CHAPTER 666
OUT-OF-STATE BANKS

Table of Contents

Sec. 36a-410. (Formerly Sec. 36-552). Definitions.
Sec. 36a-412. (Formerly Sec. 36-555). Out-of-state banks: Mergers, consolidations and acquisitions. De novo branches. Powers of branches. Applicability of Connecticut law. Commissioner approval. When.

PART I
INTERSTATE BANKING

      Sec. 36a-410. (Formerly Sec. 36-552). Definitions. As used in sections 36a-410 to 36a-413, inclusive, unless the context otherwise requires:

      (1) "Branch" means a domestic branch as defined in 12 USC Section 1813, as from time to time amended, except that "branch" includes any branch bank, branch office, branch agency, additional office, or any branch place of business at which fiduciary or trust powers are exercised;

      (2) "Commercial activities" has the same meaning as provided in subsection (a) of section 36a-145;

      (3) "Connecticut holding company" means any holding company whose home state is this state;

      (4) "De novo branch" means a branch of a bank or an out-of-state bank other than a foreign bank, which:

      (A) Is originally established by such bank or out-of-state bank; and

      (B) Does not become a branch of such bank or out-of-state bank as the result of (i) the acquisition by the bank or out-of-state bank of an insured depository institution or a branch of an insured depository institution; or (ii) the conversion, merger or consolidation of any such institution or branch;

      (5) "Home state" means: (A) With respect to a federally-chartered bank, the state in which the main office of the bank is located; (B) with respect to a foreign bank, the state which is the home state of the foreign bank under the International Bank Act of 1978, 12 USC Section 3101 et seq., as from time to time amended, if any, or the foreign country by which such bank is chartered; (C) with respect to a state-chartered bank, the state by which such bank is chartered; (D) with respect to a bank holding company, the state in which the total deposits of all banking subsidiaries of such company are the largest on the later of July 1, 1966, or the date on which the company became a bank holding company under the federal Bank Holding Company Act of 1956, 12 USC Section 1841 et seq., as from time to time amended, and in the case of any such company that holds a banking subsidiary that functions solely in a trust or fiduciary capacity, the state in which the total of such trust or fiduciary assets of such subsidiaries were the largest on the date such company became a bank holding company; and (E) with respect to a savings and loan holding company, the state in which the total deposits of all savings and loan association subsidiaries of such company were the largest on the date on which the company became a savings and loan holding company and, in the case of any such company that holds a savings and loan association subsidiary that functions solely in a trust or fiduciary capacity, the state in which the total of such trust or fiduciary assets of such subsidiaries were the largest on the date on which such company became a savings and loan holding company;

      (6) "Out-of-state holding company" means any holding company whose home state is a state other than this state or whose home state is a foreign country.

      (P.A. 83-411, S. 1, 20; P.A. 84-329, S. 1, 6; P.A. 87-9, S. 2, 3; 87-205, S. 3, 6; 87-589, S. 80, 87; P.A. 88-174, S. 1; P.A. 90-2, S. 1, 20; P.A. 91-357, S. 59, 78; P.A. 92-12, S. 100; P.A. 94-122, S. 185, 340; P.A. 95-155, S. 25, 29; P.A. 97-160, S. 3, 7; P.A. 05-39, S. 8; P.A. 07-14, S. 2.)

