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United States Code (Last Updated: May 24, 2014) |
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Title 12. BANKS AND BANKING |
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Chapter 17. BANK HOLDING COMPANIES |
§ 1842. Acquisition of bank shares or assets
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(a) Prior approval of Board as necessary; exceptions; disposition, time extension; subsequent approval or disposition upon disapproval It shall be unlawful, except with the prior approval of the Board, (1) for any action to be taken that causes any company to become a bank holding company; (2) for any action to be taken that causes a bank to become a subsidiary of a bank holding company; (3) for any bank holding company to acquire direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, such company will directly or indirectly own or control more than 5 per centum of the voting shares of such bank; (4) for any bank holding company or subsidiary thereof, other than a bank, to acquire all or substantially all of the assets of a bank; or (5) for any bank holding company to merge or consolidate with any other bank holding company. Notwithstanding the foregoing this prohibition shall not apply to (A) shares acquired by a bank, (i) in good faith in a fiduciary capacity, except where such shares are held under a trust that constitutes a company as defined in section 1841(b) of this title and except as provided in paragraphs (2) and (3) of section 1841(g) of this title, or (ii) in the regular course of securing or collecting a debt previously contracted in good faith, but any shares acquired after May 9, 1956 , in securing or collecting any such previously contracted debt shall be disposed of within a period of two years from the date on which they were acquired; (B) additional shares acquired by a bank holding company in a bank in which such bank holding company owned or controlled a majority of the voting shares prior to such acquisition; or (C) the acquisition, by a company, of control of a bank in a reorganization in which a person or group of persons exchanges their shares of the bank for shares of a newly formed bank holding company and receives after the reorganization substantially the same proportional share interest in the holding company as they held in the bank except for changes in shareholders’ interests resulting from the exercise of dissenting shareholders’ rights under State or Federal law if—(i) immediately following the acquisition— (I) the bank holding company meets the capital and other financial standards prescribed by the Board by regulation for such a bank holding company; and (II) the bank is adequately capitalized (as defined in section 1831o of this title); (ii) the holding company does not engage in any activities other than those of managing and controlling banks as a result of the reorganization; (iii) the company provides 30 days prior notice to the Board and the Board does not object to such transaction during such 30-day period; and (iv) the holding company will not acquire control of any additional bank as a result of the reorganization.. trade, unless it finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. (2) Banking and community factors In every case, the Board shall take into consideration the financial and managerial resources and future prospects of the company or companies and the banks concerned, and the convenience and needs of the community to be served.
(3) Supervisory factors The Board shall disapprove any application under this section by any company if— (A) the company fails to provide the Board with adequate assurances that the company will make available to the Board such information on the operations or activities of the company, and any affiliate of the company, as the Board determines to be appropriate to determine and enforce compliance with this chapter; or (B) in the case of an application involving a foreign bank, the foreign bank is not subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank’s home country. (4) Treatment of certain bank stock loans Notwithstanding any other provision of law, the Board shall not follow any practice or policy in the consideration of any application for the formation of a one-bank holding company if following such practice or policy would result in the rejection of such application solely because the transaction to form such one-bank holding company involves a bank stock loan which is for a period of not more than twenty-five years. The previous sentence shall not be construed to prohibit the Board from rejecting any application solely because the other financial arrangements are considered unsatisfactory. The Board shall consider transactions involving bank stock loans for the formation of a one-bank holding company having a maturity of twelve years or more on a case by case basis and no such transaction shall be approved if the Board believes the safety or soundness of the bank may be jeopardized.
(5) Managerial resources Consideration of the managerial resources of a company or bank under paragraph (2) shall include consideration of the competence, experience, and integrity of the officers, directors, and principal shareholders of the company or bank.
(6) Money laundering In every case, the Board shall take into consideration the effectiveness of the company or companies in combatting money laundering activities, including in overseas branches.
(7) Financial stability In every case, the Board shall take into consideration the extent to which a proposed acquisition, merger, or consolidation would result in greater or more concentrated risks to the stability of the United States banking or financial system.
