FINANCE CODE
CHAPTER 204. FOREIGN BANKS
SUBCHAPTER A. GENERAL PROVISIONS
§ 204.001. TRANSACTING BUSINESS. (a) A foreign bank
may not transact business in this state except to the extent
permitted by this chapter.
(b) Subsection (a) does not prohibit a foreign bank:
(1) from transacting business at a licensed federal
branch or agency in this state in accordance with federal law;
(2) that does not maintain a branch or agency in this
state or conduct business from an office or location in this state
from making unsecured loans in this state or loans secured by liens
on real or personal property located in this state, enforcing those
loans in this state, or transacting trust business in this state, to
the extent permitted by other law; or
(3) organized under the laws of a territory of the
United States, Puerto Rico, Guam, American Samoa, or the Virgin
Islands, the deposits of which are insured by the Federal Deposit
Insurance Corporation, from establishing and operating an
interstate branch in this state in its capacity as a state bank
pursuant to Chapter 203.
(c) For purposes of Subsection (a), a foreign bank is not
considered to be transacting business in this state merely because
a subsidiary or affiliate transacts business in this state,
including business that a depository institution subsidiary or
affiliate may lawfully conduct in this state as an agent for the
foreign bank to the extent authorized by the laws of this state.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.002. BOOKS, ACCOUNTS, AND RECORDS. Each Texas
state branch, agency, or representative office shall maintain and
make available appropriate books, accounts, and records
reflecting:
(1) all transactions effected by or on behalf of the
office; and
(2) all other actions taken in this state by employees
of the foreign bank located in this state to effect transactions on
behalf of an office of the foreign bank located outside this state.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.003. EXAMINATION; FEES. (a) The commissioner
may make examinations of a Texas state branch, agency, or
representative office as the commissioner considers necessary to
determine whether the office is being operated in compliance with
the laws of this state and in accordance with safe and sound banking
practices. Sections 31.105-31.107 apply to the examinations.
(b) A foreign bank that maintains a Texas state branch,
agency, or representative office shall pay fees to the commissioner
in accordance with Section 201.005 or rules adopted under this
subtitle.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.004. REPORTS. (a) A foreign bank doing business
in this state through a Texas state branch, agency, or
representative office shall make written reports to the
commissioner that:
(1) are in English;
(2) are submitted at the times and in the form
specified by the commissioner or by rules adopted under this
subtitle;
(3) are under oath of one of the foreign bank's
officers, managers, or agents transacting business in this state;
(4) show the amount of the foreign bank's assets and
liabilities, expressed in United States currency;
(5) with respect to a Texas state branch or agency,
show the amount of the branch or agency's assets and liabilities,
expressed in United States currency; and
(6) contain other information that the commissioner
requires.
(b) A license or registration of a foreign bank under this
chapter may be revoked or the foreign bank may be subject to an
enforcement action under Chapter 35 if the foreign bank fails to
make a report required under Subsection (a) or makes a material
false or misleading statement in the report.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.005. CHANGE OF CONTROL OF FOREIGN BANK. A foreign
bank licensed to establish and maintain a Texas state branch or
agency pursuant to Subchapter B, or which has registered a Texas
representative office pursuant to Subchapter C, shall file with the
commissioner a notice of change of control, in the form and
containing the information the commissioner requires, not later
than the 14th day after the date of a merger or other transaction
that results or will result in a change of control.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.006. OPERATIONS IN THIS STATE OF BANKS OWNED OR
CONTROLLED BY FOREIGN BANKS AND OTHER FOREIGN
PERSONS. (a) Except as provided in Subsection (b):
(1) the laws of this state governing the acquisition
or ownership of interests in Texas banks or out-of-state banks
seeking to establish and maintain interstate branches in this state
do not prohibit ownership of those institutions by, or otherwise
discriminate against, foreign banks or other foreign persons; and
(2) the laws of this state governing the powers and
activities of Texas banks and out-of-state banks maintaining
interstate branches in this state do not discriminate among those
banks on the basis of their ownership or control by foreign banks or
other foreign persons.
(b) Notwithstanding Subsection (a), the commissioner may
apply the laws of this state governing the ownership, control, or
operations of Texas banks, even if applicable specifically or
exclusively to foreign banks or other foreign persons, to the
extent those laws are determined by the commissioner to be:
(1) substantially equivalent to or consistent with the
standards or requirements governing the ownership, control, or
operations of Texas banks by foreign banks or other foreign persons
under applicable federal law; or
(2) otherwise consistent with the laws and policies of
the United States, including its international agreements
governing financial services.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.007. ESTABLISHMENT OF INTERSTATE BRANCH IN THIS
STATE BY AN OUT-OF-STATE FOREIGN BANK. (a) An out-of-state
foreign bank may establish an interstate Texas state branch in the
same manner as, and subject to the same criteria, standards,
conditions, requirements, and procedures applicable to, the
establishment of an interstate branch in this state by an
out-of-state bank having the same home state in the United States,
including by acquisition of or merger with a Texas bank, or
establishment of a de novo branch in the manner provided by Section
203.002, notwithstanding another law of this state to the contrary
other than Subsection (b).
