6.2-885 - (Effective October 1, 2010) Investment in stock or securities of controlled subsidiary corporations.
§ 6.2-885. (Effective October 1, 2010) Investment in stock or securities ofcontrolled subsidiary corporations.
A. As used in this section and §§ 6.2-886, 6.2-887, and 6.2-888:
"Control" has the meaning assigned to it in § 2 of the Bank Holding CompanyAct of 1956 (12 U.S.C. § 1841 et seq.).
"Controlled subsidiary corporation" means a corporation that is controlledby a bank organized under the laws of the Commonwealth, or by more than onebank, at least one of which is organized under the laws of the Commonwealth.
B. A bank may acquire, own, and hold the stock, securities, or obligations ofone or more controlled subsidiary corporations. Such investment in stock,securities, or obligations, together with any investment of the bank instock, securities, or obligations of a bank service corporation, shall notexceed in the aggregate 50 percent of the bank's capital stock and permanentsurplus, without the permission of the Commission, which limit on investmentshall not include, but shall be in addition to, investment in (i) a realestate subsidiary as provided in § 6.2-873, (ii) the stock, securities, orobligations of a building corporation under § 6.2-870, and (iii) controlledsubsidiary corporations that are wholly owned by the bank.
C. A controlled subsidiary corporation shall not be authorized to (i) receivedeposits except as hereafter provided; (ii) engage in the trust business; or(iii) conduct any business that is required under § 13.1-620 to bespecifically stated in the articles of incorporation, except a controlledsubsidiary corporation may engage in the business of credit card operations,leasing, safe deposit, factoring, credit bureaus, mortgage brokerage orservicing, data processing, international banking and finance, and any otherfunction or business activity in which a bank might engage, except thereceipt of deposits, or the trust business. Subject to the foregoinglimitations on the businesses that a controlled subsidiary corporation isauthorized to conduct, and with the prior approval of the Commission andsubject to such conditions as the Commission may impose, a controlledsubsidiary corporation may also engage in any business that is authorized bystatute, regulation, or official interpretation for a subsidiary of anational bank or an out-of-state state bank as defined in § 6.2-836 to theextent such activity is financial in nature, or incidental or complimentaryto a financial activity, and is not otherwise prohibited by state law. Acontrolled subsidiary corporation transacting business as a real estatebrokerage firm shall be governed by § 6.2-888 and be subject to theprovisions of this section. A controlled subsidiary corporation may chargeand collect such finance charges and fees or interest rates as are authorizedto banks by the laws of the Commonwealth or as otherwise authorized byChapter 3 (§ 6.2-300 et seq.).
D. A controlled subsidiary corporation engaged solely in the business ofinternational banking and finance, and subject to the regulation andsupervision by the Board of Governors of the Federal Reserve System, shallnot be prohibited from receiving deposits or from taking any other actionthat any such regulated international banking and finance institution ispermitted to take.
E. The provisions of § 6.2-874 relating to investment of funds in shares ofstock of another corporation shall be applicable to controlled subsidiarycorporations, except that a controlled subsidiary corporation may acquire,own, and hold stock in a subsidiary corporation if a bank would be permittedto directly acquire, own, or hold the stock hereunder. The provisions of §6.2-876 relating to loans to officers, directors, or employees of the bankshall be applicable both to loans by the subsidiary to officers, directors,or employees of the bank and to loans by the bank to officers, directors, oremployees of the subsidiary, with the approval of the board of directors ofthe bank only being required for purposes of § 6.2-876. The limitations of §§6.2-878 through 6.2-881 as they relate to appraisal value, maximum term, andamortization on loans secured by real estate shall be applicable tocontrolled subsidiary corporations. Notwithstanding any provisions of thissubsection to the contrary, the restrictions set out in §§ 6.2-874 through6.2-881 shall not be imposed upon any controlled subsidiary that has no statebanks as shareholders.
F. The provisions of § 6.2-875 relating to limitations upon obligations ofany one borrower shall apply to the total obligations of any borrower in theaggregate to the subsidiary corporation and to any bank or bank holdingcompany owning stock securities or obligations of such subsidiarycorporation. The loan limit of the subsidiary shall be computed byattributing to the subsidiary a pro rata share of the lending limit of eachbank stockholder prorated in accordance with the percentage of stock owned bysuch bank. However, in the case of a subsidiary, any of the stock,securities, or other obligations of which are owned by a bank holdingcompany, the loan limits of the subsidiary shall be computed by attributingto the subsidiary a pro rata share of the lending limits of all banksubsidiaries of such holding company, which share shall be prorated based onthe percentage of stock owned by the holding company and all subsidiary banksthereof. In computing whether a bank or a subsidiary that is not wholly ownedis complying with its lending limit, the loans of the bank and the subsidiaryto any common borrower shall be aggregated on a basis pro rata to thepercentage of stock of the subsidiary owned by the bank. Such controlledsubsidiary corporation shall not otherwise be subject to the provisions ofthis chapter except where it is expressly so provided. Notwithstanding anyprovisions of this subsection to the contrary, the restrictions set out in §§6.2-874 through 6.2-881 shall not be imposed upon any controlled subsidiarythat has no state banks as shareholders.
(1968, c. 270, § 6.1-58.1; 1978, c. 797; 1988, c. 296; 1993, c. 64; 1997, c.277; 1999, c. 60; 2001, c. 508; 2003, cc. 536, 558; 2010, c. 794.)