CHAPTER 204. FOREIGN BANKS

State Codes and Statutes

Back To Homepage

State Codes and Statutes

Statutes > Texas > Finance-code > Title-3-financial-institutions-and-businesses > Chapter-204-foreign-banks

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE G. BANK HOLDING COMPANIES; INTERSTATE BANK OPERATIONS

CHAPTER 204. FOREIGN BANKS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 204.001. TRANSACTING BUSINESS. (a) A foreign bank may not

transact business in this state except to the extent permitted by

this chapter.

(b) Subsection (a) does not prohibit a foreign bank:

(1) from transacting business at a licensed federal branch or

agency in this state in accordance with federal law;

(2) that does not maintain a branch or agency in this state or

conduct business from an office or location in this state from

making unsecured loans in this state or loans secured by liens on

real or personal property located in this state, enforcing those

loans in this state, or transacting trust business in this state,

to the extent permitted by other law; or

(3) organized under the laws of a territory of the United

States, Puerto Rico, Guam, American Samoa, or the Virgin Islands,

the deposits of which are insured by the Federal Deposit

Insurance Corporation, from establishing and operating an

interstate branch in this state in its capacity as a state bank

pursuant to Chapter 203.

considered to be transacting business in this state merely

because a subsidiary or affiliate transacts business in this

state, including business that a depository institution

subsidiary or affiliate may lawfully conduct in this state as an

agent for the foreign bank to the extent authorized by the laws

of this state.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.002. BOOKS, ACCOUNTS, AND RECORDS. Each Texas state

branch, agency, or representative office shall maintain and make

available appropriate books, accounts, and records reflecting:

(1) all transactions effected by or on behalf of the office; and

(2) all other actions taken in this state by employees of the

foreign bank located in this state to effect transactions on

behalf of an office of the foreign bank located outside this

state.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.003. EXAMINATION; FEES. (a) The commissioner may make

examinations of a Texas state branch, agency, or representative

office as the commissioner considers necessary to determine

whether the office is being operated in compliance with the laws

of this state and in accordance with safe and sound banking

practices. Sections 31.105-31.107 apply to the examinations.

(b) A foreign bank that maintains a Texas state branch, agency,

or representative office shall pay fees to the commissioner in

accordance with Section 201.005 or rules adopted under this

subtitle.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.004. REPORTS. (a) A foreign bank doing business in

this state through a Texas state branch, agency, or

representative office shall make written reports to the

commissioner that:

(1) are in English;

(2) are submitted at the times and in the form specified by the

commissioner or by rules adopted under this subtitle;

(3) are under oath of one of the foreign bank's officers,

managers, or agents transacting business in this state;

(4) show the amount of the foreign bank's assets and

liabilities, expressed in United States currency;

(5) with respect to a Texas state branch or agency, show the

amount of the branch or agency's assets and liabilities,

expressed in United States currency; and

(6) contain other information that the commissioner requires.

(b) A license or registration of a foreign bank under this

chapter may be revoked or the foreign bank may be subject to an

enforcement action under Chapter 35 if the foreign bank fails to

make a report required under Subsection (a) or makes a material

false or misleading statement in the report.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.005. CHANGE OF CONTROL OF FOREIGN BANK. A foreign bank

licensed to establish and maintain a Texas state branch or agency

pursuant to Subchapter B, or which has registered a Texas

representative office pursuant to Subchapter C, shall file with

the commissioner a notice of change of control, in the form and

containing the information the commissioner requires, not later

than the 14th day after the date of a merger or other transaction

that results or will result in a change of control.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.006. OPERATIONS IN THIS STATE OF BANKS OWNED OR

CONTROLLED BY FOREIGN BANKS AND OTHER FOREIGN PERSONS. (a)

Except as provided in Subsection (b):

(1) the laws of this state governing the acquisition or

ownership of interests in Texas banks or out-of-state banks

seeking to establish and maintain interstate branches in this

state do not prohibit ownership of those institutions by, or

otherwise discriminate against, foreign banks or other foreign

persons; and

(2) the laws of this state governing the powers and activities

of Texas banks and out-of-state banks maintaining interstate

branches in this state do not discriminate among those banks on

the basis of their ownership or control by foreign banks or other

foreign persons.

(b) Notwithstanding Subsection (a), the commissioner may apply

the laws of this state governing the ownership, control, or

operations of Texas banks, even if applicable specifically or

exclusively to foreign banks or other foreign persons, to the

extent those laws are determined by the commissioner to be:

(1) substantially equivalent to or consistent with the standards

or requirements governing the ownership, control, or operations

of Texas banks by foreign banks or other foreign persons under

applicable federal law; or

(2) otherwise consistent with the laws and policies of the

United States, including its international agreements governing

financial services.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.007. ESTABLISHMENT OF INTERSTATE BRANCH IN THIS STATE

BY AN OUT-OF-STATE FOREIGN BANK. (a) An out-of-state foreign

bank may establish an interstate Texas state branch in the same

manner as, and subject to the same criteria, standards,

conditions, requirements, and procedures applicable to, the

establishment of an interstate branch in this state by an

out-of-state bank having the same home state in the United

States, including by acquisition of or merger with a Texas bank,

or establishment of a de novo branch in the manner provided by

Section 203.002, notwithstanding another law of this state to the

contrary other than Subsection (b).