(b) With respect to establishment of an initial interstate
Texas state branch and subsequent intrastate branches of an
out-of-state foreign bank, the commissioner:
(1) shall apply the same criteria, standards,
conditions, requirements, and procedures applicable under
Subchapter B to the establishment of an initial Texas state branch
and subsequent intrastate branches in this state;
(2) may apply other criteria, standards, conditions,
requirements, or provisions of the laws of this state that are
determined by the commissioner to be substantially equivalent to or
consistent with federal law generally applicable to the
establishment of a branch in the United States by a foreign bank or
specifically applicable to the establishment of a branch in the
United States by the applicant foreign bank; and
(3) may allow an out-of-state foreign bank to:
(A) acquire or merge with another foreign bank
maintaining a Texas branch or agency and after the acquisition or
merger continue the operations as its own;
(B) acquire or establish an interstate Texas
branch through another means not inconsistent with Section 5,
International Banking Act (12 U.S.C. Section 3103); or
(C) convert a state agency to a state branch as
provided by Section 204.008.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.008. CONVERSION OF EXISTING OFFICE. (a) For
purposes of this section, foreign bank offices in this state are
divided into classes and ranked in ascending order as:
(1) representative office;
(2) Texas state agency; and
(3) Texas state branch.
(b) A foreign bank may change a lower class office into a
higher class office by applying for the higher class office
pursuant to Section 204.101. On approval of the application to
establish the higher class office and after all conditions to the
approval have been fulfilled, the foreign bank may change the lower
class office into the higher class office and the commissioner
shall issue a license authorizing the bank to maintain the higher
class office. The foreign bank shall promptly surrender any
license or registration previously issued by the commissioner in
connection with the lower class office.
(c) A foreign bank may change a higher class office into a
lower class office by applying for approval to close the higher
class office pursuant to Section 204.115. On approval of the
application to close the higher class office and after conditions
precedent to the closing have been fulfilled, the foreign bank may
change the higher class office into the lower class office, and the
commissioner shall issue a license or registration authorizing the
bank to maintain the lower class office.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
SUBCHAPTER B. DIRECT BRANCH AND AGENCY OFFICES OF FOREIGN BANKS
§ 204.101. APPLICATION TO ESTABLISH BRANCH OR
AGENCY. (a) A foreign bank that desires to establish and maintain
a Texas state branch or agency shall submit an application to the
commissioner. The application must:
(1) be accompanied by all application fees and
deposits required by applicable rules;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of
the foreign bank;
(4) have attached:
(A) a complete copy of the foreign bank's
application to the Board of Governors of the Federal Reserve System
under Section 7(d), International Banking Act (12 U.S.C. Section
3105(d));
(B) an authenticated copy of the foreign bank's
articles of incorporation and bylaws or other constitutive
documents and, if the copy is in a language other than English, an
English translation of the document, under the oath of the
translator; and
(C) evidence of compliance with Section 201.102;
(5) be submitted when the federal application is
submitted to the board of governors; and
(6) include on its face or in accompanying documents:
(A) the name of the foreign bank;
(B) the street address where the principal office
of the Texas state branch or agency is to be located and, if
different, the Texas state branch or agency's mailing address;
(C) the name and qualifications of each officer
and director of the foreign bank who will have control of all or
part of the business and affairs of the Texas state branch or
agency;
(D) a detailed statement of the foreign bank's
financial condition as of a date not more than 360 days before the
date of the application; and
(E) other information that:
(i) is necessary to enable the commissioner
to make the findings listed in Section 204.103;
(ii) is required by rules adopted under
this subtitle; or
(iii) the commissioner reasonably
requests.
(b) The finance commission may adopt rules prescribing
abbreviated application procedures and standards applicable to
applications by foreign banks that have already established an
initial Texas state branch or agency to establish additional
intrastate branches or agencies.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.102. HEARING AND DECISION ON
APPLICATION. (a) After the application is complete and accepted
for filing and all required fees and deposits have been paid, the
commissioner shall determine from the application and the initial
investigation whether the conditions set forth by Section 204.103
have been established. The commissioner shall approve the
application or set the application for hearing.
(b) If the commissioner sets the application for hearing:
(1) the commissioner shall notify the Board of
Governors of the Federal Reserve System that the application has
been set for hearing as provided by federal regulations;
(2) the department shall participate as the opposing
party; and
(3) the commissioner shall conduct the hearing and one
or more prehearing conferences and opportunities for discovery as
the commissioner considers advisable and consistent with
applicable law.
(c) Information relating to the financial condition and
business affairs of the foreign bank and financial information
relating to its management and shareholders, except for previously
published statements and information, is confidential and may not
be considered in the public portion of the hearing or disclosed by
the commissioner or an employee of the department except as
provided by Subchapter D, Chapter 31.
(d) The commissioner shall make a finding from the record of
the hearing on each condition listed in Section 204.103 and enter an
order granting or denying the license. If the license is denied,
the commissioner shall inform the Board of Governors of the Federal
Reserve System of the order and the reasons the federal application
should be denied.
(e) The commissioner may make approval of an application
conditional. The commissioner shall include any conditions in the
order granting the license but may not issue the license until the
Texas state branch or agency has received the approval of the Board
of Governors of the Federal Reserve System. If the approval is
conditioned on a written commitment from the applicant offered to
and accepted by the commissioner, the commitment is enforceable
against the applicant.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.103. ISSUANCE OF LICENSE. (a) The commissioner
shall issue a license to a foreign bank to establish and maintain a
Texas state branch or agency if the commissioner finds after
reasonable inquiry that:
(1) all members of the management of the Texas state
branch or agency have sufficient banking experience, ability,
standing, competence, trustworthiness, and integrity to justify a
belief that the agency will operate in compliance with state law;
(2) the foreign bank has sufficient standing to
justify a belief that the Texas state branch or agency will be free
from improper or unlawful influence or interference with respect to
the office's operation in compliance with state law; and
(3) the foreign bank is acting in good faith and the
application does not contain a material misrepresentation.
