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2000 - Rules and Regulations
{{4-28-06 p.3124.06}}
Subpart B—Safety and Soundness Rules Governing Insured
State Nonmember Banks
§ 362.6 Purpose and scope.
This subpart, along with the notice and application procedures in
subpart G of part 303 of
this chapter apply to certain banking practices that may have adverse
effects on the safety and soundness of insured state nonmember banks.
This subpart contains the required prudential separations between
certain securities underwriting affilites and insured state nonmember
banks. The standards only will apply to affiliates of insured state
nonmember banks that are not controlled by an entity that is supervised
by a federal banking agency.
[Codified to 12 C.F.R. § 362.6]
[Section 362.6 amended at 66 Fed. Reg. 1028, January 5,
2001]
§ 362.7 Definitions.
For the purposes of this subpart, the following definitions apply:
(a) Affiliate has the same meaning contained in section
3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
(b) Activity, company, control, equity security, insured
state nonmember bank, security and subsidiary have the same
meaning as provided in subpart A of
this part.
[Codified to 12 C.F.R. § 362.7]
[Section 362.7 amended at 66 Fed. Reg. 1028, January 5,
2001]
§ 362.8 Restrictions on activities of insured state nonmember
banks affiliated with certain securities companies.
(a) The FDIC has found that an unrestricted affiliation between an
insured state nonmember bank and certain companies may have adverse
effects on the safety and soundness of insured state nonmember banks.
(b) An insured state nonmember bank is prohibited from becoming or
remaining affiliated with any securities underwriting affiliate company
that directly engages in the public sale, distribution or underwriting
of stocks, bonds, debentures, notes, or other securities activity, of a
type not permissible for a national bank directly, unless the company
is controlled by an entity that is supervised by a federal banking
agency or the state nonmember bank submits an application in compliance
with § 303.121 of this
chapter and the FDIC grants its consent under the procedure in
§ 303.122(b) of this
chapter, or the state nonmember bank and the securities underwriting
affiliate company comply with the following requirements:
(1) The securities business of the affiliate is physically
separate and distinct in its operations from the operations of the
bank, provided that this requirement shall not be construed to prohibit
the bank and its affiliate from sharing the same facility if the area
where the affiliate conducts retail sales activity with the public is
physically distinct from the routine deposit taking area of the bank;
(2) The affiliate conducts business pursuant to independent
policies and procedures designed to inform customers and prospective
customers of the affiliate that the affiliate is a separate
organization from the bank and the state-chartered depository
institution is not responsible for and does not guarantee the
obligations of the affiliate;
(3) The bank adopts policies and procedures, including
appropriate limits on exposure, to govern its participation in
financing transactions underwritten by an underwriting affiliate;
(4) The bank does not express an opinion on the value or the
advisability of the purchase or sale of securities underwritten or
dealt in by an affiliate unless it notifies the customer that the
entity underwriting, making a market, distributing or dealing in the
securities is an affiliate of the bank; and
(5) The bank complies with the investment and transaction
limitations in sections 23A and 23B of the Federal Reserve Act
(12 U.S.C. 371c and
371c--1) with respect to the
affiliate.
[Codified to 12 C.F.R. § 362.8]
[Section 362.8 amended at 66 Fed. Reg. 1029, January 5,
2001]
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