      History: P.A. 84-329 amended Subsecs. (a), (b), (h) and (n) to give the defined terms the meanings in effect under 12 U.S.C. 1841(a) on June 8, 1983; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 87-205 made technical changes in introductory language; P.A. 87-589 extended application of definitions to Sec. 42-133c; P.A. 88-174 amended the definitions of "Connecticut bank", "Connecticut savings bank", "Connecticut savings and loan association", "New England bank", "New England savings bank" and "New England savings and loan association" to include references to savings and loan holding companies; added a new Subsec. (h) defining "Connecticut savings loan holding company"; added a new Subsec. (n) defining "New England savings and loan holding company"; and added a new Subsec. (o) defining "savings and loan holding company", relettering prior definitions as necessary; P.A. 90-2 added definitions of "Foreign bank", "Foreign country", "Out-of-state bank", "Out-of-state bank holding company", "Out-of-state savings bank", "Out-of-state savings and loan association" and "Out-of-state savings and loan holding company", deleted definitions of "New England bank", "New England bank holding company", "New England savings bank", "New England savings and loan association" and "New England savings and loan holding company", amended definitions of "Connecticut bank", "Connecticut bank holding company", "Connecticut savings bank", "Connecticut savings and loan association" and "Connecticut savings and loan holding company" to eliminate provisions re ownership or control by Connecticut or other New England financial institutions, and made technical changes to the definitions of "Bank", "Bank holding company", "Control", "Savings and loan holding company" and "Subsidiary"; P.A. 91-357 deleted reference to Sec. 42-133c as section to which definitions apply; P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 94-122 deleted definitions included in Sec. 36a-2 and added "Connecticut holding company" and "out-of-state holding company", effective January 1, 1995; Sec. 36-552 transferred to Sec. 36a-410 in 1995; P.A. 95-155 added definitions of "branch", "de novo branch", and "home state", changed reference from principal place of business to home state in definition of "Connecticut holding company", and added reference re home state and deleted exceptions from any holding company in definition of "out-of-state holding company", effective June 27, 1995; P.A. 97-160 redefined "branch" in Subdiv. (1) to include any branch bank, branch office, branch agency, additional office, or any branch place of business at which fiduciary or trust powers are exercised, effective June 24, 1997; P.A. 05-39 amended Subdiv. (4)(E) to provide that with respect to savings and loan holding company that holds savings and loan association subsidiaries that function solely in trust or fiduciary capacity, its home state shall be the state in which the total of trust or fiduciary assets of such subsidiaries were the largest on date such company became a savings and loan holding company, effective May 17, 2005; P.A. 07-14 added new Subdiv. (2) defining "commercial activities" and redesignated existing Subdivs. (2) to (5) as Subdivs. (3) to (6), effective May 2, 2007.

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      Sec. 36a-412. (Formerly Sec. 36-555). Out-of-state banks: Mergers, consolidations and acquisitions. De novo branches. Powers of branches. Applicability of Connecticut law. Commissioner approval. When. (a)(1) Any out-of-state bank, whether or not owned or controlled by an out-of-state holding company, may, with the approval of the commissioner, merge or consolidate with or acquire a branch or significant part of the assets or ten per cent or more of the stock of a bank provided such bank has been in existence and continuously operating for at least five years, unless the commissioner waives this requirement, where the institution resulting from any such merger or consolidation is an out-of-state bank, provided the laws of the home state of such out-of-state bank authorize, under conditions no more restrictive than those imposed by the laws of this state as determined by the commissioner, a bank to merge or consolidate with or purchase a branch or significant part of the assets or ten per cent or more of the stock of an out-of-state bank whose home state is such state. Such merger, consolidation or acquisition shall not take place if the out-of-state bank, including all insured depository institutions which are affiliates of the out-of-state bank, upon consummation of the merger, consolidation or acquisition, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. Any such merger, consolidation or acquisition of assets or stock shall be effected in accordance with and subject to the filing requirements and any limitations imposed by the laws of this state with respect to mergers, consolidations and acquisitions between banks. Any such out-of-state bank that engages in business in this state shall comply with the requirements of section 33-920 or subsection (a) of section 33-1210. Before approving any such merger, consolidation or acquisition, the commissioner shall make such considerations, determinations and findings as required by the laws of this state with respect to mergers, consolidations and acquisitions between banks and, in addition, shall consider whether such merger, consolidation or acquisition can reasonably be expected to produce benefits to the public and whether such benefits clearly outweigh possible adverse effects, including, but not limited to, an undue concentration of resources and decreased or unfair competition. The commissioner shall not approve such merger, consolidation or acquisition unless the commissioner considers whether: (A) The investment and lending policies of the out-of-state bank, in the case of a merger or acquisition of assets, or the proposed investment and lending policies of the bank, in the case of an acquisition of stock, or of the institution that will result from a consolidation, are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the services of the bank or branch to be acquired, or of the institution that will result from a merger, or the proposed services of the institution that will result from a consolidation, are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the merger, consolidation or acquisition will not substantially lessen competition in the banking industry of this state; (D) in the case of a merger or consolidation or the acquisition of twenty-five per cent or more of such stock, the out-of-state bank (i) has sufficient capital to ensure, and agrees to ensure, that the bank to be acquired or the institution that will result from the merger or consolidation will comply with applicable minimum capital requirements, and (ii) has sufficient managerial resources to operate the bank to be acquired or the institution that will result from the merger or consolidation in a safe and sound manner; and (E) the out-of-state bank is in compliance with applicable minimum capital requirements. The commissioner shall not approve such merger, consolidation or acquisition unless the commissioner makes the findings required by section 36a-34. Any out-of-state bank that merges or consolidates with or acquires a branch pursuant to this subdivision may establish additional branches in this state.