(b) Each Texas state branch or agency shall post its license
in a conspicuous place at its office. A license issued under this
subchapter is not transferable or assignable.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.104. NO CONCURRENT FEDERAL BRANCH OR
AGENCY. (a) A foreign bank licensed under this subchapter to
establish and maintain a Texas state branch or agency may not
concurrently maintain a federal branch or federal agency in this
state.
(b) A foreign bank which maintains a federal branch or
federal agency in this state may not concurrently be licensed under
this subchapter to maintain a Texas state branch or agency.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.105. POWERS OF BRANCH AND AGENCY. (a) A Texas
state branch or agency is subject to this subtitle and other laws of
this state applicable to banks as if the Texas state branch or
agency were a Texas state bank unless:
(1) this chapter or a rule adopted under this subtitle
provides otherwise; or
(2) the context of a provision or other information
indicates that a provision applies only to a bank organized under
the laws of a state or the United States.
(b) Among other exceptions to Subsection (a) that may be
required or authorized by the commissioner provided by this
subchapter or by rules adopted under this subtitle:
(1) a Texas state branch may not accept deposits of
less than $100,000 from citizens or residents of the United States,
other than credit balances that are incidental to or arise out of
its exercise of other lawful banking powers, unless the Federal
Deposit Insurance Corporation determines that specific deposit
taking activities in lesser amounts do not constitute domestic
retail deposit activities requiring deposit insurance protection
within the meaning of Section 6, International Banking Act (12
U.S.C. Section 3104);
(2) a Texas state agency may not accept deposits from
citizens or residents of the United States, other than credit
balances that are incidental to or arise out of its exercise of
other lawful banking powers, but may accept deposits from persons
who are neither citizens nor residents of the United States; and
(3) a limitation or restriction based on the capital
and certified surplus of a Texas state bank is considered to refer,
as applied to a Texas state branch or agency, to the dollar
equivalent of the capital and surplus of the foreign bank, and if
the foreign bank has more than one Texas state branch or agency in
this state, the business transacted by all the branches and
agencies must be aggregated in determining compliance with the
limitation.
(c) Subject to Subsections (a) and (b), a foreign bank
licensed to transact business in this state through a Texas state
branch or agency may:
(1) borrow and lend money with or without property as
security;
(2) purchase, sell, and make loans regardless of
whether the loans are secured by bonds or mortgages on real
property;
(3) engage in a foreign exchange transaction;
(4) issue, advise, confirm, and otherwise deal with a
letter of credit and pay, accept, or negotiate a draft drawn under a
letter of credit;
(5) accept a bill of exchange or draft;
(6) buy or acquire and sell or dispose of a bill of
exchange, draft, note, acceptance, or other obligation for the
payment of money;
(7) maintain a credit balance of money received at the
Texas state branch or agency incidental to or arising out of the
exercise of its authorized activities in this state if the money is
not intended to be a deposit and does not remain in the Texas state
branch or agency after the completion of all transactions to which
it relates;
(8) accept deposits to the extent permitted by
Subsection (b);
(9) receive money for transmission and transmit the
money from its authorized place of business in this state to any
other place;
(10) act as an indenture trustee or as a registrar,
paying agent, or transfer agent, on behalf of the issuer, for equity
or investment securities; and
(11) perform other activities that:
(A) are authorized by rules adopted to accomplish
the purposes of this subtitle; or
(B) the commissioner determines are analogous or
incidental to specific activities authorized by this section for a
Texas state branch or agency.
(d) A foreign bank licensed to transact business in this
state through a Texas state branch or agency may share the premises
of the Texas state branch or agency with another authorized office
of the foreign bank or a direct or indirect subsidiary of the
foreign bank if the books and records of the Texas state branch or
agency are kept separately from the books and records of the other
office.
(e) For purposes of this section, the term "resident of the
United States" means:
(1) an individual residing in the United States;
(2) a corporation, partnership, association, or other
entity organized in the United States; or
(3) a branch or office located in the United States of
an entity that is not organized in the United States.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.106. APPLICATION TO ACT AS
FIDUCIARY. (a) Except as provided by Section 204.105(c)(10), a
foreign bank may not act as a fiduciary at a Texas state branch or
agency except by obtaining a fiduciary license as provided by this
section. A foreign bank that intends to act as a fiduciary at a
Texas state branch or agency shall submit an application to the
commissioner. The application must:
(1) be accompanied by all application fees and
deposits required by applicable rules;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of
the foreign bank;
(4) describe in detail:
(A) the proposed fiduciary activities;
(B) the names and relevant expertise of its
officers and employees that will conduct the fiduciary activities;
and
(C) the manner in which the fiduciary activities
will be captured in the books and records of the Texas state branch
or agency with due regard for separation of beneficial and legal
interests; and
(5) contain other information that:
(A) is necessary to enable the commissioner to
make the findings required by Subsection (c);
(B) is required by rules adopted under this
subtitle; or
(C) the commissioner reasonably requests.
