§ 31220 Bank Holdings Of Licensee Securities

Key Takeaways

•Banks, savings associations, insurance companies, and public utilities can buy and own securities (like stocks or bonds) from a licensee, but they need permission first.
•There are limits on how much they can own: banks and insurance companies can't own more than 2.5% of their own money (shareholders’ equity or unassigned surplus), while savings associations and public utilities can't own more than 0.5% of their loans or total assets.
•This rule doesn’t apply to loans or credit that banks give to a licensee under normal banking rules.

Example

A bank wants to buy stocks from a company that has a special license.

The bank must ask the commissioner for permission first. If the bank has $100 million in shareholders’ equity, it can’t buy more than $2.5 million worth of stocks from this company.

Notwithstanding any other law of this state, but subject to the provisions of Section 31550: (a) Any commercial bank, industrial bank, or trust company organized under the laws of this state may, with the prior approval of the commissioner, acquire and hold securities issued by a licensee; provided, however, that the aggregate amount of securities issued by licensees which are held by the commercial bank, industrial bank, or trust company shall not at any time exceed 21/2 percent of the shareholders’ equity of the commercial bank, industrial bank, or trust company. This subdivision shall not apply to any loan or other extension of credit made by a commercial bank or industrial bank organized under the laws of this state to a licensee in accordance with the Banking Law (Division 1 (commencing with Section 99)). (b) Any savings association organized under the laws of this state may, with the prior approval of the commissioner, acquire and hold securities issued by a licensee; provided, however, that the aggregate amount of securities issued by licensees which are held by such savings association shall not at any time exceed 1/2 percent of the total outstanding loans of such savings association. (c) Any insurance company admitted to transact insurance business in this state may, with the approval of the Insurance Commissioner, acquire and hold securities issued by a licensee; provided, however, that the aggregate amount of securities issued by licensees which are held by such insurance company shall not at any time exceed 21/2 percent of the unassigned surplus of such insurance company. (d) Any public utility licensed or regulated by the Public Utilities Commission may, with the approval of the Public Utilities Commission, acquire and hold securities issued by a licensee; provided, however, that the aggregate amount of securities issued by licensees which are held by such public utility company shall not at any time exceed 1/2 percent of the total assets of such public utility company. (Amended by Stats. 2000, Ch. 1015, Sec. 55. Effective September 30, 2000.)

Key Takeaways

•Banks, savings associations, insurance companies, and public utilities can buy and own securities (like stocks or bonds) from a licensee, but they need permission first.
•There are limits on how much they can own: banks and insurance companies can't own more than 2.5% of their own money (shareholders’ equity or unassigned surplus), while savings associations and public utilities can't own more than 0.5% of their loans or total assets.
•This rule doesn’t apply to loans or credit that banks give to a licensee under normal banking rules.

Example

A bank wants to buy stocks from a company that has a special license.

The bank must ask the commissioner for permission first. If the bank has $100 million in shareholders’ equity, it can’t buy more than $2.5 million worth of stocks from this company.

Key Takeaways

Example

Key Terms

References

§ 31220 Bank Holdings Of Licensee Securities

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References