Texas Finance Code - Section 34.103. Bank Subsidiaries
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§ 34.103. BANK SUBSIDIARIES. (a) Subject to this section
and except as otherwise provided by this subtitle or rules adopted
under this subtitle, a state bank may conduct any activity or make
any investment through an operating subsidiary that a state bank or
a bank holding company, including a financial holding company, is
authorized to conduct or make under state or federal law if the
operating subsidiary is adequately empowered and appropriately
licensed to conduct its business.
(b) Except for investment in a subsidiary engaging solely in
activities that may be engaged in directly by the bank and that are
conducted on the same terms and conditions that govern the conduct
of the activities by the bank, a state bank without the prior
written approval of the banking commissioner may not invest more
than an amount equal to 10 percent of the lesser of its capital and
certified surplus or the bank's total equity capital in a single
subsidiary. For purposes of this subsection, the amount of a state
bank's investment in a subsidiary is the sum of the amount of the
bank's investment in securities issued by the subsidiary and any
loans and extensions of credit from the bank to the subsidiary.
(c) A state bank may not establish or acquire a subsidiary
or a controlling interest in a subsidiary that engages in
activities as principal in which the bank is prohibited from
engaging directly unless:
(1) the state bank's investment in the subsidiary has
been approved by the Federal Deposit Insurance Corporation under
Section 24, Federal Deposit Insurance Act (12 U.S.C. Section
1831a); or
(2) with respect to a subsidiary engaged in activities
as principal that a national bank may conduct only through a
financial subsidiary, including firm underwriting of equity
securities other than as permitted by Section 34.101, and not
otherwise engaged in activities as principal that are impermissible
for a state bank or a financial subsidiary of a national bank, the
subsidiary's activities and the bank's investment are in compliance
with the restrictions and requirements of Section 46, Federal
Deposit Insurance Act (12 U.S.C. Section 1831w).
(d) Except as otherwise provided by this subtitle or a rule
adopted under this subtitle, a state bank may not make a
non-controlling minority investment in equity securities of a
company unless:
(1) the investment or company is described by
Subsection (c)(2) or Section 34.104 or 34.105;
(2) the company engages solely in activities that are
part of or incidental to the permissible business of a state bank
under this subtitle and:
(A) the state bank is adequately empowered to
prevent the company from engaging in activities not part of or
incidental to the permissible business of a state bank or, as a
practical matter, is otherwise enabled to withdraw or liquidate its
investment in the company in such an event;
(B) as a legal and accounting matter, the loss
exposure of the state bank with respect to the activities of the
company is limited and does not include any open-ended liability
for an obligation of the company; and
(C) the investment is convenient or useful to the
state bank in carrying out its business and is not a mere passive
investment unrelated to the bank's banking business; or
(3) the investment is made indirectly through an
operating subsidiary in equity securities issued by:
(A) another bank;
(B) a company that engages solely in an activity
that is permissible for a bank service corporation or a bank holding
company subsidiary; or
(C) a company that engages solely in activities
as agent or trustee or in a brokerage, custodial, advisory, or
administrative capacity, or in a substantially similar capacity.
(e) A state bank that intends to acquire, establish, or
perform new activities through a subsidiary shall submit a letter
to the banking commissioner describing in detail the proposed
activities of the subsidiary. The bank may acquire or establish a
subsidiary or perform new activities in an existing subsidiary
beginning on the 31st day after the date the banking commissioner
receives the bank's letter unless the banking commissioner
specifies an earlier or later date. The banking commissioner may
extend the 30-day period on a determination that the bank's letter
raises issues that require additional information or additional
time for analysis. If the period is extended, the bank may acquire
or establish a subsidiary, or may perform new activities in an
existing subsidiary, only on prior written approval of the banking
commissioner.
(f) A subsidiary of a state bank is subject to regulation by
the banking commissioner to the extent provided by Chapter 11 or 12,
this subtitle, or rules adopted under this subtitle. In the absence
of limiting rules, the banking commissioner may regulate a
subsidiary as if it were a state bank.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 528, § 10, eff. Sept. 1, 2001.
Section: 33.210 33.211 34.001 34.002 34.003 34.101 34.102 34.103 34.104 34.105 34.106 34.107 34.201 34.202 34.203
Last modified: August 10, 2007
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