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2000 - Rules and Regulations
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Subpart CActivities of Insured State Savings
Associations
§ 362.9 Purpose and scope.
(a) This subpart, along with the notice and application procedures
in subpart H of part 303
of this chapter, implements the provisions of section 28 of the Federal
Deposit Insurance Act (12 U.S.C.
1831e) that restrict and prohibit insured state savings
associations and their service corporations from engaging in activities
and investments of a type that are not permissible for federal savings
associations and their service corporations. The phrase "activity
permissible for a federal savings association" means any activity
authorized for federal savings associations under any statute including
the Home Owners' Loan Act (HOLA, 12 U.S.C. 1464 et seq.),
as well as activities recognized as permissible for a federal savings
association in regulations, official thrift bulletins, orders or
written interpretations issued by the Office of Thrift Supervision
(OTS), or its predecessor, the Federal Home Loan Bank Board.
(b) This subpart does not cover the following activities:
(1) Activities conducted by the insured state savings association
other than "as principal", defined for purposes of this subpart
as activities conducted as agent for a customer, conducted in a
brokerage, custodial, advisory, or administrative capacity, or
conducted as trustee, or in any substantially similar capacity. For
example, this subpart does not cover acting solely as agent for the
sale of insurance, securities, real estate, or travel services; nor
does it cover acting as trustee, providing personal financial planning
advice, or safekeeping services.
(2) Interest in real estate in which the real property is used or
intended in good faith to be used within a reasonable time by an
insured savings association or its service corporations as offices or
related facilities for the conduct of its business or future expansion
of its business or used as public welfare investments of a type and in
an amount permissible for federal savings associations.
(3) Equity investments acquired in connection with debts
previously contracted (DPC) if the insured savings association or its
service corporation takes only such actions as would be permissible for
a federal savings association's or its service corporation's DPC
holdings.
(c) The FDIC intends to allow insured state savings associations
and their service corporations to undertake only safe and sound
activities and investments that do not present significant risks to the
Deposit Insurance Fund and that are consistent with the purposes of
federal deposit insurance and other applicable law. This subpart does
not authorize any insured state savings association to make investments
or conduct activities that are not authorized or that are prohibited by
either federal or state law.
[Codified in 12 C.F.R. § 362.9]
[Section 362.9 amended at 71 Fed. Reg. 20527, April 21,
2006]
§ 362.10 Definitions.
For the purposes of this subpart, the definitions provided in
§ 362.2 apply.
Additionally, the following definitions apply to this subpart:
(a) Affiliate has the same meaning as provided in
subpart B of this part.
(b) Corporate debt securities not of investment grade
means any corporate debt security that when acquired was not rated
among the four highest rating categories by at least one nationally
recognized statistical rating organization. The term shall not include
any obligation issued or guaranteed by a corporation that may be held
by a federal savings association without limitation as to percentage of
assets under subparagraphs (D), (E), or (F) of section 5(c)(1) of HOLA
(12 U.S.C. 1464(c)(1)(D), (E),
(F)).
(c) Insured state savings association means any
state-chartered savings association insured by the FDIC.
(d) Qualified affiliate means, in the case of a stock
insured state savings association, an affiliate other than a subsidiary
or an insured depository institution. In the case of a mutual savings
association, "qualified affiliate" means a subsidiary other than
an insured depository institution provided that all of the savings
association's investments in, and extensions of credit to, the
subsidiary are deducted from the savings association's capital.
(e) Service corporation means any corporation with
capital stock of which is available for purchase by savings
associations.
{{10-31-07 p.3124.08}}
[Codified to 12 C.F.R. § 362.10]
[Section 362.10 amended at 66 Fed. Reg. 1029, January 5,
2001]
§ 362.11 Activities of insured state savings associations.
(a) Equity investments--(1) Prohibited
investments. No insured state savings association may directly
acquire or retain as principal any equity investment of a type, or in
an amount, that is not permissible for a federal savings association
unless the exception in paragraph (a)(2) of this section applies.