(d) Interstate banking (1) Approvals authorized (A) Acquisition of banks The Board may approve an application under this section by a bank holding company that is well capitalized and well managed to acquire control of, or acquire all or substantially all of the assets of, a bank located in a State other than the home State of such bank holding company, without regard to whether such transaction is prohibited under the law of any State.
(B) Preservation of State age laws (i) In general Notwithstanding subparagraph (A), the Board may not approve an application pursuant to such subparagraph that would have the effect of permitting an out-of-State bank holding company to acquire a bank in a host State that has not been in existence for the minimum period of time, if any, specified in the statutory law of the host State.
(ii) Special rule for State age laws specifying a period of more than 5 years Notwithstanding clause (i), the Board may approve, pursuant to subparagraph (A), the acquisition of a bank that has been in existence for at least 5 years without regard to any longer minimum period of time specified in a statutory law of the host State.
(C) Shell banks For purposes of this subsection, a bank that has been chartered solely for the purpose of, and does not open for business prior to, acquiring control of, or acquiring all or substantially all of the assets of, an existing bank shall be deemed to have been in existence for the same period of time as the bank to be acquired.
(D) Effect on State contingency laws No provision of this subsection shall be construed as affecting the applicability of a State law that makes an acquisition of a bank contingent upon a requirement to hold a portion of such bank’s assets available for call by a State-sponsored housing entity established pursuant to State law, if— (i) the State law does not have the effect of discriminating against out-of-State banks, out-of-State bank holding companies, or subsidiaries of such banks or bank holding companies; (ii) that State law was in effect as of September 29, 1994 ;(iii) the Federal Deposit Insurance Corporation has not determined that compliance with such State law would result in an unacceptable risk to the Deposit Insurance Fund; and (iv) the appropriate Federal banking agency for such bank has not found that compliance with such State law would place the bank in an unsafe or unsound condition. (2) Concentration limits (A) Nationwide concentration limits The Board may not approve an application pursuant to paragraph (1)(A) if the applicant (including all insured depository institutions which are affiliates of the applicant) controls, or upon consummation of the acquisition for which such application is filed would control, more than 10 percent of the total amount of deposits of insured depository institutions in the United States.
(B) Statewide concentration limits other than with respect to initial entries The Board may not approve an application pursuant to paragraph (1)(A) if— (i) immediately before the consummation of the acquisition for which such application is filed, the applicant (including any insured depository institution affiliate of the applicant) controls any insured depository institution or any branch of an insured depository institution in the home State of any bank to be acquired or in any host State in which any such bank maintains a branch; and (ii) the applicant (including all insured depository institutions which are affiliates of the applicant), upon consummation of the acquisition, would control 30 percent or more of the total amount of deposits of insured depository institutions in any such State. (C) Effectiveness of State deposit caps No provision of this subsection shall be construed as affecting the authority of any State to limit, by statute, regulation, or order, the percentage of the total amount of deposits of insured depository institutions in the State which may be held or controlled by any bank or bank holding company (including all insured depository institutions which are affiliates of the bank or bank holding company) to the extent the application of such limitation does not discriminate against out-of-State banks, out-of-State bank holding companies, or subsidiaries of such banks or holding companies.
(D) Exceptions to subparagraph (B) The Board may approve an application pursuant to paragraph (1)(A) without regard to the applicability of subparagraph (B) with respect to any State if— (i) there is a limitation described in subparagraph (C) in a State statute, regulation, or order which has the effect of permitting a bank or bank holding company (including all insured depository institutions which are affiliates of the bank or bank holding company) to control a greater percentage of total deposits of all insured depository institutions in the State than the percentage permitted under subparagraph (B); or (ii) the acquisition is approved by the appropriate State bank supervisor of such State and the standard on which such approval is based does not have the effect of discriminating against out-of-State banks, out-of-State bank holding companies, or subsidiaries of such banks or holding companies. (E) “Deposit” defined For purposes of this paragraph, the term “deposit” has the same meaning as in section 1813(l) of this title.
