12 U.S.C. § 1842 : US Code - Section 1842: Acquisition of bank shares or assets

Search 12 U.S.C. § 1842 : US Code - Section 1842: Acquisition of bank shares or assets

(a) Prior approval of Board as necessary; exceptions; disposition,
time extension; subsequent approval or disposition upon
disapproval
It shall be unlawful, except with the prior approval of the
Board, (1) for any action to be taken that causes any company to
become a bank holding company; (2) for any action to be taken that
causes a bank to become a subsidiary of a bank holding company; (3)
for any bank holding company to acquire direct or indirect
ownership or control of any voting shares of any bank if, after
such acquisition, such company will directly or indirectly own or
control more than 5 per centum of the voting shares of such bank;
(4) for any bank holding company or subsidiary thereof, other than
a bank, to acquire all or substantially all of the assets of a
bank; or (5) for any bank holding company to merge or consolidate
with any other bank holding company. Notwithstanding the foregoing
this prohibition shall not apply to (A) shares acquired by a bank,
(i) in good faith in a fiduciary capacity, except where such shares
are held under a trust that constitutes a company as defined in
section 1841(b) of this title and except as provided in paragraphs
(2) and (3) of section 1841(g) of this title, or (ii) in the
regular course of securing or collecting a debt previously
contracted in good faith, but any shares acquired after May 9,
1956, in securing or collecting any such previously contracted debt
shall be disposed of within a period of two years from the date on
which they were acquired; (B) additional shares acquired by a bank
holding company in a bank in which such bank holding company owned
or controlled a majority of the voting shares prior to such
acquisition; or (C) the acquisition, by a company, of control of a
bank in a reorganization in which a person or group of persons
exchanges their shares of the bank for shares of a newly formed
bank holding company and receives after the reorganization
substantially the same proportional share interest in the holding
company as they held in the bank except for changes in
shareholders' interests resulting from the exercise of dissenting
shareholders' rights under State or Federal law if -
(i) immediately following the acquisition -
(I) the bank holding company meets the capital and other
financial standards prescribed by the Board by regulation for
such a bank holding company; and
(II) the bank is adequately capitalized (as defined in
section 1831o of this title);
(ii) the holding company does not engage in any activities
other than those of managing and controlling banks as a result of
the reorganization;
(iii) the company provides 30 days prior notice to the Board
and the Board does not object to such transaction during such 30-
day period; and
(iv) the holding company will not acquire control of any
additional bank as a result of the reorganization..(!1)
The Board is authorized upon application by a bank to extend, from
time to time for not more than one year at a time, the two-year
period referred to above for disposing of any shares acquired by a
bank in the regular course of securing or collecting a debt
previously contracted in good faith, if, in the Board's judgment,
such an extension would not be detrimental to the public interest,
but no such extension shall in the aggregate exceed three years.
For the purpose of the preceding sentence, bank shares acquired
after December 31, 1970, shall not be deemed to have been acquired
in good faith in a fiduciary capacity if the acquiring bank or
company has sole discretionary authority to exercise voting rights
with respect thereto, but in such instances acquisitions may be
made without prior approval of the Board if the Board, upon
application filed within ninety days after the shares are acquired,
approves retention or, if retention is disapproved, the acquiring
bank disposes of the shares or its sole discretionary voting rights
within two years after issuance of the order of disapproval.
(b) Application for approval; notice to Comptroller of Currency or
State authority; views and recommendations; disapproval; hearing;
order of Board; nonaction deemed grant of application; procedure
in emergencies or probable failures requiring immediate Board
action and orders
(1) Notice and hearing requirements
Upon receiving from a company any application for approval
under this section, the Board shall give notice to the
Comptroller of the Currency, if the applicant company or any bank
the voting shares or assets of which are sought to be required
(!2) is a national banking association, or to the appropriate
supervisory authority of the interested State, if the applicant
company or any bank the voting shares or assets of which are
sought to be acquired is a State bank, in order to provide for
the submission of the views and recommendations of the
Comptroller of the Currency or the State supervisory authority,
as the case may be. The views and recommendations shall be
submitted within thirty calendar days of the date on which notice
is given, or within ten calendar days of such date if the Board
advises the Comptroller of the Currency or the State supervisory
authority that an emergency exists requiring expeditious action.
If the thirty-day notice period applies and if the Comptroller of
the Currency or the State supervisory authority so notified by
the Board disapproves the application in writing within this
period, the Board shall forthwith give written notice of that
fact to the applicant. Within three days after giving such notice
to the applicant, the Board shall notify in writing the applicant
and the disapproving authority of the date for commencement of a
hearing by it on such application. Any such hearing shall be
commenced not less than ten nor more than thirty days after the
Board has given written notice to the applicant of the action of
the disapproving authority. The length of any such hearing shall
be determined by the Board, but it shall afford all interested
parties a reasonable opportunity to testify at such hearing. At
the conclusion thereof, the Board shall, by order, grant or deny
the application on the basis of the record made at such hearing.
