No foreign (other state) state bank may transact core banking business in this state except at a branch office established in accordance with federal law and the law of the domicile of the bank.
Foreign (other State) BanksCalifornia Branch Offices
Section § 1680
This law states that a bank from another state can only conduct essential banking activities in California if it opens a branch office that complies with both federal laws and the laws of the state where the bank is based.
foreign state bank core banking business branch office
Section § 1681
This section explains what foreign state banks, meaning banks from other states, are allowed to do in California even if they don't have a branch there. These banks can perform specific business activities already defined in another law, make loans secured by real estate in California, and appoint a California state bank as their agent for certain purposes.
Section 1680 does not prohibit:
(a)CA Financial Code § 1681(a) Any foreign (other state) state bank that does not maintain a California branch office from carrying on the activities described in subdivision (d) of Section 191 of the Corporations Code.
(b)CA Financial Code § 1681(b) Any foreign (other state) state bank that does not maintain a California branch office from making, in this state, loans secured by
liens on real property located in this state.
(c)CA Financial Code § 1681(c) Any foreign (other state) state bank from having a California state bank as its agent pursuant to Chapter 6.5 (commencing with Section 800).
foreign state banks California branch office business activities
Section § 1682
This law states that banks from outside California cannot open or keep a branch in California unless they meet certain business qualifications under the Corporations Code, starting at Section 2100.
No foreign (other state) bank may establish or maintain a California branch office unless it is qualified to transact intrastate business in this state under Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code.
foreign bank regulations California branch office intrastate business qualifications
Section § 1683
If a bank from another state wants to open or operate a branch in California, that bank must have insurance.
No foreign (other state) bank may establish or maintain a California branch office unless the bank is insured.
foreign bank requirements interstate banking California branch office
Section § 1684
This law states that an out-of-state (foreign) bank generally cannot merge with or acquire the entire business of a California bank unless it's insured and meets specific legal requirements, including federal law and other specified California statutes.
If an out-of-state bank does not yet have a branch in California, it can't start one unless it follows the merger or acquisition rules mentioned.
The law also allows for early interstate mergers under certain federal guidelines, but it prevents out-of-state banks from gaining a foothold in California by buying just part of a California bank's business instead of the whole operation.
(a)Copy CA Financial Code § 1684(a)
(1)Copy CA Financial Code § 1684(a)(1) No foreign (other state) bank may merge as the surviving corporation with a California bank, except that an insured foreign (other state) bank may do so in accordance with federal law, the law of the domicile of the foreign (other state) bank, this chapter, and Division 1.6 (commencing with Section 4800).
(2)CA Financial Code § 1684(a)(2) No foreign (other state) bank may purchase the whole business
unit of a California bank, except that an insured foreign (other state) bank may do so in accordance with federal law, the law of the domicile of the foreign (other state) bank, this chapter, and Division 1.6 (commencing with Section 4800).
(3)CA Financial Code § 1684(a)(3) No foreign (other state) bank that does not already maintain a California branch office may establish or maintain a California branch office except in the manner described in paragraph (1) or (2) and in accordance with federal law, the law of the domicile of the foreign (other state) bank, and this chapter.
(b)CA Financial Code § 1684(b) This section constitutes:
(1)CA Financial Code § 1684(b)(1) An election to permit early interstate merger transactions pursuant to Section 44(a)(3) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1831u(a)(3)).
(2)CA Financial Code § 1684(b)(2) An express
prohibition against interstate branching through the acquisition of a branch business unit located in this state of a California bank (without acquisition of the whole business unit of the California bank) pursuant to Section 44(a)(4) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1831u(a)(4)).
foreign bank merger insured foreign bank California bank acquisition
Section § 1685
This law states that a bank from another state cannot merge with or buy a California bank unless the California bank has been around for at least five years. If the California bank was specifically set up just to merge with or be bought by another California bank and hasn't opened yet, it's treated as if it's been in existence as long as the second bank it plans to merge with or buy.
(a)CA Financial Code § 1685(a) No foreign (other state) bank that does not already maintain a California branch office may:
(1)CA Financial Code § 1685(a)(1) Merge as the surviving bank with a California bank pursuant to paragraph (1) of subdivision (a) of Section 1684, unless the California bank has been in existence for at least five years.
(2)CA Financial Code § 1685(a)(2) Purchase the whole business unit of a California
bank pursuant to paragraph (2) of subdivision (a) of Section 1684 unless the California bank has been in existence for at least five years.
(b)CA Financial Code § 1685(b) For purposes of this section, a California bank that is established solely for the purpose of, and does not open for business prior to, acquiring the whole business unit of a second California bank through a merger or purchase is deemed to have been in existence for the same period of time as the second California bank.
foreign bank restrictions California branch requirement bank merger regulations
Section § 1686
This law explains exceptions to the minimum age requirement for certain bank transactions. The rule doesn't apply when a foreign bank buys a significant part of a California bank's business. This may happen when a California bank is struggling financially or its deposits need saving. If it's a national bank, the bank must be in or near default, or the FDIC provides help during a merger. For state banks, the bank might be under government control, need FDIC help, or the commissioner decides waiving the age limit serves the public good.
The minimum age requirement set forth in Section 1685 does not apply in any case in which the factor set forth in subdivision (a) and any of the factors set forth in subdivision (b) apply.
(a)CA Financial Code § 1686(a) The foreign (other state) bank, by itself or in concurrent transactions with other depository corporations (as defined in Section 4805.06), acquires the whole business unit of the California bank or, if the California bank has been
closed or placed in conservatorship, all or substantially all of the insured deposits of the California bank.
