banking permits; banker's banks; investments
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Committee on Financial Institutions and Insurance |
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Committee on Commerce and Economic Development |
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Caucus and COW |
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Third Read |
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As Passed the House |
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X |
As Transmitted to the Governor |
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SB 1178 allows the Superintendent of Banks to issue permits to limited purpose banks, also called bankers’ banks.
The banking industry has experienced considerable change in previous years, including the consolidation of banking services and an increase in interstate branching. Arizona currently does not have the statutory authority to issue permits to limited purpose banks, also known as banker’s banks. These entities provide services such as overnight funds, repurchase agreement trading and loan participation exclusively for banks. The Office of the Comptroller (OCC), which charters national banks, has encouraged the establishment of banker’s banks. Other states have followed suit and issue permits to limited purpose banks to foster competition in the correspondent banking market and maintain state control of these entities. The proposed legislation would authorize the State Banking Department to issue permits for banker’s banks and establishes the necessary licensing requirements.
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Stipulates that a banker’s
bank permit may be issued if the following provisions are met:
1. The stock of the applicant is owned
exclusively by one or more state or nationally charted bank, or if the stock is
owned by a holding company, the holding company’s stock is owned exclusively by
one or more state or nationally chartered bank.
2. The applicant engages exclusively in
providing banking services to other depository institutions or their holding
companies.
3. Provides that the applicant provide
corresponding banking services for other depository institutions or holding
companies.
4. The applicant is fully insured by the Federal
Deposit Insurance Corporation.
5. The entity may not acquire or retain at any
time the ownership, control or power to vote more than 10% of any class of
voting securities of the banker’s bank.
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Defines “banker’s bank” as an
entity that is owned exclusively by one or more state or nationally chartered
bank or holding company that exclusively provides banking services to or for
other depository institutions and their holding companies.
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Defines nationally chartered
bank as a bank or savings bank chartered by the Office of the Comptroller or
the Office of Thrift Supervision.
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Stipulates that a bank may
purchase securities of no more than 10% of the bank’s capital.