Regulatory Alerts2011-03-10
Added · Updated
North Dakota State Banking Board: Investment in a Banker's Bank Holding Company
The North Dakota State Banking Board issued a letter confirming that state-chartered banks are authorized to invest in securities of a banker's bank holding company under NDAC § 13-02-10-01. This authority is derived from parity rules, meaning state banks possess the same investment powers as federally chartered banks under 12 U.S.C. § 27(7). Consequently, any federal limitations on such investments, including purchase limits, apply equally to state banks, and state authority terminates if federal authorization ceases.
Robert J. Entringer Commissioner Aaron K. Webb Assistant Commissioner I. Lise Kruse Chief Examiner – Banks Corey J. Krebs Chief Examiner – Credit Unions CSBS ACCREDITED 1993 NASCUS ACCREDITED 2000 March 10, 2011 Anton J. Moch Winthrop & Weinstine Capella Tower, Suite 3500 225 S 6th St Minneapolis MN 55402-4629 Dear Mr. Moch, This letter is in response to your letter dated February 23, 2011. In that letter you asked Whether a North Dakota state chartered bank would have the authority to purchase shares of a Minnesota bank holding company, in this case, United Bankers' Bancorporation Inc. ("UBBI")? As you stated in your letter, UBBI is the sole shareholder of United Bankers' Bank ("UBB"), a Minnesota state banking corporation. On the morning of March 10, 2011, the North Dakota State Banking Board met to discuss your letter, and to determine if this type of investment would be authorized for state chartered banks. As a result of this meeting, the State Banking Board held that NDAC § 13-02-10-01 authorizes a state chartered bank to invest in securities that a bank would be allowed to invest in if the bank were nationally chartered. This rule was found to have been adopted under the parity authority as it existed in the North Dakota Century Code prior to the 2007 session (specifically, under NDCC § 6-03-38). Therefore, based on the foregoing, if a federally chartered bank would have the authority to invest in your stock offering under 12 U.S.C. § 27(7), then a North Dakota state chartered bank would have the same authority to invest in your stock offering under NDAC § 13-02-10-01. If there is a determination that a federal bank is no longer authorized to invest in your stock, the state bank authority to invest in your stock would likewise terminate. It is also important to note that all requirements and limitations that apply to banks under federal law will likewise apply to banks under state law (eg: limits regarding the amount of stock a bank can purchase). Put another way, the authority granted to a state chartered bank under NDAC § 13-02-10-01 cannot, in any way, exceed the authority granted to a federally chartered bank under federal law. If you have any questions, please feel free to call. Aaron K. Webb, Secretary State Banking Board AKW:sr cc: Examiners 2000 Schafer Street, Suite G, Bismarck, ND 58501-1204 • 701-328-9933 • dfi@nd.gov • fax 701-328-0290 • www.nd.gov/dfi J:\Correspondence\Winthrop response letter