(b) With respect to establishment of an initial interstate Texas

state branch and subsequent intrastate branches of an

out-of-state foreign bank, the commissioner:

(1) shall apply the same criteria, standards, conditions,

requirements, and procedures applicable under Subchapter B to the

establishment of an initial Texas state branch and subsequent

intrastate branches in this state;

(2) may apply other criteria, standards, conditions,

requirements, or provisions of the laws of this state that are

determined by the commissioner to be substantially equivalent to

or consistent with federal law generally applicable to the

establishment of a branch in the United States by a foreign bank

or specifically applicable to the establishment of a branch in

the United States by the applicant foreign bank; and

(3) may allow an out-of-state foreign bank to:

(A) acquire or merge with another foreign bank maintaining a

Texas branch or agency and after the acquisition or merger

continue the operations as its own;

(B) acquire or establish an interstate Texas branch through

another means not inconsistent with Section 5, International

Banking Act (12 U.S.C. Section 3103); or

Section 204.008.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.008. CONVERSION OF EXISTING OFFICE. (a) For purposes

of this section, foreign bank offices in this state are divided

into classes and ranked in ascending order as:

(1) representative office;

(2) Texas state agency; and

(3) Texas state branch.

(b) A foreign bank may change a lower class office into a higher

class office by applying for the higher class office pursuant to

Section 204.101. On approval of the application to establish the

higher class office and after all conditions to the approval have

been fulfilled, the foreign bank may change the lower class

office into the higher class office and the commissioner shall

issue a license authorizing the bank to maintain the higher class

office. The foreign bank shall promptly surrender any license or

registration previously issued by the commissioner in connection

with the lower class office.

class office by applying for approval to close the higher class

office pursuant to Section 204.115. On approval of the

application to close the higher class office and after conditions

precedent to the closing have been fulfilled, the foreign bank

may change the higher class office into the lower class office,

and the commissioner shall issue a license or registration

authorizing the bank to maintain the lower class office.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

SUBCHAPTER B. DIRECT BRANCH AND AGENCY OFFICES OF FOREIGN BANKS

Sec. 204.101. APPLICATION TO ESTABLISH BRANCH OR AGENCY. (a) A

foreign bank that desires to establish and maintain a Texas state

branch or agency shall submit an application to the commissioner.

The application must:

(1) be accompanied by all application fees and deposits required

by applicable rules;

(2) be in the form specified by the commissioner;

(3) be subscribed and acknowledged by an officer of the foreign

bank;

(4) have attached:

(A) a complete copy of the foreign bank's application to the

Board of Governors of the Federal Reserve System under Section

7(d), International Banking Act (12 U.S.C. Section 3105(d));

(B) an authenticated copy of the foreign bank's articles of

incorporation and bylaws or other constitutive documents and, if

the copy is in a language other than English, an English

translation of the document, under the oath of the translator;

and

(5) be submitted when the federal application is submitted to

the board of governors; and

(6) include on its face or in accompanying documents:

(A) the name of the foreign bank;

(B) the street address where the principal office of the Texas

state branch or agency is to be located and, if different, the

Texas state branch or agency's mailing address;

the foreign bank who will have control of all or part of the

business and affairs of the Texas state branch or agency;

(D) a detailed statement of the foreign bank's financial

condition as of a date not more than 360 days before the date of

the application; and

(E) other information that:

(i) is necessary to enable the commissioner to make the findings

listed in Section 204.103;

(ii) is required by rules adopted under this subtitle; or

(iii) the commissioner reasonably requests.

(b) The finance commission may adopt rules prescribing

abbreviated application procedures and standards applicable to

applications by foreign banks that have already established an

initial Texas state branch or agency to establish additional

intrastate branches or agencies.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.102. HEARING AND DECISION ON APPLICATION. (a) After

the application is complete and accepted for filing and all

required fees and deposits have been paid, the commissioner shall

determine from the application and the initial investigation

whether the conditions set forth by Section 204.103 have been

established. The commissioner shall approve the application or

set the application for hearing.

(b) If the commissioner sets the application for hearing:

(1) the commissioner shall notify the Board of Governors of the

Federal Reserve System that the application has been set for

hearing as provided by federal regulations;

(2) the department shall participate as the opposing party; and

(3) the commissioner shall conduct the hearing and one or more

prehearing conferences and opportunities for discovery as the

commissioner considers advisable and consistent with applicable

law.

affairs of the foreign bank and financial information relating to

its management and shareholders, except for previously published

statements and information, is confidential and may not be

considered in the public portion of the hearing or disclosed by

the commissioner or an employee of the department except as

provided by Subchapter D, Chapter 31.

(d) The commissioner shall make a finding from the record of the

hearing on each condition listed in Section 204.103 and enter an

order granting or denying the license. If the license is denied,

the commissioner shall inform the Board of Governors of the

Federal Reserve System of the order and the reasons the federal

application should be denied.

