2023 District of Columbia Code › Title 26 - Banks and Other Financial Institutions › Chapter 14 - Universal Bank Certification › Subchapter IV - Limitations, and Exceptions to Limitations, on Powers of Universal Banks › § 26–1401.13. Limitations on investment powers of universal bank

§ 26–1401.13. Limitations on investment powers of universal bank.
(a)(1) A universal bank shall not acquire an equity interest in a profit-participation project under § 26-1401.09(a)(4) in an aggregate amount that exceeds 20% of the universal bank’s capital; provided, that an investment described in § 26-1401.14 shall not be included computation of this limitation. The Commissioner may suspend a universal bank’s authority under § 26-1401.09(a)(4) if the Commissioner determines that the universal bank is not exercising this authority under § 26-1401.09(a)(4), will not exercise the authority in a safe and sound manner, or that the condition of the universal bank is not, or will not be, safe and sound. In making a determination to suspend a universal bank’s authority under this subsection, the Commissioner shall consider the universal bank’s capital adequacy, asset quality, earnings quantity, earnings quality, adequacy of liquidity, and sensitivity to market risk; the ability of the universal bank’s management; and any other factor the Commissioner determines is appropriate. If the Commissioner suspends the authority of a universal bank under this subsection, the Commissioner may specify how the universal bank or its subsidiary shall treat an outstanding investment.
(2) The authority granted to a universal bank under § 26-1401.09(a)(4) shall not authorize a universal bank, or a subsidiary of the universal bank, to underwrite insurance.
(b) A universal bank may purchase, sell, underwrite, and hold investment securities, consistent with safe and sound banking practices, under § 26-1401.09(a)(5) in an amount not to exceed 100% of the universal bank’s capital; provided, that:
(1) A universal bank shall not invest an aggregate amount that exceeds 20% of the universal bank’s capital in the investment securities of any one obligor or issuer; provided further, that an investment described in § 26-1401.14 shall not be included in the computation of this 20% limitation; and
(2) The underwriting activities of the universal bank shall be conducted through a subsidiary of the universal bank, with the appropriate safeguards to limit the risk exposure of the universal bank and to protect the banking customers of the universal bank;
(c)(1) A universal bank shall not purchase, sell, underwrite, or hold equity securities under § 26-1401.09(a)(6) in an aggregate amount that exceeds 20% of the universal bank’s capital; provided, that:
(A) The Commissioner may authorize a universal bank, by written order, to purchase, sell, underwrite, or hold equity securities under § 26-1401.09(a)(6) in an aggregate amount that exceeds 20% of the universal bank’s capital if such greater amount is consistent with safe and sound practices and the safe and sound operation and condition of the universal bank; and
(B) An investment described in § 26-1401.14 shall not be included in the computation of the 20% limitation.
(2) The underwriting activities of universal bank under § 26-1401.09(a)(6) shall be conducted through a subsidiary of the universal bank, with the appropriate safeguards to limit the risk exposure of the universal bank and to protect the banking customers of the universal bank.
(d) A universal bank may purchase, sell, underwrite, and hold investment securities or equity securities in other financial institutions under § 26-1401.09(a)(5) or (6); provided, that a universal bank shall not purchase and hold stock in a bank chartered under the District of Columbia Banking Code, a national bank, or in a holding company wholly owning a District-chartered or national bank without the authorization of the Commissioner; provided further, that the Commissioner shall not authorize a universal bank to purchase and hold stock under this subsection in an amount that exceeds 10% of the universal bank’s capital.
(e)(1) A universal bank may invest in housing projects under § 26-1401.09(a)(7); provided, that: (1) the aggregate investment in any one housing project shall not exceed 15% of the universal bank’s capital and the aggregate investment in all housing projects shall not exceed 50% of the universal bank’s capital; and (2) a universal bank shall not invest in a housing project under § 26-1401.09(a)(7) unless the universal bank is in compliance with the capital requirements established by the Commissioner and with the capital maintenance requirements of the universal bank’s deposit insurance corporation. An investment described in § 26-1401.14 shall not be included in the computation of the 15% and 50% limitations.
(2) For the purposes of this subsection and of § 26-1401.09(a)(7), the term “housing project” shall mean the development or redevelopment of home sites or housing for sale or rental, including projects for the reconstruction, rehabilitation, or rebuilding of residential properties to meet the minimum standards of health and occupancy, the provision of accommodations for retail stores and other community services that are reasonably related, or incident, to the housing project, and the stock of a corporation that owns a housing project and that is wholly owned by one or more financial institutions.
(f) Except as provided in subsections (b)(1) and (b)(2) of this section, a universal bank may make an investment under § 26-1401.09(a)(3) through (8), directly or through a subsidiary, unless the Commissioner determines that such investment shall be made through a subsidiary or with appropriate safeguards to limit the risk exposure of the universal bank.
(g)(1) A universal bank shall not purchase or hold more than 10% of its own capital stock, notes, or debentures; provided that:
(A) A universal bank may purchase or hold more than 10% of its own capital stock, notes, or debentures, if approved by the Commissioner consistent with safe and sound practices; and
(B) A universal bank may purchase or hold more than 10% of its own capital stock, notes, or debentures if the purchase is necessary to prevent loss upon a debt previously contracted in good faith; provided further, that:
(i) The universal bank shall sell or cancel the stock, notes, or debentures held or purchased under this subparagraph within 12 months of acquisition; and
(ii) Stocks, notes, or debentures held or purchased under this subparagraph shall not be held by the universal bank for more than 6 months if the stock, notes, or debentures can be sold for the amount of the claim of the universal bank against the holder of the debt previously contracted.
(2) Cancellation of stock, notes, or debentures under paragraph (1)(B) of this subsection shall reduce the amount of the universal bank’s capital stock, notes, or debentures. If the reduction reduces the universal bank’s capital below the minimum level required by the Commissioner, the universal bank shall increase its capital to the amount required by the Commissioner.
(June 9, 2001, D.C. Law 13-308, § 213, 48 DCR 3244.)
Section References
This section is referenced in § 26-1401.09 and § 26-1401.14.