SENATE BILL REPORT

SB 5823

BYSenators Moore, Metcalf and Fleming

Revising provisions relating to banks and trust companies.

Senate Committee on Financial Institutions

Senate Hearing Date(s):February 20, 1987

Senate Staff:Stephanie Yates (786-7416)

AS OF FEBRUARY 19, 1987

BACKGROUND:

In 1985 legislation was enacted which authorizes interstate banking in Washington beginning July 1, 1987.  Conditions precedent to acquisitions across state lines are:  (1) The home state of the acquiring bank holding company must permit acquisitions of banks in that state by Washington bank holding companies; and, (2) the Washington bank, trust company, or national banking association to be acquired must have been conducting business for a period of not less than three years.

The interstate banking law which takes effect July 1, 1987 contains no provision authorizing the Supervisor of Banking to disapprove a proposed interstate acquisition if he or she determines that such an acquisition would threaten the safety and soundness of the bank to be acquired, the acquiring bank holding company, or the structure of the financial institutions industry in Washington.

SUMMARY:

The Supervisor of Banking may disapprove proposed interstate acquisitions of Washington banks, both state-chartered and nationally-chartered, on the following grounds:  1) the proposed acquisition would be detrimental to the safety and soundness of the Washington bank being acquired, the acquiring bank holding company, or any other Washington bank; 2) the proposed acquisition would be prejudicial to the interests of the depositors, creditors, or beneficiaries of fiduciary accounts of the bank being acquired or the acquiring bank holding company; and 3) the proposed acquisition is substantially detrimental to the financial institution structure of the State of Washington.

The Supervisor may disapprove an out-of-state acquisition by a Washington bank holding company or an out-of-state bank holding company which owns a Washington bank, if the Supervisor determines that the proposed acquisition would be detrimental to the safety and soundness of the Washington bank which is owned by such a bank holding company.

The Supervisor may enter into reciprocal agreements with other state bank regulators and federal bank regulators to share information and to examine institutions which own Washington banks.  The Supervisor may accept reports of examinations from other state or federal bank regulators in lieu of conducting his or her own examinations.  The Supervisor may enter into joint enforcement actions with other state or federal bank regulators.

The Supervisor may disapprove any proposed acquisition of a state-chartered bank or trust company without the necessity of litigation.

Fiscal Note:      none requested

Effective Date:May 2, 1987