      (2) Any out-of-state bank, other than a foreign bank, may, with the approval of the commissioner, and in accordance with the provisions of this subdivision, establish a de novo branch in this state. Such establishment shall not take place unless the laws of the home state of such out-of-state bank authorize, under conditions no more restrictive than those imposed by the laws of this state, as determined by the commissioner, a bank to establish a de novo branch in the home state of such out-of-state bank, provided the commissioner may waive such reciprocity requirement for the establishment of a de novo branch the activities of which are limited to the exercise of fiduciary or trust powers if the commissioner finds that such establishment will result in net new benefits to this state. Any request for such waiver of reciprocity submitted by an out-of-state bank shall include a detailed statement of the reasons for the request and statistical and other information to support a finding of such net new benefits. Any such establishment shall be effected in accordance with and subject to the filing requirements and any limitations imposed by section 36a-145. Any such out-of-state bank that engages in business in this state shall comply with the requirements of section 33-920 or subsection (a) of section 33-1210. Before approving any such establishment, the commissioner shall make such considerations, determinations and findings as required by section 36a-145 and, in addition, shall consider whether such establishment can reasonably be expected to produce benefits to the public and whether such benefits clearly outweigh possible adverse effects, including, but not limited to, an undue concentration of resources and decreased or unfair competition. The commissioner shall not approve such establishment unless the commissioner considers whether: (A) The investment and lending policies of the out-of-state bank are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the proposed services of the branch are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the establishment will not substantially lessen competition in this state; (D) the out-of-state bank is adequately managed and will continue to be adequately managed upon establishment of such branch; and (E) the out-of-state bank is in compliance with applicable minimum capital requirements. The commissioner shall not approve such establishment unless the commissioner makes the findings required by section 36a-34. An out-of-state bank which has established a de novo branch in this state in accordance with this subdivision may establish additional branches in this state, provided the activities of such additional branches of an out-of-state bank for which the commissioner waived such reciprocity requirement shall be limited to the exercise of fiduciary or trust powers. As used in this subdivision, "net new benefits" means (i) initial capital investments, including any new construction, (ii) job creation plans, including, but not limited to, the number of jobs to be created and the average wage rates for each category of such jobs, (iii) the potential for increasing state and municipal tax revenues from increased economic activity and increased employment, (iv) consumer and business services and other benefits to the state, local community and citizens, and (v) such other matters as the commissioner may deem necessary or advisable.

      (3) Any out-of-state bank, regardless of whether it has a branch in this state, may merge or consolidate with or acquire a branch in this state of an out-of-state bank that has a branch in this state.

      (4) (A) Except as provided in this section, the laws of this state shall apply to any branch in this state of an out-of-state bank to the same extent as such laws would apply if the branch were a federal bank, provided the following laws shall apply to any branch in this state of an out-of-state bank to the same extent as such laws apply to a branch of a Connecticut bank: (i) Community reinvestment laws including sections 36a-30 to 36a-33, inclusive, (ii) consumer protection laws including sections 36a-41 to 36a-45, inclusive, 36a-290 to 36a-304, inclusive, 36a-306, 36a-307, 36a-315 to 36a-323, inclusive, 36a-645 to 36a-647, inclusive, 36a-690, 36a-695 to 36a-700, inclusive, 36a-705 to 36a-707, inclusive, 36a-715 to 36a-718, inclusive, 36a-725, 36a-726, 36a-755 to 36a-759, inclusive, 36a-770 to 36a-788, inclusive, and 36a-800 to 36a-810, inclusive, (iii) fair lending laws including sections 36a-16, 36a-737, 36a-740 and 36a-741, and (iv) branching laws including sections 36a-23 and 36a-145.