(b) On or before the 60th day after the date the application
is complete and accepted for filing and all required fees and
deposits have been paid, the commissioner shall approve the
application or set the application for hearing. If the
commissioner sets the application for hearing, the department shall
participate as the opposing party and the commissioner shall
conduct the hearing and one or more prehearing conferences and
opportunities for discovery as the commissioner considers
advisable and consistent with applicable law.
(c) The commissioner may issue a license permitting the
foreign bank to engage in fiduciary activities if the commissioner
finds that the foreign bank will exercise its fiduciary powers in
accordance with the laws of this state and has sufficient fiduciary
and accounting expertise and controls to protect beneficial
interests under its control. The commissioner may make approval of
an application conditional by including conditions and limitations
in the order granting the license. If the approval is conditioned
on a written commitment from the applicant offered to and accepted
by the commissioner, the commitment is enforceable against the
applicant.
(d) A foreign bank that obtains the approval of the
commissioner under this section may engage in fiduciary activities
at its Texas state branch or agency to the same extent and in the
same manner as a Texas state bank could do so at the same location,
subject to any conditions or limitations applicable to the license.
(e) The commissioner may initiate an enforcement action
under Chapter 35 or may suspend or revoke the authority of a foreign
bank to engage in fiduciary activities in this state in the same
manner as a revocation of license under Section 204.118 if the
commissioner finds in writing that:
(1) conditions exist related to the fiduciary
activities of the foreign bank in this state which would authorize
the commissioner to revoke or suspend its license pursuant to
Section 204.117; or
(2) a fact or condition exists which, if it had existed
at the time of the foreign bank's original notice to engage in
fiduciary activities, would have resulted in the commissioner
denying authority to engage in fiduciary activities.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.107. FILING OF AMENDMENTS TO ARTICLES OF
INCORPORATION. If the articles of incorporation of a foreign bank
licensed to maintain a Texas state branch or agency are amended, the
foreign bank shall promptly file with the commissioner a copy of the
amendment, duly authenticated by the proper officer of the country
of the foreign bank's organization. The filing does not enlarge or
alter the business the foreign bank is authorized to pursue in this
state, authorize the foreign bank to transact business in this
state under a name other than the name set forth in its license, or
extend the duration of its corporate existence.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.108. AMENDED LICENSE FOR BRANCH OR AGENCY. (a) A
foreign bank licensed to establish and maintain a Texas state
branch or agency shall apply to the commissioner for an amended
license if it changes its corporate name, changes the duration of
its corporate existence, or desires to pursue in this state other or
additional purposes than those set forth in its prior application
for the foreign bank's license or amended license then in effect.
(b) The requirements with respect to the form and contents
of an application under Subsection (a), the manner of its
execution, the issuance of an amended license, and the effect of the
amended license are the same as in the case of an initial
application for a license to establish and maintain a Texas state
branch or agency.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.109. RELOCATION OF OFFICE. (a) With the prior
written approval of the commissioner, a foreign bank licensed to
establish and maintain a Texas state branch or agency may relocate
the branch or agency office. A foreign bank that intends to
relocate a Texas state branch or agency office shall submit a letter
to the commissioner describing the address of the proposed
location, the reasons for relocation, and the manner of notifying
its customers of the relocation.
(b) On or before the 30th day after the date the foreign
bank's letter has been accepted for filing and any required fee has
been paid, the commissioner shall approve or deny the relocation.
The commissioner may not permit the foreign bank to relocate its
Texas state branch or agency office if the commissioner finds that
the proposed location and the manner of relocation and notification
will be deceptive or that the relocation will impede or tend to
impede the foreign bank's depositors and creditors in this state.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.110. SEPARATE ASSETS. (a) Each foreign bank
licensed to establish and maintain a Texas state branch or agency in
this state shall keep the assets of its business in this state
separate and apart from the assets of its business outside this
state.
(b) The depositors and creditors of a foreign bank arising
out of transactions with, and recorded on the books of, its Texas
state branch or agency are entitled to absolute preference and
priority over the depositors and creditors of the foreign bank's
offices located outside this state with respect to the assets of the
foreign bank in this state.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.111. DISCLOSURE OF LACK OF DEPOSIT
INSURANCE. Each foreign bank licensed to establish and maintain a
Texas state branch or agency shall give notice that deposits and
credit balances in the office are not insured by the Federal Deposit
Insurance Corporation.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.112. LIMITATIONS ON PAYMENT OF INTEREST ON
DEPOSITS. A foreign bank licensed to establish and maintain a
Texas state branch or agency is subject to the same limitations with
respect to the payment of interest on deposits as a state bank that
is a member of the Federal Reserve System.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.113. PLEDGE OF ASSETS. (a) In accordance with
rules adopted under this subtitle, a foreign bank licensed to
establish and maintain a Texas state branch or agency may be
required to keep on deposit, with unaffiliated banks in this state
that the foreign bank designates and the commissioner approves,
money and securities pledged to the commissioner in an aggregate
amount to be determined by the commissioner, valued at the lower of
principal amount or market value, consisting of:
(1) dollar deposits;
(2) bonds, notes, debentures, or other legally
created, general obligations of a state, an agency or political
subdivision of a state, the United States, or an instrumentality of
the United States;
(3) securities that this state, an agency or political
subdivision of this state, the United States, or an instrumentality
of the United States has unconditionally agreed to purchase,
insure, or guarantee;
(4) securities issued or guaranteed by the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Government National Mortgage Association, the
Federal Agricultural Mortgage Corporation, or the Federal Farm
Credit Banks Funding Corporation;
(5) obligations of or issued or guaranteed by the
International Bank for Reconstruction and Development, the African
Development Bank, the Asian Development Bank, the InterAmerican
Development Bank, or the North American Development Bank; or
(6) other assets as may be permitted by rule.
