SB1294 - 451R - House Bill Summary

House of Representatives

SB 1294

trust companies; minimum capital requirements

Sponsors: Senator Cirillo

DP	Committee on Financial Institutions and Insurance
X	Caucus and COW
	As Passed the House

SB 1294 increases the capital amounts trust companies must keep in reserve in order to obtain trust certification. The amount of capital that must be set aside in reserves shall depend on the amount of discretionary and nondiscretionary assets held in trust.

History

A.R.S. 6-856 requires a trust company to maintain at least $500,000 in liquid capital in order to obtain trust certification by the State Banking Department.

Provisions

· Defines asset, discretionary assets and nondiscretionary assets.

· Requires trust companies to have an additional $250,000 in capital reserves for each $750,000,000 of nondiscretionary assets and $250,000,000 of discretionary assets. At least half of these reserves shall consist of liquid assets.

· Requires a trust company with a composite rating of four from the State Banking Department to maintain an additional $250,000 in capital reserves while a trust company with a rating of five shall maintain an additional $500,000 in capital reserves. All of these reserves shall consist of liquid assets.

· Requires a trust company that had its certification issued before June 30, 2001 to comply with the additionally capital reserve requirements by December 31, 2002.

· Authorizes the Superintendent of the State Banking Department to reduce the amount of the additional capital requirements in the event that the trust company is a subsidiary of a financial institution or financial holding company capable of providing sufficient support.

· Requires trust companies to obtain a fidelity bond in the amount of one million dollars for every billion dollars over three billion dollars in trust assets.

SB 1294 passed the Financial Institutions and Insurance Committee unamended.

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44th Legislature