(2) Exception: Equity investment in service corporations.
An insured state savings association that is and continues to be
in compliance with the applicable capital standards as prescribed by
the appropriate federal banking agency may acquire or retain an equity
investment in a service corporation:
(i) Not permissible for a federal savings association to the
extent the service corporation is engaging in activities that are
allowed pursuant to the provisions of or an application under
§ 362.12(b); or
(ii) Of a type permissible for a federal savings association, but
in an amount exceeding the investment limits applicable to federal
savings associations, if the insured state savings association obtains
the FDIC's prior consent. Consent will be given only if the FDIC
determines that the amount of the investment in a service corporation
engaged in such activities does not present a significant risk to the
Deposit Insurance Fund. Applications should be filed in accordance with
§ 303.141 of this
chapter and will be processed under
§ 303.142(b) of this
chapter. Approvals granted under § 303.142(b) of this chapter may be
made subject to any conditions or restrictions found by the FDIC to be
necessary to protect the Deposit Insurance Fund from significant risk,
to prevent unsafe or unsound practices, and/or to ensure that the
activity is consistent with the purposes of federal deposit insurance
and other applicable law.
(b) Activities other than equity investments--(1)
Prohibited activities. An insured state savings association
may not directly engage as principal in any activity, that is not an
equity investment, of a type not permissible for a federal savings
association, and an insured state savings association shall not make
nonresidential real property loans in an amount exceeding that
described in section 5(c)(2)(B) of HOLA
(12 U.S.C. 1464(c)(2)(B)),
unless one of the exceptions in paragraph (b)(2) of this section
applies. This section shall not be read to require the divestiture of
any asset (including a nonresidential real estate loan), if the asset
was acquired prior to August 9, 1989; however, any activity conducted
with such asset must be conducted in accordance with this subpart.
After August 9, 1989, an insured state savings association directly or
through a subsidiary (other than, in the case of a mutual savings
association, a subsidiary that is a qualified affiliate), may not
acquire or retain any corporate debt securities not of investment
grade.
(2) Exceptions--(i) Consent obtained through
application. An insured state savings association that meets and
continues to meet the applicable capital standards set by the
appropriate federal banking agency may directly conduct activities
prohibited by paragraph (b)(1) of this section if the savings
association obtains the FDIC's prior consent. Consent will be given
only if the FDIC determines that conducting the activity designated
poses no significant risk to the affected deposit insurance fund.
Applications should be filed in accordance with
§ 303.141 of this
chapter and will be processed under § 303.142(b) of this chapter.
Approvals granted under § 303.142(b) of this chapter may be made
subject to any conditions or restrictions found by the FDIC to be
necessary to protect the Deposit Insurance Fund from significant risk,
to prevent unsafe or unsound practices, and/or to ensure that the
activity is consistent with the purposes of federal deposit insurance
and other applicable law.
(ii) Nonresidential realty loans permissible for a federal
savings association conducted in an amount not permissible. An
insured state savings association that meets and continues to meet the
applicable capital standards set by the appropriate federal banking
agency may make nonresidential real property loans in an amount
exceeding the amount described in
section 5(c)(2)(B) of HOLA, if
the savings association files a notice in compliance with § 303.141
of this chapter and the FDIC processes the notice without objection
under § 303.142(a) of this chapter. Consent will be given only if the
FDIC determines that engaging in such lending in the amount designated
poses no significant risk to the Deposit Insurance Fund.
{{4-28-06 p.3124.09}}
(iii) Acquiring and retaining adjustable rate and money
market preferred stock. (A) An insured state savings
association's investment of up to 15 percent of the association's
tier one capital in adjustable rate preferred stock or money market
(auction rate) preferred stock does not represent a significant risk to
the Deposit Insurance Fund. An insured state savings association may
conduct this activity without first obtaining the FDIC's consent,
provided that the association meets and continues to meet the
applicable capital standards as prescribed by the appropriate federal
banking agency. The fact that prior consent is not required by this
subpart does not preclude the FDIC from taking any appropriate action
with respect to the activities if the facts and circumstances warrant
such action.