      (B) Except as provided in this section, an out-of-state bank, other than a federally-chartered out-of-state bank, that establishes a branch in this state may conduct any activity at such branch (i) if such activity is permissible under the laws of the home state of such out-of-state bank, and (ii) to the same extent as such activity is permissible for either a Connecticut bank or a branch in this state of a federally-chartered out-of-state bank. If the commissioner determines that a branch in this state of an out-of-state bank, other than a federally-chartered out-of-state bank, is being operated in violation of any applicable law of this state or in an unsafe and unsound manner, the commissioner may take any enforcement action authorized under this title against such out-of-state bank to the same extent as if such branch were a Connecticut bank, provided the commissioner shall promptly give notice of such action to the home state banking regulator of such out-of-state bank and, to the extent practicable, shall consult and cooperate with such regulator in pursuing and resolving such action.

      (5) Any out-of-state bank that merges or consolidates with or acquires the assets of a bank or establishes in this state a de novo branch shall be subject to the supervision and examination of the commissioner pursuant to regulations adopted by the commissioner in accordance with chapter 54 and shall make reports to the commissioner as required by the laws of this state. The commissioner may examine and supervise the Connecticut branches of any such out-of-state bank and may enter into agreements with other state or federal banking regulators or similar regulators in a foreign country concerning such examinations or supervision. Any such agreement may include provisions concerning the assessment or sharing of fees for such examination or supervision. Unless waived by the commissioner, the provisions of this section shall apply to the acquisition of the assets of any bank from the receiver of such bank by any out-of-state bank.

      (6) No out-of-state bank may establish or maintain a branch in this state on the premises or property of an affiliate of such bank if the affiliate engages in commercial activities.

      (b) A bank may merge or consolidate with an out-of-state bank where the resulting institution is a bank, or acquire a branch or a significant part of the assets or ten per cent or more of the stock of an out-of-state bank, in accordance with applicable law. Any such merger, consolidation or acquisition of assets or stock shall be effected in accordance with and subject to the limitations imposed by the laws of this state with respect to mergers, consolidations and acquisitions between banks. Any such bank may continue to operate as a branch the business of the out-of-state bank with which it has merged or consolidated or the assets of which it has acquired to the extent of the powers otherwise possessed by such bank. The commissioner may examine and supervise the out-of-state branches of any such Connecticut bank, and may enter into agreements with other state or federal banking regulators or similar regulators in a foreign country concerning such examinations or supervision. Any such agreement may include provisions concerning the assessment or sharing of fees for such examination or supervision.

      (c) Any acquisition by a Connecticut bank of ten per cent or more of the stock of another bank or an out-of-state bank pursuant to the authority of subsection (b) of this section is not subject to any provisions of this title limiting the ownership of stock in such institutions.

      (P.A. 83-411, S. 4, 20; 83-587, S. 84, 96; P.A. 84-546, S. 92, 173; P.A. 88-224, S. 3; P.A. 90-2, S. 4, 20; P.A. 91-189, S. 10, 13; P.A. 92-12, S. 101; P.A. 93-24, S. 7, 9; P.A. 94-122, S. 187, 340; P.A. 95-155, S. 27, 29; P.A. 96-191, S. 3, 6; 96-256, S. 196, 209; P.A. 97-223, S. 7, 8; P.A. 98-58, S. 1, 3; 98-177, S. 3; P.A. 99-33, S. 1, 3; 99-158, S. 7; P.A. 01-76, S. 4, 5; P.A. 03-196, S. 7; P.A. 04-136, S. 37; P.A. 07-14, S. 3.)

