Amendments to 7 TAC §3.91

Title 7. Banking and Securities
Part 1. Finance Commission of Texas
Chapter 3. State Bank Regulation
Subchapter E. Banking House and Other Facilities
7 TAC §3.91

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes amendments to §3.91, concerning Loan Production Offices. The amended rule is proposed to clarify the requirements necessary for a foreign bank to establish a loan production office in this state.

The proposed amendments to §3.91 clarify and provide the requirements foreign banks must fulfill to establish and maintain loan production offices in Texas. Under proposed revised §3.91(g), a foreign bank must comply with Finance Code Chapters 201 and 204 in order to establish a loan production office (LPO) in this state, unless the LPO is being established as an office of a Federal branch regulated by the Office of the Comptroller of the Currency. In that case, then under proposed §3.91(h), the Federal branch must instead comply with the provisions of the Finance Code, Chapter 201, Subchapter B and notify the Banking Commissioner (the commissioner) of the proposed establishment of the office and provide the information as required by proposed §3.91(h)(1).

An LPO of a Federal branch that seeks to relocate or close an established LPO in this state, must notify the commissioner in writing of the planned relocation or closure of the LPO per proposed §3.91(h)(2). Under proposed §3.91(h)(3), no examinations or fees will be required under Finance Code, Chapter 204, for an LPO of a Federal branch.

Dan Frasier, Director, Corporate Activities Division, Texas Department of Banking, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the rule.

Mr. Frasier also has determined that, for each year of the first five years the rule as proposed is in effect, the public benefit anticipated as a result of enforcing the rule is more clarity regarding how to establish an LPO in this state. The simplified and clarified requirements may lead to the establishment of additional LPOs in Texas, which will create additional competition to meet the loan needs of Texas citizens.

For each year of the first five years that the rule will be in effect, there will be no economic costs to persons required to comply with the rule as proposed.

There will be no adverse economic effect on small businesses or micro-businesses. There will be no difference in the cost of compliance for small businesses as compared to large businesses.

To be considered, comments on the proposed amended rule must be submitted no later than 5:00 p.m. on April 6, 2015. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.

The amended rule is proposed under Finance Code, §201.003, which provides that the commission may adopt rules to accomplish the purposes of Title 3, Subtitle G, of the Texas Finance Code, including rules to implement and clarify this subtitle, which includes Chapter 204 governing Foreign Banks.

Finance Code, §§204.003 and 204.201 are affected by the proposed amended section.

§3.91. Loan Production Offices.

(a) - (f) (No change.)

(g) Foreign bank LPOs [corporations]. A banking corporation or association incorporated or organized under the laws of a jurisdiction other than the United States or a state, territory, commonwealth, or other political subdivision of the United States, must comply with the provisions of the Finance Code, Chapter 201, Subchapter B (§§201.101 et seq.), and Finance Code, Chapter 204, to establish an LPO, unless the LPO will be an office of a Federal branch regulated by the Office of the Comptroller of the Currency (OCC). In the latter case, the Federal branch must comply with subsection (h) of this section [to establish a representative office in this state].

(h) Federal branch LPO. A Federal branch may establish an LPO in this state by complying with the provisions of Finance Code, Chapter 201, Subchapter B (§§201.101 et seq.), and by notifying the banking commissioner of its intent to establish the LPO.

(1) The Federal branch shall notify the banking commissioner in writing on or before the 31st day preceding the date of establishment of the LPO, except that the banking commissioner may waive or shorten the period if the banking commissioner does not have a significant supervisory or regulatory concern regarding the Federal branch or its planned LPO. The written notification must include the physical address of the planned LPO, a list of the specific activities to be performed at the planned LPO, the anticipated date for the establishment of the LPO, documentation evidencing the approval of the OCC, and such other information as the banking commissioner may reasonably request.

(2) To relocate or close an existing LPO in this state, a Federal branch shall notify the banking commissioner in writing on or before the tenth day following the date of the relocation or closure of the LPO. The written notification must include the physical address of the LPO, the date for its closure or relocation, documentation evidencing the approval or acquiescence of the OCC, and such other information as the banking commissioner may reasonably request.

(3) An LPO of a Federal branch established in compliance with this section is not subject to examination by the banking commissioner under, or subject to any fee imposed by, Finance Code, Chapter 204.