(b) The assets deposited and the amount of the assets to be
maintained under Subsection (a) are subject to the conditions and
limitations the commissioner considers necessary or desirable for
the maintenance of a sound financial condition, the protection of
depositors, creditors, and the public interest in this state, and
the support of public confidence in the business of the Texas state
branch or agency. The commissioner may give credit to reserves
required to be maintained with a federal reserve bank in or outside
this state pursuant to federal law, in accordance with rules
adopted under this subtitle.
(c) While a foreign bank continues business in the ordinary
course, the foreign bank may collect interest on the money and
securities deposited under this section and from time to time
exchange, examine, and verify the securities.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.114. ASSET MAINTENANCE. (a) In accordance with
rules adopted under this subtitle, a foreign bank licensed to
establish and maintain a Texas state branch or agency shall at all
times satisfy the ratio of branch or agency assets to liabilities
determined by the commissioner, in the commissioner's sole
discretion, to be necessary or desirable with respect to the
foreign bank. The type of assets to be held in this state are
specified by Subsection (b) and the type of liabilities to be
included in the ratio are specified by Subsection (c).
(b) Assets to be held in this state for the purpose of
satisfying the ratio of assets to liabilities:
(1) include:
(A) currency, bonds, notes, debentures, drafts,
bills of exchange, or other evidences of indebtedness, including
loan participation agreements or certificates;
(B) other obligations payable in the United
States or in United States funds or, with the prior approval of the
commissioner, in funds freely convertible into United States funds;
and
(C) other assets the commissioner permits or as
may be specified by rule; and
(2) exclude obligations of a person for money borrowed
to the extent that the total of the obligations of the person
exceeds 10 percent of total assets considered for purposes of this
section.
(c) Liabilities included for purposes of calculating the
ratio of assets to liabilities:
(1) include all liabilities of the foreign bank
appearing in the books, accounts, or records of its Texas state
branch or agency, including acceptances; and
(2) exclude amounts due and other liabilities to other
offices, agencies, branches, and wholly owned subsidiaries of the
foreign bank, and other liabilities the commissioner determines.
The existence of a nominal number of directors' shares outstanding
does not cause a subsidiary to be considered less than wholly owned.
(d) Subject to rules adopted under this subtitle, the
commissioner, in the commissioner's sole discretion, may vary the
ratio of assets to liabilities required by this section for a
foreign bank as may be necessary or desirable to reflect
differences among Texas branches or Texas agencies because of:
(1) the financial condition of Texas branch or agency
offices of the foreign bank;
(2) the financial condition of branch or agency
offices of the foreign bank located in other states;
(3) the general economic conditions prevalent in the
home country of the foreign bank; or
(4) the financial condition of the foreign bank
itself, including:
(A) the financial condition of its branches and
agencies located in other countries;
(B) the financial condition of its affiliated
bank and nonbank subsidiaries in the United States; and
(C) the financial condition of the foreign bank
on a worldwide consolidated basis or in its home country.
(e) For purposes of this section, assets must be valued at
the lower of principal amount or market value. The commissioner may
determine the value of a non-marketable security, loan, or other
asset or obligation held or owed to the foreign bank or its Texas
state branch or agency in this state. If the commissioner cannot
determine the value of an non-marketable asset, the asset must be
excluded from the ratio computation.
(f) The commissioner may require a foreign bank to deposit
the assets required to be held in this state pursuant to this
section with specific banks in this state designated by the
commissioner if, because of the existence or the potential
occurrence of unusual and extraordinary circumstances, the
commissioner considers it necessary or desirable for the
maintenance of a sound financial condition, the protection of
depositors, creditors, and the public interest in this state, and
the maintenance of public confidence in the business of a Texas
state branch or agency.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.115. VOLUNTARY CLOSURE OF BRANCH OR
AGENCY. (a) A foreign bank licensed to establish and maintain a
Texas state branch or agency may not close the office without filing
an application with, and obtaining the prior approval of, the
commissioner. An application by a foreign bank under this section
must be in the form and include the information the commissioner
requires.
(b) The commissioner shall approve the application if the
commissioner finds that the closing of the office will not be
substantially detrimental to the foreign bank's depositors and
creditors in this state. An application may be approved subject to
conditions imposed by the commissioner for the continued protection
of the foreign bank's depositors and creditors in this state,
including a condition that the foreign bank pledge assets in the
manner specified by Section 204.113 for a specified period of time.