(b)Copy CA Financial Code § 1686(b)
(1)Copy CA Financial Code § 1686(b)(1) If the California bank is a national bank, one of the following:
(A)CA Financial Code § 1686(b)(1)(A) The bank is in default or in danger of default, as defined in Section 3(x) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1813(x)).
(B)CA Financial Code § 1686(b)(1)(B) The purchase or merger is one with respect to which the Federal Deposit Insurance Corporation provides assistance under Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1823(c)).
(2)CA Financial Code § 1686(b)(2) If the California bank is a state bank, one of the following:
(A)CA Financial Code § 1686(b)(2)(A) The commissioner has taken possession of the property and business of the bank
pursuant to Section 592.
(B)CA Financial Code § 1686(b)(2)(B) The purchase or merger is one with respect to which the Federal Deposit Insurance Corporation provides assistance under Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1823(c)).
(C)CA Financial Code § 1686(b)(2)(C) The commissioner finds that one or more of the factors listed in Section 592 exists and that imposing the minimum age requirement of Section 3825 is not in the public interest.
foreign bank acquisition California bank conservatorship
Section § 1687
This law explains how foreign (out-of-state) banks with branches in California should follow certain California banking regulations. If the out-of-state bank is a commercial bank, it must adhere to specific local regulations as if it were a California commercial bank. If it's an industrial bank, additional rules apply, including certain regulations that local industrial banks follow.
For banks authorized to perform trust business, they must comply with California's trust laws, and their main office could be treated as located wherever their largest California branch is.
Out-of-state banks can't conduct business in California that they're not allowed to under their home state's laws or if such business is prohibited for California's local banks. Where there's a conflict between different rules, the specific rule for foreign banks prevails.
(a)CA Financial Code § 1687(a) In case a foreign (other state) state bank that maintains a California branch office is a commercial bank, in addition to other provisions of this division and Division 1 (commencing with Section 99) that are otherwise applicable to the bank, the following provisions of this division apply to the bank with respect to its business in this state as if the bank were a California state commercial bank:
(1)CA Financial Code § 1687(a)(1) Chapter 10 (commencing with Section 1320).
(2)CA Financial Code § 1687(a)(2) Chapter 12 (commencing with Section 1400).
(3)CA Financial Code § 1687(a)(3) Chapter 13 (commencing with Section 1450).
(4)CA Financial Code § 1687(a)(4) Sections 1487, 1488, 1514, 1520, and 1522.
(5)CA Financial Code § 1687(a)(5) Chapter 17 (commencing with Section 1620).
(b)CA Financial Code § 1687(b) In case a foreign (other state) state bank that maintains a California branch office is an industrial bank, in addition to other provisions of this division and Division 1 (commencing with Section 99) that are otherwise applicable to the bank, the provisions cited in paragraphs (1) to (7), inclusive, of subdivision (a) and the provisions of Chapter 15 (commencing with Section 1530) apply to the industrial bank with respect to its business in
this state as if the bank were a California state industrial bank.
(c)CA Financial Code § 1687(c) In case a foreign (other state) state bank that maintains a California branch office is authorized pursuant to the law of its domicile to transact trust business, in addition to other provisions of this division and Division 1 (commencing with Section 99) that are otherwise applicable to the bank, the following provisions of Chapter 16 (commencing with Section 1550) apply to the bank with respect to its business in this state as if the bank were a California state bank authorized to transact trust business:
(1)CA Financial Code § 1687(c)(1) Article 3 (commencing with Section 1570). For purposes of Article 3 (commencing with Section 1570), the bank’s principal place of business is deemed to be situated in the city in which its California branch office is located or, if it maintains California branch offices in two or more cities, in the city
with the largest population.
(2)CA Financial Code § 1687(c)(2) Article 4 (commencing with Section 1580), except Section 1580.
(3)CA Financial Code § 1687(c)(3) Article 5 (commencing with Section 1600), except Sections 1583, 1584, 1585, 1588, and 1590.
(d)CA Financial Code § 1687(d) Subject to the provisions of subdivision (d), in case a foreign (other state) state bank that maintains a California branch office is authorized pursuant to the law of its domicile to transact trust business, the bank may engage in and conduct trust business in this state and may be appointed by any court to act in any fiduciary capacity in which a California state trust company is authorized to act.
(e)CA Financial Code § 1687(e) No foreign (other state) state bank that maintains a California branch office may transact at the branch office any business that it is not authorized to
transact or is prohibited from transacting under the law of its domicile or that banks organized under the laws of this state are not authorized to transact or are prohibited from transacting.
(f)CA Financial Code § 1687(f) Whenever any provision of this chapter or of any regulation or order issued under this chapter that is applicable to or with respect to a foreign (other state) state bank that maintains a California branch office is inconsistent with any provision of any other chapter of this division, the former provision applies, and the latter provision does not apply.
foreign banks California branch office commercial bank regulations
Section § 1688
This law says that a foreign bank (a bank from another state) that doesn't have any offices in California can merge with or buy an entire business unit of another foreign bank that already has offices in California. This can happen if it follows both federal law and the laws of the bank's home state. The bank that ends up in control can keep the existing offices in California and can open more offices as if it were the original bank that had them.
Notwithstanding Section 1684, a foreign (other state) bank that does not maintain offices in California may merge with or purchase the whole business unit of a foreign (other state) bank that already maintains one or more offices in California in accordance with Section 1684 pursuant to federal law and the law of the domicile of the surviving or purchasing bank. The surviving or purchasing bank may retain the offices established in this state by the disappearing or selling bank.
Thereafter, the surviving or purchasing bank may establish and maintain additional offices as if it were the disappearing or selling bank.
foreign bank merger out-of-state bank purchase bank offices in California