      History: P.A. 83-587 made technical changes; P.A. 84-546 made technical changes; P.A. 88-224 required the commissioner to use a balancing test before approving any merger consolidation or acquisition and to adopt regulations; P.A. 90-2 changed New England savings bank to out-of-state savings bank, added certain criteria for the commissioner of banking to consider prior to approving any merger or consolidation with or acquisition by an out-of-state savings bank, added certain findings to be made by the commissioner prior to granting such approval, provided that the regulations required under Subsec. (a) apply only to mergers or consolidations with and acquisitions by a New England savings bank, and made certain technical changes; P.A. 91-189 required the commissioner to consider whether the proposed merger, consolidation or acquisition will not substantially lessen competition in the banking industry, added provisions re considerations to be made by the commissioner in the case of a merger or consolidation or the acquisition of 25% or more of the stock of the Connecticut institution and added provisions re regulations concerning the commissioner's findings of records of compliance with community technical changes; P.A. 92-12 made a technical change in Subsec. (d); P.A. 93-24 amended Subsec. (a) to delete provision requiring adoption of regulations setting specific standards for the approval of mergers or consolidations with acquisitions by a New England savings bank, effective May 4, 1993; P.A. 94-122 allowed out-of-state commercial banks to merge with or acquire the assets of Connecticut institutions, applied the interstate banking law to 10% acquisitions, foreign country banks, home states, express reciprocal laws, de novo establishments, deleted the community reinvestment provisions in Subsec. (a), gave the commissioner authority to examine and supervise Connecticut branches of out-of-state banks and enter agreements with other regulators re such oversight, specified that interstate banking requirements apply to an out-of-state bank's acquisition of assets of any bank from a receiver, effective January 1, 1995; Sec. 36-555 transferred to Sec. 36a-412 in 1995; P.A. 95-155 amended Subsec. (a)(1) and (b) by adding the acquisition of a branch and adding "significant part of" to the assets that may be acquired, amended Subsec. (a)(1) by adding the five-year requirement, the reference to "ten per cent or more" and provisions re controlling deposits, re Secs. 33-396 and 33-505, and re considerations, determinations and findings by the commissioner, by deleting reference to the principal place of business and certain provisions re the merger, consolidation or acquisition by an out-of-state bank, and by changing "state or foreign country" to "home state" and making technical changes re the required considerations by the commissioner, added Subsec. (a)(2) re de novo branches, added Subsec. (a)(3) re the powers of and applicability of state laws on branches, amended Subsec. (b) by deleting "in the same location" and the approval requirement re an out-of-state bank's state or country, adding authority re the commissioner's examination and supervision, deleted former Subsec. (c) re acquisition of stock of a bank, and made technical changes, effective June 27, 1995; P.A. 96-191 amended Subpara. (a)(1)(E) and added Subdiv. (a)(3) re merger, consolidation or acquisition of a branch in this state by an out-of-state bank, renumbering former Subdivs. (3) and (4) accordingly, effective June 3, 1996; P.A. 96-256 amended Subsec. (a) to replace references to Sec. 33-505 with Sec. 33-1210(a), effective January 1, 1997; P.A. 97-223 amended Subdiv. (4)(A) of Subsec. (a) by adding provisions re enforcement action taken by commissioner; P.A. 98-58 amended Subsec. (a)(2) by adding reciprocity waiver and activity restrictions applicable to branches limited to the exercise of fiduciary or trust powers, effective May 18, 1998; P.A. 98-177 made technical changes in Subsec. (a); P.A. 99-33 amended Subsec. (a)(@) by adding provisions re commissioner's finding of net new benefits, effective May 27, 1999; P.A. 99-158 amended Subsec. (a)(4) by deleting the provisions of former Subpara. (A), designating former Subpara. (B) as Subpara. (A) and making technical changes therein, and adding new Subpara. (B); P.A. 01-76 deleted Subsec. (a)(3)(A) and provisions re the commissioner's approval of a merger or consolidation of an out-of-state bank, added reference to Secs. 36a-41 to 36a-45 in Subsec. (a)(4)(A)(ii) and made a technical change in Subsec. (b), effective July 1, 2001; P.A. 03-196 amended Subsecs. (a)(5) and (b) to allow agreements entered into by commissioner to include provisions re assessment or sharing of fees for examination or supervision and, in Subsec. (a)(5), replace "The provisions of this section apply" with "Unless waived by the commissioner, the provisions of this section shall apply", effective July 1, 2003; P.A. 04-136 amended Subsec. (a)(1) and (2) to eliminate provisions re establishment of additional branches in accordance with Sec. 36a-145, effective May 12, 2004; P.A. 07-14 added Subsec. (a)(6) prohibiting an out-of-state bank from establishing or maintaining a branch in this state on premises or property of its affiliate if affiliate engages in commercial activities, effective May 7, 2007.

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