In the event of the failure of the Board to act on any
application for approval under this section within the ninety-one-
day period which begins on the date of submission to the Board
of the complete record on that application, the application shall
be deemed to have been granted. Notwithstanding any other
provision of this subsection, if the Board finds that it must act
immediately on any application for approval under this section in
order to prevent the probable failure of a bank or bank holding
company involved in a proposed acquisition, merger, or
consolidation transaction, the Board may dispense with the notice
requirements of this subsection, and if notice is given, the
Board may request that the views and recommendations of the
Comptroller of the Currency or the State supervisory authority,
as the case may be, be submitted immediately in any form or by
any means acceptable to the Board. If the Board has found
pursuant to this subsection either that an emergency exists
requiring expeditious action or that it must act immediately to
prevent probable failure, the Board may grant or deny any such
application without a hearing notwithstanding any recommended
disapproval by the appropriate supervisory authority.
(2) Waiver in case of bank in danger of closing
If the Board receives a certification described in section
1823(f)(8)(D) (!3) of this title from the appropriate Federal or
State chartering authority that a bank is in danger of closing,
the Board may dispense with the notice and hearing requirements
of paragraph (1) with respect to any application received by the
Board relating to the acquisition of such bank, the bank holding
company which controls such bank, or any other affiliated bank.
(c) Factors for consideration by Board
(1) Competitive factors
The Board shall not approve -
(A) any acquisition or merger or consolidation under this
section which would result in a monopoly, or which would be in
furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of
the United States, or
(B) any other proposed acquisition or merger or consolidation
under this section whose effect in any section of the country
may be substantially to lessen competition, or to tend to
create a monopoly, or which in any other manner would be in
restraint or (!4) trade, unless it finds that the
anticompetitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the
community to be served.
(2) Banking and community factors
In every case, the Board shall take into consideration the
financial and managerial resources and future prospects of the
company or companies and the banks concerned, and the convenience
and needs of the community to be served.
(3) Supervisory factors
The Board shall disapprove any application under this section
by any company if -
(A) the company fails to provide the Board with adequate
assurances that the company will make available to the Board
such information on the operations or activities of the
company, and any affiliate of the company, as the Board
determines to be appropriate to determine and enforce
compliance with this chapter; or
(B) in the case of an application involving a foreign bank,
the foreign bank is not subject to comprehensive supervision or
regulation on a consolidated basis by the appropriate
authorities in the bank's home country.
(4) Treatment of certain bank stock loans
Notwithstanding any other provision of law, the Board shall not
follow any practice or policy in the consideration of any
application for the formation of a one-bank holding company if
following such practice or policy would result in the rejection
of such application solely because the transaction to form such
one-bank holding company involves a bank stock loan which is for
a period of not more than twenty-five years. The previous
sentence shall not be construed to prohibit the Board from
rejecting any application solely because the other financial
arrangements are considered unsatisfactory. The Board shall
consider transactions involving bank stock loans for the
formation of a one-bank holding company having a maturity of
twelve years or more on a case by case basis and no such
transaction shall be approved if the Board believes the safety or
soundness of the bank may be jeopardized.
(5) Managerial resources
Consideration of the managerial resources of a company or bank
under paragraph (2) shall include consideration of the
competence, experience, and integrity of the officers, directors,
and principal shareholders of the company or bank.
(6) Money laundering
In every case, the Board shall take into consideration the
effectiveness of the company or companies in combatting money
laundering activities, including in overseas branches.
(d) Interstate banking
(1) Approvals authorized
(A) Acquisition of banks
The Board may approve an application under this section by a
bank holding company that is adequately capitalized and
adequately managed to acquire control of, or acquire all or
substantially all of the assets of, a bank located in a State
other than the home State of such bank holding company, without
regard to whether such transaction is prohibited under the law
of any State.
(B) Preservation of State age laws
(i) In general
Notwithstanding subparagraph (A), the Board may not approve
an application pursuant to such subparagraph that would have
the effect of permitting an out-of-State bank holding company
to acquire a bank in a host State that has not been in
existence for the minimum period of time, if any, specified
in the statutory law of the host State.
(ii) Special rule for State age laws specifying a period of
more than 5 years
Notwithstanding clause (i), the Board may approve, pursuant
to subparagraph (A), the acquisition of a bank that has been
in existence for at least 5 years without regard to any
longer minimum period of time specified in a statutory law of
the host State.
