Substitute Senate Bill No. 1031

Public Act No. 99-33

An Act Concerning the Reciprocity Requirement for the Establishment of Certain De Novo Branches by Out-of-State Banks.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (2) of subsection (a) of section 36a-412 of the general statutes is repealed and the following is substituted in lieu thereof:

(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 in accordance with section 36a-145, 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.

Sec. 2. Subsection (b) of section 36a-428a of the general statutes is repealed and the following is substituted in lieu thereof:

(b) Upon the filing of the required application and license fee, the commissioner shall investigate the facts and may issue a license after the commissioner considers the effects of the proposed state branch or state agency on competition, the financial and managerial resources and future prospects of the applicant foreign bank and the proposed state branch or state agency, the public convenience and advantage that will be promoted, and the net new benefits to this state. [For the purposes of this section] As used in this subsection, "net new benefits" means [initial capital investments, job creation plans, consumer and business services, and such other matters as the commissioner may deem necessary or advisable] (1) initial capital investments, including any new construction, (2) 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, (3) the potential for increasing state and municipal tax revenues from increased economic activity and increased employment, (4) consumer and business services and other benefits to the state, local community and citizens, and (5) such other matters as the commissioner may deem necessary or advisable.

Sec. 3. This act shall take effect from its passage.

Approved May 27, 1999

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