(3) Community reinvestment compliance In determining whether to approve an application under paragraph (1)(A), the Board shall— (A) comply with the responsibilities of the Board regarding such application under section 2903 of this title; and (B) take into account the applicant’s record of compliance with applicable State community reinvestment laws. (4) Applicability of antitrust laws No provision of this subsection shall be construed as affecting— (A) the applicability of the antitrust laws; or (B) the applicability, if any, of any State law which is similar to the antitrust laws. (5) Exception for banks in default or in danger of default The Board may approve an application pursuant to paragraph (1)(A) which involves— (A) an acquisition of 1 or more banks in default or in danger of default; or (B) an acquisition with respect to which assistance is provided under section 1823(c) of this title; without regard to subparagraph (B) or (D) of paragraph (1) or paragraph (2) or (3). (e) Insured depository institution Every bank that is a holding company and every bank that is a subsidiary of such a company shall become and remain an insured depository institution as defined in section 1813 of this title.
(f) [Repealed] (g) Mutual bank holding company (1) Establishment Notwithstanding any provision of Federal law other than this chapter, a savings bank or cooperative bank operating in mutual form may reorganize so as to form a holding company.
(2) Regulations A bank holding company organized as a mutual holding company shall be regulated on terms, and shall be subject to limitations, comparable to those applicable to any other bank holding company.
References In Text
Section 1823(f)(8)(D) of this title, referred to in subsec. (b)(2), which defined “bank in danger of closing”, was repealed by Pub. L. 101–73, title II, § 217(5)(H),
Amendments
2010—Subsec. (c)(7). Pub. L. 111–203, § 604(d), added par. (7).
Subsec. (d)(1)(A). Pub. L. 111–203, § 607(a), substituted “well capitalized and well managed” for “adequately capitalized and adequately managed”.
2006—Subsec. (d)(1)(D)(iii). Pub. L. 109–173 substituted “Deposit Insurance Fund” for “appropriate deposit insurance fund”.
2004—Subsec. (b)(1). Pub. L. 108–386 struck out “or a District bank” after “national banking association” in first sentence.
2001—Subsec. (c)(6). Pub. L. 107–56 added par. (6).
1999—Subsec. (f). Pub. L. 106–102, § 118, amended subsec. (f) generally, substituting “(f) [Repealed].” for provisions relating to authorized activities of qualified savings banks which are subsidiaries of bank holding companies.
Subsec. (g)(2). Pub. L. 106–102, § 105, amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “A corporation organized as a holding company under this subsection shall be regulated on the same terms and be subject to the same limitations as any other holding company which controls a savings bank.”
1994—Subsec. (a). Pub. L. 103–325, § 319(a), substituted “(B)” for “or (B)” and added subpar. (C).
Subsec. (d). Pub. L. 103–328 amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows: “Notwithstanding any other provision of this section, no application (except an application filed as a result of a transaction authorized under section 1823(f) of this title) shall be approved under this section which will permit any bank holding company or any subsidiary thereof to acquire, directly or indirectly, any voting shares of, interest in, or all or substantially all of the assets of any additional bank located outside the State in which the operations of such bank holding company’s banking subsidiaries were principally conducted on
Subsec. (e). Pub. L. 103–325, § 322(c)(1), struck out after first sentence “This subsection does not apply to a bank described in the last sentence of section 1841(c) of this title.”
1991—Subsec. (c). Pub. L. 102–242, § 202(d), inserted heading, inserted par. (1) designation and heading, redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively, inserted par. (2) designation and heading, added par. (3), and inserted par. (4) designation and heading.
Subsec. (c)(5). Pub. L. 102–242, § 210, added par. (5).
1989—Subsec. (e). Pub. L. 101–73, which directed the substitution of “an insured depository institution as defined in section 1813 of this title” for “an insured bank as defined in section 1813(h) of this title”, was executed by making the substitution for “an insured bank as such term is defined in section 1813(h) of this title”, as the probable intent of Congress.
1987—Pub. L. 100–86, § 509(a), repealed Pub. L. 97–320, § 141. See 1982 Amendment note below.
Subsec. (b). Pub. L. 100–86, § 502(h)(1), designated existing provisions as par. (1) and added par. (2).
Subsec. (f). Pub. L. 100–86, § 101(d), added subsec. (f).
Subsec. (g). Pub. L. 100–86, § 107(b), added subsec. (g).