(e) The commissioner may make approval of an application

conditional. The commissioner shall include any conditions in the

order granting the license but may not issue the license until

the Texas state branch or agency has received the approval of the

Board of Governors of the Federal Reserve System. If the approval

is conditioned on a written commitment from the applicant offered

to and accepted by the commissioner, the commitment is

enforceable against the applicant.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.103. ISSUANCE OF LICENSE. (a) The commissioner shall

issue a license to a foreign bank to establish and maintain a

Texas state branch or agency if the commissioner finds after

reasonable inquiry that:

(1) all members of the management of the Texas state branch or

agency have sufficient banking experience, ability, standing,

competence, trustworthiness, and integrity to justify a belief

that the agency will operate in compliance with state law;

(2) the foreign bank has sufficient standing to justify a belief

that the Texas state branch or agency will be free from improper

or unlawful influence or interference with respect to the

office's operation in compliance with state law; and

(3) the foreign bank is acting in good faith and the application

does not contain a material misrepresentation.

(b) Each Texas state branch or agency shall post its license in

a conspicuous place at its office. A license issued under this

subchapter is not transferable or assignable.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.104. NO CONCURRENT FEDERAL BRANCH OR AGENCY. (a) A

foreign bank licensed under this subchapter to establish and

maintain a Texas state branch or agency may not concurrently

maintain a federal branch or federal agency in this state.

(b) A foreign bank which maintains a federal branch or federal

agency in this state may not concurrently be licensed under this

subchapter to maintain a Texas state branch or agency.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.105. POWERS OF BRANCH AND AGENCY. (a) A Texas state

branch or agency is subject to this subtitle and other laws of

this state applicable to banks as if the Texas state branch or

agency were a Texas state bank unless:

(1) this chapter or a rule adopted under this subtitle provides

otherwise; or

(2) the context of a provision or other information indicates

that a provision applies only to a bank organized under the laws

of a state or the United States.

(b) Among other exceptions to Subsection (a) that may be

required or authorized by the commissioner provided by this

subchapter or by rules adopted under this subtitle:

(1) a Texas state branch may not accept deposits of less than

$100,000 from citizens or residents of the United States, other

than credit balances that are incidental to or arise out of its

exercise of other lawful banking powers, unless the Federal

Deposit Insurance Corporation determines that specific deposit

taking activities in lesser amounts do not constitute domestic

retail deposit activities requiring deposit insurance protection

within the meaning of Section 6, International Banking Act (12

U.S.C. Section 3104);

(2) a Texas state agency may not accept deposits from citizens

or residents of the United States, other than credit balances

that are incidental to or arise out of its exercise of other

lawful banking powers, but may accept deposits from persons who

are neither citizens nor residents of the United States; and

(3) a limitation or restriction based on the capital and surplus

of a Texas state bank is considered to refer, as applied to a

Texas state branch or agency, to the dollar equivalent of the

capital and surplus of the foreign bank, and if the foreign bank

has more than one Texas state branch or agency in this state, the

business transacted by all the branches and agencies must be

aggregated in determining compliance with the limitation.

to transact business in this state through a Texas state branch

or agency may:

(1) borrow and lend money with or without property as security;

(2) purchase, sell, and make loans regardless of whether the

loans are secured by bonds or mortgages on real property;

(3) engage in a foreign exchange transaction;

(4) issue, advise, confirm, and otherwise deal with a letter of

credit and pay, accept, or negotiate a draft drawn under a letter

of credit;

(5) accept a bill of exchange or draft;

(6) buy or acquire and sell or dispose of a bill of exchange,

draft, note, acceptance, or other obligation for the payment of

money;

(7) maintain a credit balance of money received at the Texas

state branch or agency incidental to or arising out of the

exercise of its authorized activities in this state if the money

is not intended to be a deposit and does not remain in the Texas

state branch or agency after the completion of all transactions

to which it relates;

(8) accept deposits to the extent permitted by Subsection (b);

(9) receive money for transmission and transmit the money from

its authorized place of business in this state to any other

place;

(10) act as an indenture trustee or as a registrar, paying

agent, or transfer agent, on behalf of the issuer, for equity or

investment securities; and

(11) perform other activities that:

(A) are authorized by rules adopted to accomplish the purposes

of this subtitle; or

(B) the commissioner determines are analogous or incidental to

specific activities authorized by this section for a Texas state

branch or agency.

(d) A foreign bank licensed to transact business in this state

through a Texas state branch or agency may share the premises of

the Texas state branch or agency with another authorized office

of the foreign bank or a direct or indirect subsidiary of the

foreign bank if the books and records of the Texas state branch

or agency are kept separately from the books and records of the

other office.

(e) For purposes of this section, the term "resident of the

United States" means:

(1) an individual residing in the United States;

(2) a corporation, partnership, association, or other entity

organized in the United States; or

(3) a branch or office located in the United States of an entity

that is not organized in the United States.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

110, Sec. 13, eff. September 1, 2007.

Sec. 204.106. APPLICATION TO ACT AS FIDUCIARY. (a) Except as

provided by Section 204.105(c)(10), a foreign bank may not act as

a fiduciary at a Texas state branch or agency except by obtaining

a fiduciary license as provided by this section. A foreign bank

that intends to act as a fiduciary at a Texas state branch or

agency shall submit an application to the commissioner. The

application must:

(1) be accompanied by all application fees and deposits required

by applicable rules;

(2) be in the form specified by the commissioner;

(3) be subscribed and acknowledged by an officer of the foreign

bank;

(4) describe in detail:

(A) the proposed fiduciary activities;

(B) the names and relevant expertise of its officers and

employees that will conduct the fiduciary activities; and

captured in the books and records of the Texas state branch or

agency with due regard for separation of beneficial and legal

interests; and

(5) contain other information that:

