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6000 - Bank Holding Company Act
ACQUISITION OF BANK SHARES OR
ASSETS
SEC. 3. (a) 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
{{12-30-99 p.6028.02}}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 2(b) and except as
provided in paragraphs (2) and (3) of section 2(g), or (ii) in the
regular course of securing or collecting a debt previously contracted
in good faith, but any shares acquired after the date of enactment of
this Act 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 38
of the Federal Deposit Insurance Act);
(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. 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
{{2-28-05 p.6029}}
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 the date of enactment of the Bank
Holding Company Act Amendments of 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.
[Codified to 12 U.S.C. 1842(a)]
[Source: Section 3(a) of the Act of May 9, 1956 (Pub. L. No. 511;
70 Stat. 134), effective May 9, 1956, as amended by sections 7(a) and
7(b) of the Act of July 1, 1966 (Pub. L. No. 89--485; 80 Stat. 237),
effective July 1, 1966; section 102(1) of title I of the Act of
December 31, 1970 (Pub. L. No. 91--607; 84 Stat. 1763), effective
December 31, 1970; section 301(a) of title III of the Act of November
16, 1977 (Pub. L. No. 95--188; 91 Stat. 1388), effective November 16,
1977; section 319(a) of title III of the Act of September 23, 1994
(Pub. L. No. 103--325; 108 Stat. 2224), effective September 23,
1994]
(b)(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 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
{{2-28-05 p.6030}}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 13(f)(8)(D) of
the Federal Deposit Insurance Act 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.
[Codified to 12 U.S.C. 1842(b)]
[Source: Section 3(b) of the Act of May 9, 1956 (Pub. L. No. 511;
70 Stat. 134), effective May 9, 1956, as amended by section 102(2) of
title I of the Act of December 31, 1970 (Pub. L. No. 91--607; 84 Stat.
1763), effective December 31, 1970; section 302 of title III of the Act
of November 16, 1977 (Pub. L. No. 95--188; 91 Stat. 1389), effective
November 16, 1977; section 502(h)(1) of title V of the Act of August
10, 1987 (Pub. L. No. 100--86; 101 Stat. 628), effective August 10,
1987; section 8(c)(2) of the Act of October 30, 2004 (Pub. L. No.
108-386; 118 Stat. 2232), effective October 30,
2004]
(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 2
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 Act; 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.
{{4-28-06 p.6030.01}}
(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.
[Codified to 12 U.S.C. 1842(c)]
[Source: Section 3(c) of the Act of May 9, 1956 (Pub. L. No. 511;
70 Stat. 135), effective May 9, 1956, as amended by section 7(c) of the
Act of July 1, 1966 (Pub. L. No. 89--485; 80 Stat. 237), effective July
1, 1966; section 713 of title VII of the Act of March 31, 1980 (Pub. L.
No. 96--221; 94 Stat. 190), effective March 31, 1980; sections 202(d)
and 210 of title II of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2290 and 2298, respectively), effective December
19, 1991; section 327(a)(1) of title III of the Act of October 26, 2001
(Pub. L. No. 107--56; 115 Stat. 318), effective October 26,
2001]
(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 the date of enactment of
the Riegle-Neal Interstate Banking and Branching Efficiency Act of
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.
{{4-28-06 p.6030.02}}
(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 institution which are
affiliates of the bank or bank holding company) to the extent the
application of such limitations 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 institution 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 3(l) of the
Federal Deposit Insurance Act.
(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 804 of the Community Reinvestment Act of
1977; 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 13(c) of the Federal Deposit Insurance Act;
without regard to subparagraph (B) or (D) of paragraph (1) or
paragraph (2) or (3).
[Codified to 12 U.S.C. 1842(d)]
[Source: Section 3(d) of the Act of May 9, 1956 (Pub. L. No. 511;
70 Stat. 135), effective May 9, 1956, as amended by section 7(d)
of the Act of July 1, 1966 (Pub. L. No. 89--485; 80 Stat. 238),
effective July 1, 1966; section 712 of title VII of the Act of March
31, 1980 (Pub. L. No. 96--221; 94 Stat. 189), effective March 31, 1980
through September 30, 1981; section 118(c) of title I of the Act of
October 15, 1982 (Pub. L. No. 97--320; 96 Stat. 1479),
effective
{{4-28-06 p.6031}}October 15, 1982 through
October 15, 1985; section 101 of title I of the Act of September 29,
1994 (Pub. L. No. 103--328; 108 Stat. 2339), effective September 29,
1995; section 9(h)(2) of the Act of February 15, 2006 (Pub. L. No.
107--193; 119 Stat. 3617), effective date shall take effect on the date
of the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund pursuant to the Federal Deposit Insurance Reform Act of
2005]
(e) 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 3 of the Federal Deposit
Insurance Act.
[Codified to 12 U.S.C. 1842(e)]
[Source: Section 3(e) of the Act of May 9, 1956 (Pub. L. No. 511),
as added by section 102(3) of title I of the Act of December 31, 1970
(Pub. L. No. 91--607; 84 Stat. 1763), effective December 31, 1970; and
as amended by section 404(d)(2) of title IV of the Act of October 15,
1982 (Pub. L. No. 97--320; 96 Stat. 1512), effective October 15, 1982;
section 602(b) of title VI of the Act of August 9, 1989 (Pub. L. No.
101--73; 103 Stat. 409), effective August 9, 1989; section 321(c)(1) of
title III of the Act of September 23, 1994 (Pub. L. No. 103--325; 108
Stat. 2227), effective September 23, 1994]
(f) [Repealed]
[Source: Section 3(f) of the Act of May 9, 1956 (Pub. L. No.
511), as added by section 101(d) of title I of the Act of August 10,
1987 (Pub. L. No. 100-86; 101 Stat. 561 to 562), effective August 10,
1987; repealed at section 118 of title I of the Act of November 12,
1999 (Pub. L. No. 106--102; 113 Stat. 1373), effective March 12,
2000]
(g) MUTUAL BANK HOLDING COMPANY.--
(1) ESTABLISHMENT.--Notwithstanding any provision of
Federal law other than this Act, 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.
[Codified to 12 U.S.C. 1842(g)]
[Source: Section 3(g) of the Act of May 9, 1956 (Pub. L. No. 511),
as added by section 107(b) of title I of the Act of August 10, 1987
(Pub. L. No. 100-86; 101 Stat. 579), effective August 10, 1987; as
amended by section 105 of title I of the Act of November 12, 1999 (Pub.
L. No. 106--102; 113 Stat. 1359), effective March 12,
2000]
2 So in statute as enacted. The word "or" should probably
be "of". Go Back to Text
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