1982—Subsec. (d). Pub. L. 97–320, § 118(c), inserted “(except an application filed as a result of a transaction authorized under section 1823(f) of this title)” after “no application”.
Pub. L. 97–320, § 141(a)(4), which directed that, effective
Subsec. (e). Pub. L. 97–320, § 404(d)(2), inserted “This subsection does not apply to a bank described in the last sentence of section 1841(c) of this title.”
1980—Subsec. (c). Pub. L. 96–221, § 713, inserted provisions relating to applications for the formation of one-bank holding companies.
Subsec. (d). Pub. L. 96–221, § 712(b), (c), temporarily designated existing provisions as par. (1) and added par. (2). See Termination Date of 1980 Amendment note set out below.
1977—Subsec. (a). Pub. L. 95–188, § 301(a), authorized the Board to extend the time for disposition of acquired shares for not more than one year at a time and three years in the aggregate.
Subsec. (b). Pub. L. 95–188, § 302, inserted provision for alternative submission of views and recommendations within ten calendar days of the date on which notice is given if the Board advises the appropriate supervisory authority that an emergency exists requiring expeditious action, substituted “shall, by order,” for “shall by order” and inserted provisions respecting procedure in emergencies or probable failures requiring immediate Board action and orders.
1970—Subsec. (a). Pub. L. 91–607, § 102(1), inserted provision deeming acquisition of bank shares after
Subsec. (b). Pub. L. 91–607, § 102(2), inserted provision deeming an application for approval as granted where Board has not acted on application within 91 day period beginning on date of submission to Board of complete record on application.
Subsec. (e). Pub. L. 91–607, § 102(3), added subsec. (e).
1966—Subsec. (a). Pub. L. 89–485, § 7(a), (b), expanded the list of acts requiring prior approval of the Board by including therein any action that causes a bank to become a subsidiary of a bank holding company and substituted provisions excepting shares that are held under a trust that constitutes a company as defined in section 1841(b) of this title and excepting shares as provided in pars. (2) and (3) of section 1841(g) of this title from the effect of the clause lifting the requirements of prior Board approved in the case of shares acquired by a bank in good faith in a fiduciary capacity for provisions excepting shares held for the benefit of the shareholders of a bank from the effect of the clause.
Subsec. (c). Pub. L. 89–485, § 7(c), inserted provision prohibiting any acquisition, merger, or consolidation that would result in a monopoly or would further any combination or conspiracy to monopolize the banking business in any part of the United States or would substantially lessen competition or in any manner be in restraint of trade unless the public interest clearly outweighed the anticompetitive effects and substituted provisions requiring the Board to take into consideration the financial and managerial resources and future prospects of the company or bank concerned and the convenience and needs of the community to be served for provisions requiring the Board to take into consideration the financial history of the company or bank concerned, its prospects, the character of its management, the needs of the community, and the public interest.
Subsec. (d). Pub. L. 89–485, § 7(d), substituted provisions restricting expansion to state in which the operations of the bank holding company’s banking subsidiaries were principally conducted, defined, as that state in which total deposits of all such banking subsidiaries were largest, on
Effective Date Of Amendment
Amendment by section 604(d) of Pub. L. 111–203 effective on the transfer date, see section 604(j) of Pub. L. 111–203, set out as a note under section 1462 of this title.
Amendment by section 607(a) of Pub. L. 111–203 effective on the transfer date, see section 607(c) of Pub. L. 111–203, set out as a note under section 1831u of this title.
Amendment by Pub. L. 109–173 effective
Amendment by Pub. L. 108–386 effective
Pub. L. 107–56, title III, § 327(a)(2),
Amendment by Pub. L. 106–102 effective 120 days after
Amendment by Pub. L. 103–328 effective at end of 1-year period beginning on
Termination Date
Amendment by Pub. L. 96–221 repealed on
Miscellaneous
No amendment made by section 141(a) of Pub. L. 97–320, set out as a note under section 1464 of this title, as in effect before
No amendment made by section 141(a) of Pub. L. 97–320, set out as a note under section 1464 of this title, as in effect on the day before
Section 141(a) of Pub. L. 97–320, set out as a note under section 1464 of this title, as in effect on the day after