State of Kansas
State Bank Commissioner
Special Order 1996-4
This Order, is issued this 11th day of December, 1996 by the Kansas State Bank Commissioner (commissioner) pursuant to K.S.A. 9-1715, as amended. As used in this special order, the term "Kansas state bank" shall mean a bank operating under a certificate of authority issued by the commissioner pursuant to the laws of the state of Kansas.
Whereas, pursuant to 12 C.F.R. § 5.34, a national banking association may establish or acquire an operating subsidiary for the purpose of engaging in any activities which are a part of or incidental to the business of banking; and,
Whereas, no provision of Kansas law presently provides general authority for a Kansas state bank to establish or acquire an operating subsidiary for the purpose of engaging in any activities which are a part of or incidental to the business of banking; and,
Whereas, K.S.A. 9-1715, as amended, grants to the commissioner "... the power to authorize any ... state bank[s] to engage in any activity in which such banks could engage were they operating as national banks at the time such authority is granted..."; and,
Whereas, the Commissioner deems the issuance of this special order to be reasonably required to preserve the welfare of state banks and to promote competitive equality of state banks and national banking associations;
It is therefore ordered, that subject to the limitations set forth in this special order, a Kansas state bank is hereby authorized to establish or acquire operating subsidiaries for the purpose of engaging in any activities which are a part of or incidental to the business of banking.
It is further ordered, that the parent bank shall own at least 80% of the stock of any operating subsidiary established or acquired pursuant to this special order.
It is further ordered, that prior to establishing or acquiring a new operating subsidiary, or conducting new activities in an existing subsidiary, pursuant to this special order, the bank shall submit a letter of intent to the commissioner detailing the proposed activities of the operating subsidiary and the specific location at which each activity will be conducted.
It is further ordered, that the bank may establish or acquire the proposed new operating subsidiary, or conduct the proposed new activity in an existing operating subsidiary, 30 days after the commissioner receives the bank's letter of intent, or in less than 30 days if so notified in writing by the commissioner.
It is further ordered, that if the commissioner notifies the bank, within 15 days of the receipt of the bank's letter of intent, that additional information or time is needed to review the bank's proposal, or if the commissioner objects in writing to the bank's proposed operating subsidiary, the bank shall not establish or acquire the operating subsidiary, or conduct the proposed activity, without express, written approval from the commissioner.
It is further ordered, that the commissioner may impose terms and conditions upon the establishment, acquisition, or operation of an operating subsidiary which the commissioner believes are necessary to address any legal or safety and soundness concerns.
It is further ordered, that all provisions of Kansas laws and regulations applicable to the parent bank shall be equally applicable to an operating subsidiary, including without limitation, the geographic restrictions imposed on activities constituting branch banking pursuant to K.S.A. 9-1111.
It is further ordered, that, for the purpose of applying all applicable statutory limitations, including without limitation, K.S.A. 9-904, K.S.A. 9-905, K.S.A. 9-906, K.S.A. 9-910, K.S.A. 9-911, K.S.A. 9-912, K.S.A. 9-1102, and K.S.A. 9-1104, the pertinent book figures of the parent bank and all its operating subsidiaries shall be consolidated.
It is further ordered, that each operating subsidiary shall be subject to examination and supervision by the Office of the State Bank Commissioner in the same manner and to the same extent as the parent bank. The expense of examination and supervision of any operating subsidiary shall be borne by the parent bank and the parent bank shall reimburse the Office of the State Bank Commissioner for any special expenses, including travel costs, associated with examination or supervision of the operating subsidiary.
It is further ordered, that if, upon examination, the commissioner finds that any operating subsidiary is being operated in an illegal or unsafe and unsound manner, or in violation of any condition imposed by the commissioner when granting approval of the operating subsidiary, the commissioner is authorized to order the parent bank to take appropriate remedial action, which may include dissolution of the subsidiary.
It is further ordered, that the powers and procedures established by this order are intended to be in addition to, and not a limitation on, other statutes, regulations, rules and special orders that govern Kansas state banks and their ability to establish and operate subsidiaries of any kind or to own an equity interest in a corporation or other business entity, and in case of any conflict with preexisting authority, the preexisting powers and procedures shall govern.
It is further ordered, that pursuant to K.S.A. 9-1715(b), as amended, the terms of this special order shall become effective December 11, 1996 and shall remain in full force and effect until amended or revoked by the State Bank Commissioner.
It is so ordered.
State Bank Commissioner
W. Newton Male