(c) When an application by a foreign bank under this section
has been approved and all conditions precedent to the closing have
been fulfilled, the foreign bank may close the office and an
officer, manager, or agent of the foreign bank shall deliver to the
commissioner:
(1) all copies of examination reports or other
property of the department;
(2) a statement under oath by an authorized officer,
manager, or agent of the foreign bank that all deposit and other
liabilities of the Texas state branch or agency to depositors and
creditors in this state have been properly discharged by payment or
pledge or otherwise assumed or retained by a financial institution;
(3) the license issued by the commissioner;
(4) an appropriate board resolution closing the Texas
state branch or agency; and
(5) a statement of the location where the records of
the Texas state branch or agency will be kept after the closing.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.116. ENFORCEMENT. The commissioner may initiate
an enforcement action under Chapter 35 or a proceeding to revoke the
license of a Texas state branch or agency if the commissioner by
examination or other credible evidence finds that the foreign bank:
(1) does not currently meet the criteria established
by this chapter for the original issuance of a license;
(2) has refused to permit the commissioner to examine
its books, papers, accounts, records, or affairs in accordance with
Sections 204.002 and 204.003;
(3) has failed to make a report required under this
chapter or made a material false or misleading statement in the
report;
(4) has violated this subtitle, another law or rule
applicable to a foreign bank or a Texas state branch or agency, or a
final and enforceable order of the commissioner or the finance
commission;
(5) has misrepresented or concealed a material fact in
the original application for license;
(6) has violated a condition of its license or an
agreement between the foreign bank and the commissioner or the
department; or
(7) conducts business in an unsafe and unsound manner.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.117. PROCEDURE FOR REVOCATION. (a) Notice of a
revocation proceeding must:
(1) be in the form of a proposed order;
(2) be served on the foreign bank by personal delivery
or registered or certified mail, return receipt requested, to a
director, officer, manager, or employee of the foreign bank at a
Texas state branch or agency location, or to the registered agent of
the foreign bank;
(3) state the effective date of the proposed order,
which may not be before the 21st day after the date the proposed
order is mailed or delivered except as otherwise provided in
Section 204.118; and
(4) state the grounds for the proposed revocation with
reasonable certainty.
(b) Unless the foreign bank requests a hearing in writing on
or before the effective date of the proposed order, the order takes
effect as proposed and is final and nonappealable.
(c) A hearing requested on a proposed order shall be held
not later than the 30th day after the date the written request for
hearing is received by the department unless the parties agree to a
later hearing date. The department shall participate as the
opposing party, and the commissioner shall conduct the hearing and
one or more prehearing conferences and opportunities for discovery
as the commissioner considers advisable and consistent with
applicable statutes and rules. The foreign bank may not accept new
business during the pendency of the hearing unless the commissioner
gives prior written approval, except that it shall comply with any
stricter requirements imposed by Section 7(e), International
Banking Act (12 U.S.C. Section 3105(e)).
(d) Information relating to the financial condition and
business affairs of the foreign bank, except previously published
statements and information, is confidential and may not be
considered in the public portion of the hearing or disclosed by the
commissioner or an employee of the department except as provided by
Subchapter D, Chapter 31.
(e) Based on the record, the commissioner shall issue or
refuse to issue the proposed order. An issued order may contain
modifications indicated by the record to be necessary or desirable,
including modifications to impose penalties available under
Chapter 35 in lieu of license revocation.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.118. IMMEDIATE SUSPENSION OR REVOCATION. (a) If
the commissioner finds that any of the factors set forth in Section
204.116 are true with respect to a foreign bank licensed to maintain
a Texas state branch or agency and that it is necessary for the
protection of the interests of creditors of the foreign bank's
business in this state or for the protection of the public interest
that the commissioner immediately suspend or revoke the license of
the foreign bank, the commissioner may issue, without notice and
hearing, an order suspending or revoking the license of the foreign
bank for a period of up to 90 days, pending investigation or hearing
under Section 204.117.
(b) An order issued under this section shall be served on
the foreign bank in the manner required by Section 204.117(a)(2).
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.119. STATUS OF REVOKED LICENSE. Unless stayed by
the finance commission or district court that has jurisdiction over
an appeal, a final order of the commissioner revoking a license is
effective immediately and the foreign bank shall immediately cease
all activity in this state requiring a license. Subject to Section
204.120, all functions requiring a license must be immediately
transferred to a branch, affiliate, or agency of the foreign bank
that is located outside of this state and that has the power to
perform those functions under governing law. Continued activity in
this state of an unlicensed foreign bank is subject to Subchapter C,
Chapter 35.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.120. SEIZURE AND LIQUIDATION. (a) If the
commissioner finds that any of the factors set forth in Section
204.116 are true with respect to a foreign bank licensed to
establish and maintain a Texas state branch or agency, the
commissioner may by order immediately take possession of the
property and business of the foreign bank in this state if that
action is necessary or desirable for the protection of the
interests of the depositors and creditors of the foreign bank's
business in this state or for the protection of the public. The
commissioner shall retain possession until the foreign bank resumes
business in this state or is finally liquidated, except that the
commissioner may permit the foreign bank to resume business in this
state on conditions the commissioner requires. An order issued
under this section shall be served on the foreign bank in the manner
required by Section 204.117(a)(2).
(b) As soon as practicable after taking possession of the
property and business of a foreign bank pursuant to Subsection (a),
the commissioner shall initiate a receivership proceeding by filing
a copy of the order issued under this section in a district court in
Travis County to be governed by Chapter 36 as if the foreign bank
were a Texas state bank, except as otherwise provided by this
section. Notwithstanding the priorities established by Chapter 36,
the depositors and creditors of the Texas state branch or agency,
arising out of transactions with and recorded on the books of the
Texas state branch or agency, have an absolute preference and
priority over the creditors of the foreign bank's offices located
outside this state.
(c) An action initiated that seeks to directly or indirectly
affect the assets of the Texas state branch or agency is considered
to be an intervention in the receivership proceeding. Venue for an
action instituted to effect, contest, or otherwise intervene in the
liquidation of a Texas state branch or agency is in Travis County,
except that on motion filed and served concurrently with or before
the filing of the answer, the court may, on a finding of good cause,
transfer the action to the county of the Texas state branch or
agency location.
