009. Section 111.021(e), Tax Code, is amended to
75-19 read as follows:
75-20 (e) A notice under this section that attempts to prohibit
75-21 the transfer or disposal of an asset possessed or controlled by a
75-22 bank or other financial institution is governed by Section 59.008,
75-23 Finance Code, and also is effective if it is delivered or mailed to
75-24 the principal or any branch office of the bank or other financial
75-25 institution including any office of the bank or other financial
75-26 institution at which the deposit is carried or the credit or
75-27 property is held.
75-28 ARTICLE 8. TRANSITION, EFFECTIVE DATE, EMERGENCY
75-29 SECTION 8.001. DATE FOR CERTAIN FILINGS. (a) With respect
75-30 to an interstate branch or other office of an out-of-state
75-31 financial institution that exists in this state on the effective
75-32 date of this Act, regardless of whether the out-of-state financial
75-33 institution has filed a designation pursuant to or was not
75-34 previously subject to Section 39.003 or 59.001, Finance Code, as
75-35 those sections existed before the effective date of this Act, the
75-36 out-of-state financial institution must file the documentation and
75-37 information required by Section 201.102, Finance Code, as added by
75-38 this Act, before January 1, 2000.
75-39 (b) With respect to an out-of-state trust institution that
75-40 does not maintain a branch or trust office in this state but
75-41 maintains a representative trust office in this state on the
75-42 effective date of this Act, the out-of-state trust institution must
75-43 file the documentation and information required by Section 9.202,
75-44 Texas Trust Company Act (Article 342a-1.001 et seq., Vernon's Texas
75-45 Civil Statutes), as added by this Act, before January 1, 2000.
75-46 SECTION 8.002. REPEALER. (a) The following provisions of
75-47 the Finance Code are repealed:
75-48 (1) Sections 31.002(a)(26) and (27);
75-49 (2) Sections 31.008 and 32.0095; and
75-50 (3) Chapters 38, 39, and 272.
75-51 (b) The following provisions of the Texas Trust Company Act
75-52 (Article 342a-1.001 et seq., Vernon's Texas Civil Statutes) are
75-53 repealed:
75-54 (1) Sections 1.002(a)(3), (6), (16), and (20); and
75-55 (2) Section 3.021.
75-56 SECTION 8.003. RELATIONSHIP TO OTHER LAWS. If this Act
75-57 conflicts with an Act of the 76th Legislature, Regular Session,
75-58 1999, adopting a nonsubstantive revision of statutes relating to
75-59 financial institutions and practices, this Act prevails.
75-60 SECTION 8.004. EFFECTIVE DATE. This Act takes effect
75-61 September 1, 1999.
75-62 SECTION 8.005. EMERGENCY. The importance of this
75-63 legislation and the crowded condition of the calendars in both
75-64 houses create an emergency and an imperative public necessity that
75-65 the constitutional rule requiring bills to be read on three several
75-66 days in each house be suspended, and this rule is hereby suspended.
75-67 * * * * *