New Jersey Administrative Code › Title 3 - BANKING › Chapter 11 - INVESTMENTS › Subchapter 5 - INVESTMENT BY BANK, SAVINGS BANK OR STATE ASSOCIATION IN CAPITAL STOCK OF DOMESTIC OPERATING SUBSIDIARIES › Section 3:11-5.1 - Operational subsidiaries

Current through Register Vol. 56, No. 14, July 15, 2024
(a) With the prior
				approval of the Commissioner, a bank may engage in activities, which are a part
				of the business of banking or incidental thereto, by means of an operating
				subsidiary corporation. In order to qualify as an operating subsidiary
				hereunder, at least 80 percent of the voting stock of the subsidiary must be
				owned by the bank. An application to conduct business as an operating
				subsidiary shall be accompanied by a $ 100.00 application fee. In addition, the
				Department shall impose a per diem charge, as required.
(b) An operating subsidiary may perform any
				business function which the parent bank is permitted to perform.
(c) The Department considers an application
				for the establishment of a domestic operating subsidiary to be primarily a
				business decision of the applicant; however, the Commissioner must be satisfied
				that the general condition of the applicant is satisfactory. The existence of
				conditions warranting special supervisory attention by the Department normally
				will preclude approval. A bank should not have an undue amount of criticized
				assets, particularly in relation to capital; serious or frequent violations of
				law; inadequate liquidity; adverse operating trends; poor internal controls or
				other significant problems. Capital, earnings and retention of earnings should
				be sufficient to support the current level of operations as well as the
				proposed expansion. In determining the applicant's capacity to support the
				proposed subsidiary, the estimated cost of establishing or acquiring the
				subsidiary and the volume and scope of anticipated business will be considered.
				If the application is for the acquisition of an existing business, the
				Commissioner will also take into account the public interest factor, similar to
				the requirement for this consideration on mergers as called for in
				17:9A-136.
(d) Transactions between the parent bank and
				the operating subsidiaries are not subject to the limitations in
				17:9A-62.
(e) Except as otherwise permitted by statute
				or regulation, all provisions of State banking laws applicable to the
				operations of the parent bank shall be equally applicable to the operations of
				its operational subsidiaries.
(f)
				Unless otherwise provided by statute or regulation, pertinent book figures of
				the parent bank and its operating subsidiaries shall be consolidated for the
				purpose of applying applicable statutory limitations.
(g) Each operating subsidiary shall be
				subject to examination and supervision by the Commissioner in the same manner
				and to the same extent as the parent bank. If upon examination, the
				Commissioner shall ascertain that the subsidiary is created or operated in
				violation of law or regulation or that the manner of operation is detrimental
				to the business of the parent bank and its depositors, he or she may order the
				bank to dispose of all or part of such subsidiary upon such term as he or she
				may deem proper. The cost of an examination into the condition of an existing
				business proposed to be acquired and operated as an operating subsidiary shall
				be paid by the applicant as will any subsequent examinations of an approved
				subsidiary.
(h) Prior to the
				disposition of an operating subsidiary, the parent bank shall inform the
				Commissioner, by letter, of the terms of the transaction.