(A) is necessary to enable the commissioner to make the findings

required by Subsection (c);

(B) is required by rules adopted under this subtitle; or

(b) On or before the 60th day after the date the application is

complete and accepted for filing and all required fees and

deposits have been paid, the commissioner shall approve the

application or set the application for hearing. If the

commissioner sets the application for hearing, the department

shall participate as the opposing party and the commissioner

shall conduct the hearing and one or more prehearing conferences

and opportunities for discovery as the commissioner considers

advisable and consistent with applicable law.

bank to engage in fiduciary activities if the commissioner finds

that the foreign bank will exercise its fiduciary powers in

accordance with the laws of this state and has sufficient

fiduciary and accounting expertise and controls to protect

beneficial interests under its control. The commissioner may make

approval of an application conditional by including conditions

and limitations in the order granting the license. If the

approval is conditioned on a written commitment from the

applicant offered to and accepted by the commissioner, the

commitment is enforceable against the applicant.

(d) A foreign bank that obtains the approval of the commissioner

under this section may engage in fiduciary activities at its

Texas state branch or agency to the same extent and in the same

manner as a Texas state bank could do so at the same location,

subject to any conditions or limitations applicable to the

license.

(e) The commissioner may initiate an enforcement action under

Chapter 35 or may suspend or revoke the authority of a foreign

bank to engage in fiduciary activities in this state in the same

manner as a revocation of license under Section 204.118 if the

commissioner finds in writing that:

(1) conditions exist related to the fiduciary activities of the

foreign bank in this state which would authorize the commissioner

to revoke or suspend its license pursuant to Section 204.117; or

(2) a fact or condition exists which, if it had existed at the

time of the foreign bank's original notice to engage in fiduciary

activities, would have resulted in the commissioner denying

authority to engage in fiduciary activities.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.107. FILING OF AMENDMENTS TO ARTICLES OF INCORPORATION.

If the articles of incorporation of a foreign bank licensed to

maintain a Texas state branch or agency are amended, the foreign

bank shall promptly file with the commissioner a copy of the

amendment, duly authenticated by the proper officer of the

country of the foreign bank's organization. The filing does not

enlarge or alter the business the foreign bank is authorized to

pursue in this state, authorize the foreign bank to transact

business in this state under a name other than the name set forth

in its license, or extend the duration of its corporate

existence.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.108. AMENDED LICENSE FOR BRANCH OR AGENCY. (a) A

foreign bank licensed to establish and maintain a Texas state

branch or agency shall apply to the commissioner for an amended

license if it changes its corporate name, changes the duration of

its corporate existence, or desires to pursue in this state other

or additional purposes than those set forth in its prior

application for the foreign bank's license or amended license

then in effect.

(b) The requirements with respect to the form and contents of an

application under Subsection (a), the manner of its execution,

the issuance of an amended license, and the effect of the amended

license are the same as in the case of an initial application for

a license to establish and maintain a Texas state branch or

agency.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.109. RELOCATION OF OFFICE. (a) With the prior written

approval of the commissioner, a foreign bank licensed to

establish and maintain a Texas state branch or agency may

relocate the branch or agency office. A foreign bank that intends

to relocate a Texas state branch or agency office shall submit a

letter to the commissioner describing the address of the proposed

location, the reasons for relocation, and the manner of notifying

its customers of the relocation.

(b) On or before the 30th day after the date the foreign bank's

letter has been accepted for filing and any required fee has been

paid, the commissioner shall approve or deny the relocation. The

commissioner may not permit the foreign bank to relocate its

Texas state branch or agency office if the commissioner finds

that the proposed location and the manner of relocation and

notification will be deceptive or that the relocation will impede

or tend to impede the foreign bank's depositors and creditors in

this state.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.110. SEPARATE ASSETS. (a) Each foreign bank licensed

to establish and maintain a Texas state branch or agency in this

state shall keep the assets of its business in this state

separate and apart from the assets of its business outside this

state.

(b) The depositors and creditors of a foreign bank arising out

of transactions with, and recorded on the books of, its Texas

state branch or agency are entitled to absolute preference and

priority over the depositors and creditors of the foreign bank's

offices located outside this state with respect to the assets of

the foreign bank in this state.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.111. DISCLOSURE OF LACK OF DEPOSIT INSURANCE. Each

foreign bank licensed to establish and maintain a Texas state

branch or agency shall give notice that deposits and credit

balances in the office are not insured by the Federal Deposit

Insurance Corporation.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.112. LIMITATIONS ON PAYMENT OF INTEREST ON DEPOSITS. A

foreign bank licensed to establish and maintain a Texas state

branch or agency is subject to the same limitations with respect

to the payment of interest on deposits as a state bank that is a

member of the Federal Reserve System.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.113. PLEDGE OF ASSETS. (a) In accordance with rules

adopted under this subtitle, a foreign bank licensed to establish

and maintain a Texas state branch or agency may be required to

keep on deposit, with unaffiliated banks in this state that the

foreign bank designates and the commissioner approves, money and

securities pledged to the commissioner in an aggregate amount to

be determined by the commissioner, valued at the lower of

principal amount or market value, consisting of:

(1) dollar deposits;

(2) bonds, notes, debentures, or other legally created, general

obligations of a state, an agency or political subdivision of a

state, the United States, or an instrumentality of the United

States;

(3) securities that this state, an agency or political

subdivision of this state, the United States, or an

instrumentality of the United States has unconditionally agreed

to purchase, insure, or guarantee;

(4) securities issued or guaranteed by the Federal Home Loan

Mortgage Corporation, the Federal National Mortgage Association,

the Government National Mortgage Association, the Federal

Agricultural Mortgage Corporation, or the Federal Farm Credit

Banks Funding Corporation;

(5) obligations of or issued or guaranteed by the International

Bank for Reconstruction and Development, the African Development

Bank, the Asian Development Bank, the InterAmerican Development

Bank, or the North American Development Bank; or

(6) other assets as may be permitted by rule.