(d) The foreign bank may contest the commissioner's actions
as provided by this subsection. On or before the 10th day after the
date the commissioner has taken possession of the property and
business of a foreign bank pursuant to Subsection (a), the foreign
bank, acting through a majority of its directors, may intervene in
the action filed by the banking commissioner to challenge the
commissioner's closing of the foreign bank's Texas state branch or
agency and to enjoin the commissioner or other receiver from
liquidating its assets. The court may issue an ex parte order
restraining the commissioner or other receiver from liquidating the
foreign bank's assets pending a hearing on the injunction. The
commissioner or other receiver shall comply with the restraining
order but may petition the court for permission to liquidate an
asset as necessary to prevent its loss or diminution pending the
outcome of the injunction. The commissioner or other receiver may
not be required to post bond. The court shall hear this action as
quickly as possible and shall give it priority over other business.
The foreign bank or the commissioner or other receiver may appeal
the court's judgment as in other civil cases, except that the
commissioner or other receiver shall retain all seized foreign bank
assets pending a final appellate court order even if the
commissioner does not prevail in the trial court. If the
commissioner prevails in the trial court, liquidation of the state
trust company may proceed unless the trial court or appellate court
orders otherwise. If liquidation is enjoined or stayed pending
appeal, the trial court retains jurisdiction to permit liquidation
of an asset as necessary to prevent its loss or diminution pending
the outcome of the appeal.
(e) After the commissioner or other receiver has completed
the liquidation of the property and business of a foreign bank, the
commissioner or other receiver shall transfer any remaining assets
to the foreign bank in accordance with the court's orders, except
that:
(1) if the foreign bank has an office in another state
of the United States that is in liquidation and the assets of the
office appear to be insufficient to pay in full the creditors of
that office, the court shall order the commissioner or other
receiver to transfer to the liquidator of that office the amount of
the remaining assets that appears to be necessary to cover the
insufficiency; or
(2) if the foreign bank has two or more such offices in
liquidation and the amount of remaining assets is less than the
aggregate amount of insufficiencies with respect to the offices,
the court shall order the commissioner or other receiver to
distribute the remaining assets among the liquidators of the
offices in the manner the court finds equitable.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.121. DISSOLUTION. (a) If a foreign bank
licensed to maintain a Texas state branch or agency in this state is
dissolved, has its authority or existence terminated or canceled in
the jurisdiction of its incorporation, or has its authority to
maintain a branch or agency in this state terminated by the Board of
Governors of the Federal Reserve System under Section 7(e),
International Banking Act (12 U.S.C. Section 3105(e)), an officer,
manager, or agent of the foreign bank shall deliver to the
commissioner:
(1) a certified copy of:
(A) a certificate of the official responsible for
records of banking corporations of the foreign bank's jurisdiction
of incorporation attesting to the occurrence of dissolution or of
termination or cancellation of authority or existence;
(B) an order or decree of a court directing the
dissolution of the foreign bank or the termination or cancellation
of its authority or existence; or
(C) an order of the Board of Governors of the
Federal Reserve System terminating its authority under Section
7(e), International Banking Act (12 U.S.C. Section 3105(e)); and
(2) the documents and information required by Section
204.115(c).
(b) The filing of the certificate, order, or decree has the
same effect provided by Section 204.119 as if the license issued
under this subchapter were revoked by the commissioner as of the
effective date of termination or cancellation specified in the
certificate, order, or decree unless the commissioner orders an
earlier effective date, subject to the procedural protections of
Section 204.117 or 204.118.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
SUBCHAPTER C. REPRESENTATIVE OFFICES OF FOREIGN BANK
§ 204.201. REGISTRATION OF REPRESENTATIVE
OFFICE. (a) A foreign bank may establish a Texas representative
office if the foreign bank files with the commissioner a verified
statement of registration. A statement of registration must:
(1) be accompanied by all registration fees and
deposits required by rule;
(2) be in the form specified by the commissioner;
(3) be subscribed and acknowledged by an officer of
the foreign bank;
(4) contain as an exhibit or attachment:
(A) a copy of the foreign bank's notice or
application submitted to the Board of Governors of the Federal
Reserve System under Section 10, International Banking Act (12
U.S.C. Section 3107), and, when issued, the order or notification
from the board of governors indicating that the representative
office has been approved;
(B) an authenticated copy of the foreign bank's
articles of incorporation and bylaws or other constitutive
documents and, if the copy is in a language other than English, an
English translation of the document, under the oath of the
translator; and
(C) evidence of compliance with Section 201.102;
(5) be submitted when the federal notice or
application is submitted to the board of governors; and
(6) directly or in exhibits or attachments contain:
(A) the name of the foreign bank;
(B) the street address and post office address
where each Texas representative office is to be located in this
state;
(C) the name and qualifications of each officer
and director of the foreign bank who will have charge of any aspect
of the business and affairs of the Texas representative office;
(D) a complete and detailed statement of the
financial condition of the foreign bank as of a date not more than
360 days before the date of the filing; and
(E) other information the commissioner requires.
(b) The finance commission may adopt rules prescribing
abbreviated registration procedures and standards for foreign
banks that have already established an initial Texas representative
office to establish additional Texas representative offices.
