H. B. 2814
(By Mr. Speaker, Mr. Kiss, and Delegate Trump)
[By Request of the Executive]
[Introduced March 1, 2005; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §31A-3-2 of the Code of West Virginia,
1931, as amended; and to amend and reenact §31A-8C-1,
§31A-8C-2, §31A-8C-3 and §31A-8C-5 of said code, all relating
generally to financially-related activities of State-chartered
Banking Institutions; reorganizing the approval process for
engaging in financially-related activities; clarifying the
definition of financially-related activities; creating a
notice and approval process to engage in financially-related
activities; allowing banks to make equity investments in
entities providing financially-related activities on the same
terms as national banks; and restating the purpose and
interpretation of the article.
Be it enacted by the Legislature of West Virginia:
That §31A-3-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that §31A-8C-1, §31A-8C-2, §31A-8C-3 and §31A-8C-5 of said code be amended and reenacted, all to read as
follows:
ARTICLE 3. BOARD OF BANKING AND FINANCIAL INSTITUTIONS.
§31A-3-2. General powers and duties.
(a) In addition to other powers conferred by this chapter, the
Board has the power to:
(1) Regulate its own procedure and practice;
(2) Promulgate reasonable rules to implement any provision of
this article in accordance with the provisions of article three,
chapter twenty-nine-a of this code;
(3) Advise the Commissioner in all matters within his or her
jurisdiction;
(4) Study the organization, programs and services of financial
institutions and the laws relating thereto in this state and in
other jurisdictions, and to report and recommend to the Governor
and the Legislature all such changes and amendments in laws,
policies and procedures relating thereto as it considers proper;
(5) Grant permission and authority to a financial institution:
(A) To participate in a public agency hereafter created under
the laws of this state or of the United States, the purpose of
which is to afford advantages or safeguards to financial
institutions or to depositors therein, and to comply with all
lawful requirements and conditions imposed upon those participants;
and
(B)
To engage in any financial institution activity, services,
procedures and practices in which financial institutions of the
same type subject to the jurisdiction of the federal government may
hereafter be authorized by federal laws, rules or regulations to
engage, notwithstanding any contrary provision of this code; and
(C) To pay interest on demand deposits of the United States or
any agency thereof, if the payment of interest is permitted under
any applicable federal law, rule or regulation;
and
Any permission and authority granted by the board pursuant to
this subdivision shall terminate upon the adjournment of the next
regular session of the Legislature, unless the Legislature enacts
legislation authorizing the financial institution participation,
activity, services and procedures or payment of interest with
respect to which such permission and authority were granted, in
which event the permission and authority shall continue in effect
until the effective date of the legislation; and
(6) Seek judicial enforcement to compel compliance with any of
its orders and to seek and obtain civil penalties as set forth
under this chapter.