(C) Shell banks
For purposes of this subsection, a bank that has been
chartered solely for the purpose of, and does not open for
business prior to, acquiring control of, or acquiring all or
substantially all of the assets of, an existing bank shall be
deemed to have been in existence for the same period of time as
the bank to be acquired.
(D) Effect on State contingency laws
No provision of this subsection shall be construed as
affecting the applicability of a State law that makes an
acquisition of a bank contingent upon a requirement to hold a
portion of such bank's assets available for call by a State-
sponsored housing entity established pursuant to State law, if
-
(i) the State law does not have the effect of
discriminating against out-of-State banks, out-of-State bank
holding companies, or subsidiaries of such banks or bank
holding companies;
(ii) that State law was in effect as of September 29, 1994;
(iii) the Federal Deposit Insurance Corporation has not
determined that compliance with such State law would result
in an unacceptable risk to the Deposit Insurance Fund; and
(iv) the appropriate Federal banking agency for such bank
has not found that compliance with such State law would place
the bank in an unsafe or unsound condition.
(2) Concentration limits
(A) Nationwide concentration limits
The Board may not approve an application pursuant to
paragraph (1)(A) if the applicant (including all insured
depository institutions which are affiliates of the applicant)
controls, or upon consummation of the acquisition for which
such application is filed would control, more than 10 percent
of the total amount of deposits of insured depository
institutions in the United States.
(B) Statewide concentration limits other than with respect to
initial entries
The Board may not approve an application pursuant to
paragraph (1)(A) if -
(i) immediately before the consummation of the acquisition
for which such application is filed, the applicant (including
any insured depository institution affiliate of the
applicant) controls any insured depository institution or any
branch of an insured depository institution in the home State
of any bank to be acquired or in any host State in which any
such bank maintains a branch; and
(ii) the applicant (including all insured depository
institutions which are affiliates of the applicant), upon
consummation of the acquisition, would control 30 percent or
more of the total amount of deposits of insured depository
institutions in any such State.
(C) Effectiveness of State deposit caps
No provision of this subsection shall be construed as
affecting the authority of any State to limit, by statute,
regulation, or order, the percentage of the total amount of
deposits of insured depository institutions in the State which
may be held or controlled by any bank or bank holding company
(including all insured depository institutions which are
affiliates of the bank or bank holding company) to the extent
the application of such limitation does not discriminate
against out-of-State banks, out-of-State bank holding
companies, or subsidiaries of such banks or holding companies.
(D) Exceptions to subparagraph (B)
The Board may approve an application pursuant to paragraph
(1)(A) without regard to the applicability of subparagraph (B)
with respect to any State if -
(i) there is a limitation described in subparagraph (C) in
a State statute, regulation, or order which has the effect of
permitting a bank or bank holding company (including all
insured depository institutions which are affiliates of the
bank or bank holding company) to control a greater percentage
of total deposits of all insured depository institutions in
the State than the percentage permitted under subparagraph
(B); or
(ii) the acquisition is approved by the appropriate State
bank supervisor of such State and the standard on which such
approval is based does not have the effect of discriminating
against out-of-State banks, out-of-State bank holding
companies, or subsidiaries of such banks or holding
companies.
(E) "Deposit" defined
For purposes of this paragraph, the term "deposit" has the
same meaning as in section 1813(l) of this title.
(3) Community reinvestment compliance
In determining whether to approve an application under
paragraph (1)(A), the Board shall -
(A) comply with the responsibilities of the Board regarding
such application under section 2903 of this title; and
(B) take into account the applicant's record of compliance
with applicable State community reinvestment laws.
(4) Applicability of antitrust laws
No provision of this subsection shall be construed as affecting
-
(A) the applicability of the antitrust laws; or
(B) the applicability, if any, of any State law which is
similar to the antitrust laws.
(5) Exception for banks in default or in danger of default
The Board may approve an application pursuant to paragraph
(1)(A) which involves -
(A) an acquisition of 1 or more banks in default or in danger
of default; or
(B) an acquisition with respect to which assistance is
provided under section 1823(c) of this title;
without regard to subparagraph (B) or (D) of paragraph (1) or
paragraph (2) or (3).
(e) Insured depository institution
Every bank that is a holding company and every bank that is a
subsidiary of such a company shall become and remain an insured
depository institution as defined in section 1813 of this title.
(f) [Repealed]
(g) Mutual bank holding company
(1) Establishment
Notwithstanding any provision of Federal law other than this
chapter, a savings bank or cooperative bank operating in mutual
form may reorganize so as to form a holding company.
(2) Regulations
A bank holding company organized as a mutual holding company
shall be regulated on terms, and shall be subject to limitations,
comparable to those applicable to any other bank holding company.