Illinois Administrative Code › Title 38 - FINANCIAL INSTITUTIONS › Part 398 - PLEDGING REQUIREMENTS FOR ILLINOIS TRUST COMPANIES › Section 398.10 - Pledging Requirements for Illinois Trust Companies

Current through Register Vol. 48, No. 28, July 12, 2024
a) Pursuant to Section 6-13.5 of the Act,
			 each Illinois trust company holding a certificate of authority under Article II
			 of the Act shall pledge to the Secretary a surety bond running to the Secretary
			 or securities or combination thereof in the amount of $2,000,000. The surety
			 bond or pledged securities must be reducible to cash by the Secretary without
			 regard to any priorities, preferences or adverse claims in order to cover costs
			 associated with a receivership of the Illinois trust company. The surety bond
			 or pledged securities shall be utilized only to cover costs associated with a
			 receivership of the pledging Illinois trust company.
b) To the extent the trust company pledges a
			 surety bond, the surety bond shall be issued by a bonding company authorized to
			 do business in the State of Illinois that has a rating in one of the top three
			 rating categories as determined by a national rating service. The surety bond
			 must clearly show that it runs to the benefit of the Secretary. The surety bond
			 must also state that, if the trust company is placed in receivership and the
			 Secretary acts as receiver or appoints a receiver, the Secretary may reduce the
			 bond to cash in order to pay for any costs associated with the receivership.
			 The trust company may not obtain a surety bond from any entity in which the
			 trust company has a financial interest or of which the trust company is an
			 affiliate. Any fees associated with obtaining and maintaining a surety bond
			 shall be the responsibility of the trust company.
c) To the extent the trust company pledges
			 securities, the securities shall be held at a Federal Reserve Bank or at a
			 depository institution that is a state or national bank, a state or federal
			 savings bank, or a state or federal savings and loan association approved by
			 the Secretary. The trust company shall not be an affiliate of, or have a
			 financial interest in, the depository institution. The securities pledged
			 pursuant to this subsection shall be securities that qualify as authorized
			 investments for public agencies under Section 2 of the Public Funds Investment
			 Act [30 ILCS
			 235/2 ]. Securities pledged pursuant to this
			 subsection shall be in addition to any securities required as part of the trust
			 company's capital. Any fees associated with holding securities pursuant to this
			 subsection shall be the responsibility of the trust company. A trust company
			 choosing to pledge securities shall enter into a single deposit agreement with
			 the Secretary and the Federal Reserve Bank or depository institution that is
			 holding the securities. The deposit agreement shall contain provisions
			 requiring the depository institution and the trust company to meet the
			 requirements set forth in subsections (c)(1) through (3):
1) The depository institution shall segregate
			 on its books and records all accounts of the trust company as assets that the
			 trust company pledges as a part of the assets to be kept by the trust company
			 in Illinois pursuant to the required pledge amount. These accounts shall be
			 held by the depository institution in trust in the name of the
			 Secretary;
2) The depository
			 institution shall provide the Secretary with reports, receipts, confirmation or
			 other documentation that the Secretary may request of the depository
			 institution to determine the trust company's compliance with the requirements
			 of Section 6-13.5 of the Act and this Section; and
3) The trust company shall pledge the
			 securities required under Section 6-13.5 of the Act exclusively to the
			 Secretary.