(b) The Board also has the power, by entering appropriate
orders, to:
(1) Restrict the withdrawal of deposits from any financial
institution when, in the judgment of the Board, extraordinary
circumstances make the restrictions necessary for the protection of creditors of and depositors in the affected institution;
(2) Compel the holder of shares in any corporate financial
institution to refrain from voting the shares on any matter when,
in the judgment of the Board, the order is necessary to protect the
institution against reckless, incompetent or careless management,
to safeguard funds of depositors in the institution or to prevent
willful violation of any applicable law or of any rule and
regulation or order issued thereunder. In such a case the shares
of the holder may not be counted in determining the existence of a
quorum or a percentage of the outstanding shares necessary to take
any corporate action;
(3) Approve or disapprove applications to incorporate and
organize state banking institutions in accordance with the
provisions of sections six and seven, article four of this chapter;
(4) Approve or disapprove applications to incorporate and
organize state-chartered bankers' banks in accordance with the
provisions of sections six and seven, article four of this chapter;
(5) Exempt a bankers' bank from any provision of this chapter
if the Board finds that the provision is inconsistent with the
purpose for which a bankers' bank is incorporated and organized and
that the welfare of the public or any banking institution or other
financial institution would not be jeopardized thereby;
(6) Revoke the certificate of authority, permit, certificate
or license of any state banking institution to engage in business in this state if that institution fails or refuses to comply with
any order of the Commissioner entered pursuant to the provisions of
paragraph (A) or (B), subdivision (15), subsection (c), section
four, article two of this chapter, or at the Board's election to
direct the Commissioner to apply to any court having jurisdiction
for a prohibitory or mandatory injunction or other appropriate
remedy to compel obedience to such order;
(7) Suspend or remove a director, officer or employee of any
financial institution who is or becomes ineligible to hold that
position under any provision of law or rule and regulation or
order, or who willfully disregards or fails to comply with any
order of the Board or Commissioner made and entered in accordance
with the provisions of this chapter or who is dishonest or grossly
incompetent in the conduct of financial institution business and
prohibit that director, officer or employee from participating in
the affairs of any other financial institution until further order
of the Board;
(8) To receive from state banking institutions applications to
establish branch banks by the purchase of the business and assets
and assumption of the liabilities of, or merger or consolidation
with, another banking institution, or by the construction, lease or
acquisition of branch bank facilities in an unbanked area; examine
and investigate such applications, to hold hearings thereon, and to
approve or disapprove such applications, all in accordance with section twelve, article eight of this chapter;
(9) Approve or disapprove the application of any state bank to
purchase the business and assets and assume the liabilities of, or
merge or consolidate with, another state banking institution in
accordance with the provisions of section seven, article seven of
this chapter;
(10) Approve or disapprove the application of any state bank
to purchase the business and assets and assume the liabilities of
a national banking association, or merge or consolidate with a
national banking association to form a resulting state bank in
accordance with the provisions of section seven, article seven of
this chapter; and
(11) In addition to any authority granted pursuant to section
twelve, article eight of this chapter, incident to the approval of
an application pursuant to subdivisions (7) or (8) of this
subsection, permit the bank the application of which is so approved
to operate its banking business under its name from the premises of
the bank the business and assets of which have been purchased and
the liabilities of which have been assumed by such applicant bank
or with which the applicant bank has merged or consolidated:
Provided, That this permission may be granted only if the Board has
made the findings required by subsection (f), section three of this
article and such applicant bank has no common directors or officers
nor common ownership of stock exceeding ten percent of total outstanding voting stock with the bank whose business and assets
are being purchased and liabilities assumed, or with whom the
applicant bank is being merged; and
(12) To receive an appeal from any party who is adversely
affected by an order of the Commissioner issued pursuant to section
twelve-d, article eight of this chapter, and hold hearings in
accordance with the provisions of article five, chapter
twenty-nine-a of this code.
(c) A provision of this section may not be construed to alter,
reduce or modify the rights of shareholders, or obligations of a
banking institution in regard to its shareholders, as set forth in
section one hundred seventeen, article one, chapter thirty-one of
this code and section seven, article seven of this chapter, and
other applicable provisions of this code.
(d) Any order entered by the West Virginia Board of Banking
and Financial Institutions pursuant to this section is a matter of
public record.
ARTICLE 8C. PROVISION OF FINANCIALLY-RELATED SERVICES BY BANKS
AND BANK HOLDING COMPANIES.
§31A-8C-1. Financially-related defined.
The term "financially-related" includes:
(a) All products, services and activities offered or engaged
in by national banks or by any
West Virginia state or federally
chartered thrift institution or
West Virginia state or federally chartered credit union
or a bank chartered by any other state;
except those excluded by subsection (f) of this section;
(b) Equity investments in real estate development activities,
products and services;
(c) Securities underwriting and brokerage activities, products
and services; except those excluded by subsection (f) of this
section;
(d) Financial consulting activities, products and services;
and
(e) Any and all other activities, products and services
engaged in or offered by other providers of financial products or
services which may be deemed by the Commissioner of Banking
pursuant to this article to be financially-related; except those
excluded by subsection (f)
and (g) of this section.