(c) A foreign bank that maintains a Texas state or federal
branch or agency in this state is not prohibited from establishing
or maintaining one or more Texas representative offices.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.202. PLACE OF BUSINESS. A Texas representative
office may engage in the business authorized by this subchapter at
each place of business registered with the commissioner. A Texas
representative office may change its location in this state by
filing a notice with the commissioner containing the street address
and post office address of the new location.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.203. PERMISSIBLE ACTIVITIES OF REPRESENTATIVE
OFFICE. (a) A registered Texas representative office of a
foreign bank may:
(1) solicit loans and in connection with a loan:
(A) assemble credit information about the
borrower;
(B) inspect and appraise property;
(C) obtain property title information; and
(D) prepare a loan application;
(2) solicit purchasers for loans from the foreign
bank;
(3) solicit persons to contract for servicing the
foreign bank loans;
(4) conduct research;
(5) perform services as liaison for customers and
correspondents of the foreign bank;
(6) execute loan documents relating to permitted loans
with the written approval of the foreign bank;
(7) perform back office administrative functions as
may be more specifically defined by rule; and
(8) engage in other activities approved by the
commissioner or permitted by rule.
(b) A representative office may not solicit or accept credit
balances or deposits or make final credit decisions.
(c) A Texas representative office that is or becomes a
regional administrative office of the foreign bank, as may be
defined more fully by rule, may engage in credit approval
activities if:
(1) the foreign bank gives prior written notice to the
commissioner not later than the 30th day before the date the Texas
representative office engages in credit approval activities; and
(2) the commissioner does not object within the 30-day
period to the conduct of the activities by the Texas representative
office.
(d) Written notice under Subsection (c) must be in a form
and contain the information the commissioner requires.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.204. ENFORCEMENT. The commissioner may initiate
an enforcement action under Chapter 35 or a proceeding to revoke the
registration of a representative office if the commissioner by
examination or other credible evidence finds that the foreign bank:
(1) has refused to permit the commissioner to examine
the books, papers, accounts, records, or affairs of a Texas
representative office in accordance with Sections 204.002 and
204.003;
(2) has violated this subtitle, another law or rule
applicable to a foreign bank or a Texas representative office, or a
final and enforceable order of the commissioner or the finance
commission;
(3) has misrepresented or concealed a material fact in
the original registration;
(4) has violated a condition of an agreement between
the foreign bank and the commissioner, a bank supervisory agency,
or another state regulatory agency; or
(5) conducts business in an unsafe and unsound manner.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.205. PROCEDURE FOR REVOCATION. (a) Notice of a
revocation proceeding must:
(1) be in the form of a proposed order;
(2) be served on the foreign bank by personal delivery
or registered or certified mail, return receipt requested, to a
director, officer, or employee of the foreign bank at a Texas
representative office location, or to the registered agent of the
foreign bank;
(3) state the effective date of the proposed order,
which may not be before the 21st day after the date the proposed
order is mailed or delivered; and
(4) state the grounds for the proposed revocation with
reasonable certainty.
(b) Unless the foreign bank requests a hearing in writing on
or before the effective date of the proposed order, the order takes
effect as proposed and is final and nonappealable.
(c) A hearing requested on a proposed order shall be held
not later than the 30th day after the date the written request for
hearing is received by the commissioner unless the parties agree to
a later hearing date. The department shall participate as the
opposing party, and the commissioner shall conduct the hearing and
one or more prehearing conferences and opportunities for discovery
as the commissioner considers advisable and consistent with
applicable statutes and rules. During the pendency of the hearing
and unless the commissioner gives prior written approval, the
foreign bank may not accept new business from this state.
(d) Information relating to the financial condition and
business affairs of the foreign bank, except previously published
statements and information, is confidential and may not be
considered in the public portion of the hearing or disclosed by the
commissioner or an employee of the department except as provided by
Subchapter D, Chapter 31.
(e) Based on the record, the commissioner shall issue or
refuse to issue the proposed order. An issued order may contain
modifications indicated by the record to be necessary or desirable,
including modifications to impose penalties available under
Chapter 35 in lieu of revocation of registration.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.206. EFFECT OF REVOKED REGISTRATION. A foreign
bank that has had its registration under this subchapter revoked
shall cease all activities in this state. Continued activity in
this state of an unregistered foreign bank is subject to Subchapter
C, Chapter 35.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
§ 204.207. DISSOLUTION. (a) If a foreign bank with a
registered Texas representative office is dissolved, has its
authority or existence terminated or canceled in the jurisdiction
of its incorporation, or has its authority to maintain its Texas
representative office terminated by the Board of Governors of the
Federal Reserve System under Section 10(b), International Banking
Act (12 U.S.C. Section 3107(b)), an officer, manager, or agent of
the foreign bank shall deliver to the commissioner a certified copy
of:
(1) a certificate of the official responsible for
records of banking corporations of the foreign bank's jurisdiction
of incorporation attesting to the occurrence of dissolution or of
termination or cancellation of authority or existence;
(2) an order or decree of a court directing the
dissolution of the foreign bank or the termination or cancellation
of its authority or existence; or
(3) an order of the Board of Governors of the Federal
Reserve System terminating its authority under Section 10(b),
International Banking Act (12 U.S.C. Section 3107(b)).
(b) The filing of the certificate, order, or decree has the
same effect under Section 204.206 as if the registration made under
this subchapter were revoked by the commissioner.
Added by Acts 1999, 76th Leg., ch. 344, § 1.001, eff. Sept. 1,
1999.