(B) An insured state savings association may acquire or retain
other instruments of a type determined by the FDIC to have the
character of debt securities and not to represent a significant risk to
the Deposit Insurance Fund. Such instruments shall be included in the
15 percent of tier one capital limit imposed in paragraph
(b)(2)(iii)(A) of this section. An insured state savings association
may conduct this activity without first obtaining the FDIC's consent,
provided that the association meets and continues to meet the
applicable capital standards as prescribed by the appropriate federal
banking agency. The fact that prior consent is not required by this
subpart does not preclude the FDIC from taking any appropriate action
with respect to the activities if the facts and circumstances warrant
such action.
(3) Activities permissible for a federal savings
association conducted in an amount not permissible. Except as
provided in paragraph (b)(2)(ii) of this section, an insured state
savings association may engage as principal in any activity, which is
not an equity investment of a type permissible for a federal savings
association, in an amount in excess of that permissible for a federal
savings association, if the savings association meets and continues to
meet the applicable capital standards set by the appropriate federal
banking agency, the institution has advised the appropriate regional
director (DOS) under the procedure in
§ 303.142(c) of this
chapter within thirty days before engaging in the activity, and the
FDIC has not advised the insured state savings association that
conducting the activity in the amount indicated poses a significant
risk to the Deposit Insurance Fund. This section shall not be read to
require the divestiture of any asset if the asset was acquired prior to
August 9, 1989; however, any activity conducted with such asset must be
conducted in accordance with this subpart.
[Codified to 12 C.F.R. § 362.11]
[Section 362.11 amended at 71 Fed. Reg. 20527, April 21,
2006]
§ 362.12 Service corporations of insured state savings
associations.
(a) Prohibition. A service corporation of an insured
state savings association may not engage in any activity that is not
permissible for a service corporation of a federal savings association,
unless it meets one of the exceptions in paragraph (b) of this section.
(b) Exceptions--(1) Consent obtained through
application. A service corporation of an insured state savings
association may conduct activities prohibited by paragraph (a) of this
section if the savings association obtains the FDIC's prior written
consent and the insured state savings association meets and continues
to meet the applicable capital standards set by the appropriate federal
banking agency. Consent will be given only if the FDIC determines that
the activity poses no significant risk to the Deposit Insurance Fund.
Applications for consent should be filed in accordance with § 303.141
of this chapter and will be processed under § 303.142(b) of this
chapter. Approvals granted under
§ 303.142(b) of this
chapter may be made subject to any conditions or restrictions found by
the FDIC to be necessary to protect the Deposit Insurance Fund from
risk, to prevent unsafe or unsound banking practices, and/or to ensure
that the activity is consistent with the purposes of federal deposit
insurance and other applicable law. The activities covered by this
paragraph may include, but are not limited to, acquiring and retaining
equity securities of a company engaged in the public sale distribution
or underwriting of securities.
(2) Service corporations conducting unrestricted
activities. The FDIC has determined that the following
activities do not represent a significant risk to the Deposit Insurance
Fund:
(i) [Reserved]
(ii) A service corporation of an insured state savings
association may acquire and retain equity securities of a company
engaged in the following activities, if the service
{{4-28-06 p.3124.10}}corporation controls the
company or the company is controlled by insured depository
institutions, and the association continues to meet the applicable
capital standards as prescribed by the appropriate federal banking
agency. The FDIC consents that such activity may be conducted by a
service corporation of an insured state savings association without
first obtaining the FDIC's consent. The fact that prior consent is not
required by this subpart does not preclude the FDIC from taking any
appropriate action with respect to the activities if the facts and
circumstances warrant such action.
(A) Equity securities of a company that engages in
permissible activities. A service corporation may own the equity
securities of a company that engages in any activity permissible for a
federal savings association.