(b) The assets deposited and the amount of the assets to be

maintained under Subsection (a) are subject to the conditions and

limitations the commissioner considers necessary or desirable for

the maintenance of a sound financial condition, the protection of

depositors, creditors, and the public interest in this state, and

the support of public confidence in the business of the Texas

state branch or agency. The commissioner may give credit to

reserves required to be maintained with a federal reserve bank in

or outside this state pursuant to federal law, in accordance with

rules adopted under this subtitle.

course, the foreign bank may collect interest on the money and

securities deposited under this section and from time to time

exchange, examine, and verify the securities.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.114. ASSET MAINTENANCE. (a) In accordance with rules

adopted under this subtitle, a foreign bank licensed to establish

and maintain a Texas state branch or agency shall at all times

satisfy the ratio of branch or agency assets to liabilities

determined by the commissioner, in the commissioner's sole

discretion, to be necessary or desirable with respect to the

foreign bank. The type of assets to be held in this state are

specified by Subsection (b) and the type of liabilities to be

included in the ratio are specified by Subsection (c).

(b) Assets to be held in this state for the purpose of

satisfying the ratio of assets to liabilities:

(1) include:

(A) currency, bonds, notes, debentures, drafts, bills of

exchange, or other evidences of indebtedness, including loan

participation agreements or certificates;

(B) other obligations payable in the United States or in United

States funds or, with the prior approval of the commissioner, in

funds freely convertible into United States funds; and

by rule; and

(2) exclude obligations of a person for money borrowed to the

extent that the total of the obligations of the person exceeds 10

percent of total assets considered for purposes of this section.

of assets to liabilities:

(1) include all liabilities of the foreign bank appearing in the

books, accounts, or records of its Texas state branch or agency,

including acceptances; and

(2) exclude amounts due and other liabilities to other offices,

agencies, branches, and wholly owned subsidiaries of the foreign

bank, and other liabilities the commissioner determines. The

existence of a nominal number of directors' shares outstanding

does not cause a subsidiary to be considered less than wholly

owned.

(d) Subject to rules adopted under this subtitle, the

commissioner, in the commissioner's sole discretion, may vary the

ratio of assets to liabilities required by this section for a

foreign bank as may be necessary or desirable to reflect

differences among Texas branches or Texas agencies because of:

(1) the financial condition of Texas branch or agency offices of

the foreign bank;

(2) the financial condition of branch or agency offices of the

foreign bank located in other states;

(3) the general economic conditions prevalent in the home

country of the foreign bank; or

(4) the financial condition of the foreign bank itself,

including:

(A) the financial condition of its branches and agencies located

in other countries;

(B) the financial condition of its affiliated bank and nonbank

subsidiaries in the United States; and

consolidated basis or in its home country.

(e) For purposes of this section, assets must be valued at the

lower of principal amount or market value. The commissioner may

determine the value of a non-marketable security, loan, or other

asset or obligation held or owed to the foreign bank or its Texas

state branch or agency in this state. If the commissioner cannot

determine the value of an non-marketable asset, the asset must be

excluded from the ratio computation.

(f) The commissioner may require a foreign bank to deposit the

assets required to be held in this state pursuant to this section

with specific banks in this state designated by the commissioner

if, because of the existence or the potential occurrence of

unusual and extraordinary circumstances, the commissioner

considers it necessary or desirable for the maintenance of a

sound financial condition, the protection of depositors,

creditors, and the public interest in this state, and the

maintenance of public confidence in the business of a Texas state

branch or agency.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.115. VOLUNTARY CLOSURE OF BRANCH OR AGENCY. (a) A

foreign bank licensed to establish and maintain a Texas state

branch or agency may not close the office without filing an

application with, and obtaining the prior approval of, the

commissioner. An application by a foreign bank under this section

must be in the form and include the information the commissioner

requires.

(b) The commissioner shall approve the application if the

commissioner finds that the closing of the office will not be

substantially detrimental to the foreign bank's depositors and

creditors in this state. An application may be approved subject

to conditions imposed by the commissioner for the continued

protection of the foreign bank's depositors and creditors in this

state, including a condition that the foreign bank pledge assets

in the manner specified by Section 204.113 for a specified period

of time.

been approved and all conditions precedent to the closing have

been fulfilled, the foreign bank may close the office and an

officer, manager, or agent of the foreign bank shall deliver to

the commissioner:

(1) all copies of examination reports or other property of the

department;

(2) a statement under oath by an authorized officer, manager, or

agent of the foreign bank that all deposit and other liabilities

of the Texas state branch or agency to depositors and creditors

in this state have been properly discharged by payment or pledge

or otherwise assumed or retained by a financial institution;

(3) the license issued by the commissioner;