(f) The term "financially-related" excludes products, services
or activities offered or engaged in by any insurer or by any
underwriter, agent, solicitor or broker of insurance, which
products, services or activities are regulated by the department of
insurance pursuant to chapter thirty-three of the West Virginia
code except for such activities, products and services permitted,
engaged in, or offered by a West Virginia state chartered banking
institution prior to the effective date of this article.
(g) (f) The term "financially-related"
also excludes products,
services or activities offered or engaged in by any real estate agent, agency or broker, which products, services or activities are
regulated by the state Real Estate Commission pursuant to chapter
forty-seven of the West Virginia Code except for such activities,
products and services permitted, engaged in or offered by a West
Virginia State-Chartered Banking Institution prior to the effective
date of this
article section or permitted pursuant to subdivision
(b) of this section.
§31A-8C-2. Banks and bank holding companies permitted to offer
financially-related services.
(a) Subject to the prior approval of the Commissioner of
Banking, any West Virginia State-Chartered Banking Institution or
any bank holding company headquartered in this state may, either
through equity investment in other entities or through a
wholly-owned subsidiary or subsidiaries, or by contract or
agreement with others to provide such products or services, engage
in any activity, exercise any power or offer any product or service
that is financially-related. A State Chartered Banking Institution
may engage in a financially related activity directly and not
through an operating subsidiary, financial subsidiary or affiliate
if it is permissible for a national bank to engage in the
financially-related activity directly. The Commissioner shall
grant or deny any request under this section within sixty days of
receipt unless additional information is required.
(b) In determining whether an activity is financially-related, the Commissioner shall consider:
(1) The ability of financial institutions to exercise any
additional powers in a safe and sound manner;
(2) The authority of national banks, federal thrifts, federal
credit unions and other financial service providers operating
pursuant to federal law or regulation, and the laws of other states
to provide the financially-related service; and
(3) Any specific limitations on financial institution
operations or powers contained in this chapter.
(c) If a state chartered banking institution or bank holding
company must make prior application to a federal Bank Regulatory
Agency for approval to engage in a financially-related activity,
the banking institution or bank holding company shall file with the
Commissioner a copy of the application submitted to the federal
agency.
§31A-8C-3. Limitation on permitted investment in entities offering
financially-related services.
No West Virginia State-Chartered Banking Institution or bank
holding company may invest or otherwise expend
in excess of ten
percent more, in the aggregate of the amount of its capital and
surplus, on a consolidated basis, in the conduct of
financially-related activities
than would be allowed to a national
bank.
§31A-8C-5. Construction, conflicting provisions.
This article shall be construed liberally to permit banks and
bank holding companies to offer financially-related products and
services
and to enable West Virginia State-Chartered Banking
Institutions and bank holding companies to compete fairly with
other financial institutions and other entities providing financial
services under the laws of the United States or any other state.
No other provision of this code shall be deemed to prohibit such
activity:
Provided, That in the provision of such products and
services, banks and bank holding companies are subject to the same
state and federal regulation and licensing requirements as are
other providers of such products and services.
NOTE: The purpose of this bill is foster competitive equality
for State-Chartered Banking Institutions with federally chartered
institutions and other financial services providers operating in
West Virginia. It provides for an application and approval process
to be regulated by the Commissioner of banking and provides parity
with other state and federal banking powers.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§31A-8C-1 completely rewrites present law §31A-8C-1 by
incorporating into it the language of present law §31A-8C-2, with
amendments.
Strike-throughs indicate language that would be stricken from
present law, and underscoring indicates new language that would be
added.
§31A-8C-2 completely rewrites present law §31A-8C-2;
therefore, strike-throughs and underscoring have been omitted.
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