(B) Equity securities of a company that acquires and
retains adjustable-rate and money market preferred stock. A
service corporation may own the equity securities of a company that
engages in any activity permissible for an insured state savings
association under § 362.11(b)(2)(iii) so long as instruments held
under this paragraph (b)(2)(ii)(B), paragraph (b)(2)(iv) of this
section, and § 362.11(b)(2)(iii) in the aggregate do not exceed the
limit set by § 362.11(b)(2)(iii).
(C) Equity securities of a company acting as an insurance
agency. A service corporation may own the equity securities of a
company that acts as an insurance agency.
(iii) Activities that are not conducted "as
principal". A service corporation controlled by the insured
state savings association may engage in activities which are not
conducted "as principal" such as acting as an agent for a
customer, acting in a brokerage, custodial, advisory, or administrative
capacity, or acting as trustee, or in any substantially similar
capacity.
(iv) Acquiring and retaining adjustable-rate and money
market preferred stock. A service corporation may engage in any
activity permissible for an insured state savings association under
§ 362.11(b)(2)(iii) so long as instruments held under this paragraph
(b)(2)(iv), paragraph (b)(2)(ii)(B) of this section, and
§ 362.11(b)(2)(iii) in the aggregate do not exceed the limit set by
§ 362.11(b)(2)(iii).
(3) [Reserved]
(4) [Reserved]
(c) Investment and transaction limits. The restrictions
detailed in § 362.4(d)
apply to transactions between an insured state savings association and
any service corporation engaging in activities which are not
permissible for a service corporation of a federal savings association
if specifically required by this part or FDIC order. For purposes of
applying the investment limits in § 362.4(d)(2), the term
"investment" includes only those items described in
§ 362.4(d)(2)(ii)(A)(3) and (4). For purposes
of applying § 362.4(d)(2), (3), and (4) to this paragraph (c),
references to the terms "insured state bank" and
"subsidiary" in § 362.4(d)(2), (3), and (4), shall be deemed to
refer, respectively, to the insured state savings association and the
service corporation. For purposes of applying § 362.4(d)(5),
references to the terms "insured state bank" and
"subsidiary" in § 362.4(d)(5) shall be deemed to refer,
respectively, to the insured state savings association and the service
corporations or subsidiaries.
(d) Capital requirements. If specifically required by
this part or by FDIC order, an insured state savings association that
wishes to conduct as principal activities through a service corporation
which are not permissible for a service corporation of a federal
savings association must:
(1) Be well-capitalized after deducting from its capital any
investment in the service corporation, both equity and debt.
(2) Use such regulatory capital amount for the purposes of the
insured state savings association's assessment risk classification
under part 327 of this
chapter.
[Codified to 12 C.F.R. § 362.12]
[Section 362.12 amended at 66 Fed. Reg. 1029, January 5,
2001; 71 Fed. Reg. 20527, April 21, 2006]
§ 362.13 Approvals previously granted.
FDIC consent by order or notice. An insured state savings
association that previously filed an application and obtained the
FDIC's consent to engage in an activity or to acquire or retain an
investment in a service corporation engaging as principal in an
activity or acquiring and retaining any investment that is prohibited
under this subpart may continue
{{4-28-06 p.3124.10-A}}that activity or retain that
investment without seeking the FDIC's consent, provided the insured
state savings association and the service corporation, if applicable,
continue to meet the conditions and restrictions of approval. An
insured state savings association which was
{{2-28-01 p.3124.11}}granted approval based on
conditions which differ from the requirements of §§ 362.4(c)(2) and
362.12(c) and (d) will be considered to meet the conditions and
restrictions of the approval if the insured state savings association
and any applicable service corporation meet the requirements of
§§ 362.4(c)(2) and 362.12(c) and (d). For the purposes of applying
§ 362.4(c)(2), references
to the terms "eligible subsidiary" and "subsidiary" in
§ 362.4(c)(2) shall be deemed to refer, respectively, to the eligible
service corporation and the service corporation.
[Codified to 12 C.F.R. § 362.13]
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