(4) an appropriate board resolution closing the Texas state

branch or agency; and

(5) a statement of the location where the records of the Texas

state branch or agency will be kept after the closing.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.116. ENFORCEMENT. The commissioner may initiate an

enforcement action under Chapter 35 or a proceeding to revoke the

license of a Texas state branch or agency if the commissioner by

examination or other credible evidence finds that the foreign

bank:

(1) does not currently meet the criteria established by this

chapter for the original issuance of a license;

(2) has refused to permit the commissioner to examine its books,

papers, accounts, records, or affairs in accordance with Sections

204.002 and 204.003;

(3) has failed to make a report required under this chapter or

made a material false or misleading statement in the report;

(4) has violated this subtitle, another law or rule applicable

to a foreign bank or a Texas state branch or agency, or a final

and enforceable order of the commissioner or the finance

commission;

(5) has misrepresented or concealed a material fact in the

original application for license;

(6) has violated a condition of its license or an agreement

between the foreign bank and the commissioner or the department;

(7) conducts business in an unsafe and unsound manner.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.117. PROCEDURE FOR REVOCATION. (a) Notice of a

revocation proceeding must:

(1) be in the form of a proposed order;

(2) be served on the foreign bank by personal delivery or

registered or certified mail, return receipt requested, to a

director, officer, manager, or employee of the foreign bank at a

Texas state branch or agency location, or to the registered agent

of the foreign bank;

(3) state the effective date of the proposed order, which may

not be before the 21st day after the date the proposed order is

mailed or delivered except as otherwise provided in Section

204.118; and

(4) state the grounds for the proposed revocation with

reasonable certainty.

(b) Unless the foreign bank requests a hearing in writing on or

before the effective date of the proposed order, the order takes

effect as proposed and is final and nonappealable.

later than the 30th day after the date the written request for

hearing is received by the department unless the parties agree to

a later hearing date. The department shall participate as the

opposing party, and the commissioner shall conduct the hearing

and one or more prehearing conferences and opportunities for

discovery as the commissioner considers advisable and consistent

with applicable statutes and rules. The foreign bank may not

accept new business during the pendency of the hearing unless the

commissioner gives prior written approval, except that it shall

comply with any stricter requirements imposed by Section 7(e),

International Banking Act (12 U.S.C. Section 3105(e)).

(d) Information relating to the financial condition and business

affairs of the foreign bank, except previously published

statements and information, is confidential and may not be

considered in the public portion of the hearing or disclosed by

the commissioner or an employee of the department except as

provided by Subchapter D, Chapter 31.

(e) Based on the record, the commissioner shall issue or refuse

to issue the proposed order. An issued order may contain

modifications indicated by the record to be necessary or

desirable, including modifications to impose penalties available

under Chapter 35 in lieu of license revocation.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.118. IMMEDIATE SUSPENSION OR REVOCATION. (a) If the

commissioner finds that any of the factors set forth in Section

204.116 are true with respect to a foreign bank licensed to

maintain a Texas state branch or agency and that it is necessary

for the protection of the interests of creditors of the foreign

bank's business in this state or for the protection of the public

interest that the commissioner immediately suspend or revoke the

license of the foreign bank, the commissioner may issue, without

notice and hearing, an order suspending or revoking the license

of the foreign bank for a period of up to 90 days, pending

investigation or hearing under Section 204.117.

(b) An order issued under this section shall be served on the

foreign bank in the manner required by Section 204.117(a)(2).

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.119. STATUS OF REVOKED LICENSE. Unless stayed by the

finance commission or district court that has jurisdiction over

an appeal, a final order of the commissioner revoking a license

is effective immediately and the foreign bank shall immediately

cease all activity in this state requiring a license. Subject to

Section 204.120, all functions requiring a license must be

immediately transferred to a branch, affiliate, or agency of the

foreign bank that is located outside of this state and that has

the power to perform those functions under governing law.

Continued activity in this state of an unlicensed foreign bank is

subject to Subchapter C, Chapter 35.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.120. SEIZURE AND LIQUIDATION. (a) If the commissioner

finds that any of the factors set forth in Section 204.116 are

true with respect to a foreign bank licensed to establish and

maintain a Texas state branch or agency, the commissioner may by

order immediately take possession of the property and business of

the foreign bank in this state if that action is necessary or

desirable for the protection of the interests of the depositors

and creditors of the foreign bank's business in this state or for

the protection of the public. The commissioner shall retain

possession until the foreign bank resumes business in this state

or is finally liquidated, except that the commissioner may permit

the foreign bank to resume business in this state on conditions

the commissioner requires. An order issued under this section

shall be served on the foreign bank in the manner required by

Section 204.117(a)(2).

(b) As soon as practicable after taking possession of the

property and business of a foreign bank pursuant to Subsection

(a), the commissioner shall initiate a receivership proceeding by

filing a copy of the order issued under this section in a

district court in Travis County to be governed by Chapter 36 as

if the foreign bank were a Texas state bank, except as otherwise

provided by this section. Notwithstanding the priorities

established by Chapter 36, the depositors and creditors of the

Texas state branch or agency, arising out of transactions with

and recorded on the books of the Texas state branch or agency,

have an absolute preference and priority over the creditors of

the foreign bank's offices located outside this state.

affect the assets of the Texas state branch or agency is

considered to be an intervention in the receivership proceeding.

