CHAPTER 204. FOREIGN BANKS
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE G. BANK HOLDING COMPANIES; INTERSTATE BANK OPERATIONS
CHAPTER 204. FOREIGN BANKS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
SUBCHAPTER B. DIRECT BRANCH AND AGENCY OFFICES OF FOREIGN BANKS
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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 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, Sec. 1.001, eff. Sept. 1,
1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
110, Sec. 13, eff. September 1, 2007.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
SUBCHAPTER C. REPRESENTATIVE OFFICES OF FOREIGN BANK
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.
Sec. 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, Sec. 1.001, eff. Sept. 1,
1999.