Venue for an action instituted to effect, contest, or otherwise

intervene in the liquidation of a Texas state branch or agency is

in Travis County, except that on motion filed and served

concurrently with or before the filing of the answer, the court

may, on a finding of good cause, transfer the action to the

county of the Texas state branch or agency location.

(d) The foreign bank may contest the commissioner's actions as

provided by this subsection. On or before the 10th day after the

date the commissioner has taken possession of the property and

business of a foreign bank pursuant to Subsection (a), the

foreign bank, acting through a majority of its directors, may

intervene in the action filed by the banking commissioner to

challenge the commissioner's closing of the foreign bank's Texas

state branch or agency and to enjoin the commissioner or other

receiver from liquidating its assets. The court may issue an ex

parte order restraining the commissioner or other receiver from

liquidating the foreign bank's assets pending a hearing on the

injunction. The commissioner or other receiver shall comply with

the restraining order but may petition the court for permission

to liquidate an asset as necessary to prevent its loss or

diminution pending the outcome of the injunction. The

commissioner or other receiver may not be required to post bond.

The court shall hear this action as quickly as possible and shall

give it priority over other business. The foreign bank or the

commissioner or other receiver may appeal the court's judgment as

in other civil cases, except that the commissioner or other

receiver shall retain all seized foreign bank assets pending a

final appellate court order even if the commissioner does not

prevail in the trial court. If the commissioner prevails in the

trial court, liquidation of the state trust company may proceed

unless the trial court or appellate court orders otherwise. If

liquidation is enjoined or stayed pending appeal, the trial court

retains jurisdiction to permit liquidation of an asset as

necessary to prevent its loss or diminution pending the outcome

of the appeal.

(e) After the commissioner or other receiver has completed the

liquidation of the property and business of a foreign bank, the

commissioner or other receiver shall transfer any remaining

assets to the foreign bank in accordance with the court's orders,

except that:

(1) if the foreign bank has an office in another state of the

United States that is in liquidation and the assets of the office

appear to be insufficient to pay in full the creditors of that

office, the court shall order the commissioner or other receiver

to transfer to the liquidator of that office the amount of the

remaining assets that appears to be necessary to cover the

insufficiency; or

(2) if the foreign bank has two or more such offices in

liquidation and the amount of remaining assets is less than the

aggregate amount of insufficiencies with respect to the offices,

the court shall order the commissioner or other receiver to

distribute the remaining assets among the liquidators of the

offices in the manner the court finds equitable.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.121. DISSOLUTION. (a) If a foreign bank licensed to

maintain a Texas state branch or agency in this state is

dissolved, has its authority or existence terminated or canceled

in the jurisdiction of its incorporation, or has its authority to

maintain a branch or agency in this state terminated by the Board

of Governors of the Federal Reserve System under Section 7(e),

International Banking Act (12 U.S.C. Section 3105(e)), an

officer, manager, or agent of the foreign bank shall deliver to

the commissioner:

(1) a certified copy of:

(A) a certificate of the official responsible for records of

banking corporations of the foreign bank's jurisdiction of

incorporation attesting to the occurrence of dissolution or of

termination or cancellation of authority or existence;

(B) an order or decree of a court directing the dissolution of

the foreign bank or the termination or cancellation of its

authority or existence; or

System terminating its authority under Section 7(e),

International Banking Act (12 U.S.C. Section 3105(e)); and

(2) the documents and information required by Section

204.115(c).

(b) The filing of the certificate, order, or decree has the same

effect provided by Section 204.119 as if the license issued under

this subchapter were revoked by the commissioner as of the

effective date of termination or cancellation specified in the

certificate, order, or decree unless the commissioner orders an

earlier effective date, subject to the procedural protections of

Section 204.117 or 204.118.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

SUBCHAPTER C. REPRESENTATIVE OFFICES OF FOREIGN BANK

Sec. 204.201. REGISTRATION OF REPRESENTATIVE OFFICE. (a) A

foreign bank may establish a Texas representative office if the

foreign bank files with the commissioner a verified statement of

registration. A statement of registration must:

(1) be accompanied by all registration fees and deposits

required by rule;

(2) be in the form specified by the commissioner;

(3) be subscribed and acknowledged by an officer of the foreign

bank;

(4) contain as an exhibit or attachment:

(A) a copy of the foreign bank's notice or application submitted

to the Board of Governors of the Federal Reserve System under

Section 10, International Banking Act (12 U.S.C. Section 3107),

and, when issued, the order or notification from the board of

governors indicating that the representative office has been

approved;

(B) an authenticated copy of the foreign bank's articles of

incorporation and bylaws or other constitutive documents and, if

the copy is in a language other than English, an English

translation of the document, under the oath of the translator;

and

(5) be submitted when the federal notice or application is

submitted to the board of governors; and

(6) directly or in exhibits or attachments contain:

(A) the name of the foreign bank;

(B) the street address and post office address where each Texas

representative office is to be located in this state;

the foreign bank who will have charge of any aspect of the

business and affairs of the Texas representative office;

(D) a complete and detailed statement of the financial condition

of the foreign bank as of a date not more than 360 days before

the date of the filing; and

(E) other information the commissioner requires.

(b) The finance commission may adopt rules prescribing

abbreviated registration procedures and standards for foreign

banks that have already established an initial Texas

representative office to establish additional Texas

representative offices.

branch or agency in this state is not prohibited from

establishing or maintaining one or more Texas representative

offices.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.202. PLACE OF BUSINESS. A Texas representative office

may engage in the business authorized by this subchapter at each

place of business registered with the commissioner. A Texas

representative office may change its location in this state by

filing a notice with the commissioner containing the street

address and post office address of the new location.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.203. PERMISSIBLE ACTIVITIES OF REPRESENTATIVE OFFICE.

(a) A registered Texas representative office of a foreign bank

may:

(1) solicit loans and in connection with a loan:

(A) assemble credit information about the borrower;

(B) inspect and appraise property;

(D) prepare a loan application;

(2) solicit purchasers for loans from the foreign bank;

(3) solicit persons to contract for servicing the foreign bank

loans;

(4) conduct research;

(5) perform services as liaison for customers and correspondents

of the foreign bank;

(6) execute loan documents relating to permitted loans with the

written approval of the foreign bank;

(7) perform back office administrative functions as may be more

specifically defined by rule; and

(8) engage in other activities approved by the commissioner or

permitted by rule.

(b) A representative office may not solicit or accept credit

balances or deposits or make final credit decisions.

administrative office of the foreign bank, as may be defined more

fully by rule, may engage in credit approval activities if:

(1) the foreign bank gives prior written notice to the

commissioner not later than the 30th day before the date the

Texas representative office engages in credit approval

activities; and

(2) the commissioner does not object within the 30-day period to

the conduct of the activities by the Texas representative office.

(d) Written notice under Subsection (c) must be in a form and

contain the information the commissioner requires.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.204. ENFORCEMENT. The commissioner may initiate an

enforcement action under Chapter 35 or a proceeding to revoke the

registration of a representative office if the commissioner by

examination or other credible evidence finds that the foreign

bank:

(1) has refused to permit the commissioner to examine the books,

papers, accounts, records, or affairs of a Texas representative

office in accordance with Sections 204.002 and 204.003;

(2) has violated this subtitle, another law or rule applicable

to a foreign bank or a Texas representative office, or a final

and enforceable order of the commissioner or the finance

commission;

(3) has misrepresented or concealed a material fact in the

original registration;

(4) has violated a condition of an agreement between the foreign

bank and the commissioner, a bank supervisory agency, or another

state regulatory agency; or

(5) conducts business in an unsafe and unsound manner.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.205. PROCEDURE FOR REVOCATION. (a) Notice of a

revocation proceeding must:

(1) be in the form of a proposed order;

(2) be served on the foreign bank by personal delivery or

registered or certified mail, return receipt requested, to a

director, officer, or employee of the foreign bank at a Texas

representative office location, or to the registered agent of the

foreign bank;

(3) state the effective date of the proposed order, which may

not be before the 21st day after the date the proposed order is

mailed or delivered; and

(4) state the grounds for the proposed revocation with

reasonable certainty.

(b) Unless the foreign bank requests a hearing in writing on or

before the effective date of the proposed order, the order takes

effect as proposed and is final and nonappealable.

later than the 30th day after the date the written request for

hearing is received by the commissioner unless the parties agree

to a later hearing date. The department shall participate as the

opposing party, and the commissioner shall conduct the hearing

and one or more prehearing conferences and opportunities for

discovery as the commissioner considers advisable and consistent

with applicable statutes and rules. During the pendency of the

hearing and unless the commissioner gives prior written approval,

the foreign bank may not accept new business from this state.

(d) Information relating to the financial condition and business

affairs of the foreign bank, except previously published

statements and information, is confidential and may not be

considered in the public portion of the hearing or disclosed by

the commissioner or an employee of the department except as

provided by Subchapter D, Chapter 31.

(e) Based on the record, the commissioner shall issue or refuse

to issue the proposed order. An issued order may contain

modifications indicated by the record to be necessary or

desirable, including modifications to impose penalties available

under Chapter 35 in lieu of revocation of registration.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.206. EFFECT OF REVOKED REGISTRATION. A foreign bank

that has had its registration under this subchapter revoked shall

cease all activities in this state. Continued activity in this

state of an unregistered foreign bank is subject to Subchapter C,

Chapter 35.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

Sec. 204.207. DISSOLUTION. (a) If a foreign bank with a

registered Texas representative office is dissolved, has its

authority or existence terminated or canceled in the jurisdiction

of its incorporation, or has its authority to maintain its Texas

representative office terminated by the Board of Governors of the

Federal Reserve System under Section 10(b), International Banking

Act (12 U.S.C. Section 3107(b)), an officer, manager, or agent of

the foreign bank shall deliver to the commissioner a certified

copy of:

(1) a certificate of the official responsible for records of

banking corporations of the foreign bank's jurisdiction of

incorporation attesting to the occurrence of dissolution or of

termination or cancellation of authority or existence;

(2) an order or decree of a court directing the dissolution of

the foreign bank or the termination or cancellation of its

authority or existence; or

(3) an order of the Board of Governors of the Federal Reserve

System terminating its authority under Section 10(b),

International Banking Act (12 U.S.C. Section 3107(b)).

(b) The filing of the certificate, order, or decree has the same

effect under Section 204.206 as if the registration made under

this subchapter were revoked by the commissioner.

Added by Acts 1999, 76th Leg., ch. 344, Sec. 1.001, eff. Sept. 1,

1999.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!