The Finance Commission of Texas (commission), on behalf of the Texas Department of Banking (department), adopts new §3.40, concerning definitions, §3.41, concerning applications, notices and reports related to foreign bank branches and agencies, and §3.44, concerning statements of registration, notices and filings related to foreign bank representative offices. The commission also adopts amendments to §3.4, concerning foreign banking, §3.21, related to bank call reports, §3.22, concerning sale or lease agreements with an officer, director, principal shareholder or affiliate, §3.34, concerning posting of notice in all financial institutions regarding requirements for certain loan agreements to be in writing, §3.35, concerning safe deposit box facilities, §3.42, concerning foreign bank agency records, §3.43, concerning credit balance of funds, §3.45, concerning records of representative office, §3.91, concerning loan production offices, §3.92, concerning user safety at unmanned teller machines, §3.111, concerning confidential information, and §3.112, concerning department charges for providing public information. The new and amended sections are adopted without changes to the proposed text as published in the December 30, 2005, issue of the Texas Register (30 TexReg 8757). The text will not be republished.

The adopted new and amended sections are explained in this preamble on a subchapter by subchapter basis. As a general matter, the adopted revisions conform terms used in the chapter to statutory definitions, replace obsolete statutory references with correct citations, update and clarify requirements, harmonize certain of the sections and governing law, and delete outdated or redundant provisions.

Subchapter A sets out and explains certain securities-related activities in which state banks and their subsidiaries may engage. The adopted amendment to §3.4 conforms the minimum capital requirement a state bank must satisfy to engage in foreign banking to the measure presently used to determine the capital adequacy of a bank.

Subchapter B sets out requirements that apply generally to state banks. The adopted amendments to §3.21, which pertains to call report requirements, delete the definitions of well-known terms that are already defined in Finance Code, §31.002, and use terminology consistent with Finance Code definitions. The adopted amendments to §3.22 reflect the language of Finance Code, §33.109, with respect to the persons to whom the requirements of that section apply. The adopted amendments to §3.34, which concerns the posting of notices regarding certain loan agreements, and §3.35, regarding imprint requirements for safe deposit box keys, use more direct language, update and correct citations and effective date provisions, and use terminology consistent with Finance Code definitions.

Subchapter C governs foreign bank operations in Texas. At the time the subchapter was adopted, foreign bank operations were regulated under Finance Code, Chapter 39. Thereafter, the Texas Legislature repealed Chapter 39 and replaced it with new Finance Code, Chapter 204, effective September 1, 1999. Foreign bank operations are now regulated under Chapter 204.

Subchapter C was adopted before the enactment of Finance Code, Chapter 204, and its sections required revision to reflect the provisions of Chapter 204. As explained in this preamble, the adopted new and amended Subchapter C sections harmonize the subchapter with Chapter 204 and clarify certain of the department's current practices. Adopted new §3.41 and §3.44 replace previously existing §3.41 and §3.44, which sections are repealed in this issue of the Texas Register .

Adopted new §3.40 defines certain terms to reference Finance Code, Chapter 204. Adopted new §3.41 sets out the requirements related to the applications, notices and reports a foreign bank must file in connection with establishing and maintaining a Texas branch or agency, and reflects and incorporates the requirements of Finance Code, Chapter 204. The adopted new section retains the department's requirement that a foreign bank pay an application fee for each branch or agency it seeks to establish, but allows the banking commissioner to waive one or more of the informational requirements of the license application form if the foreign bank has already established a branch or agency in this state. Additionally, adopted new §3.41 clarifies the notice requirements that apply if a foreign bank that maintains a Texas branch or agency wishes to establish a Texas representative office. Finally, adopted new §3.41 carries forward the annual report filing requirement.

Adopted new §3.44 sets out the requirements related to the registration, notices and reports a foreign bank must file for a Texas representative office, and reflects and incorporates the requirements of Finance Code, Chapter 204. The adopted new section retains the substance of the scope and commencement of operations provisions of repealed §3.44 and the department's requirement that a foreign bank file a registration statement and pay the required fee for each Texas representative office it establishes. However, adopted new §3.44 allows the banking commissioner to waive one or more of the informational requirements of the registration form with respect to a foreign bank's additional representative offices.

The adopted amendments to §3.42, which section specifies the records that a foreign bank branch, agency or representative office must maintain, and to §3.43, which authorizes a foreign bank branch or agency to maintain credit balances, conform the sections to and reflect the requirements and limitations of Finance Code, Chapter 204 and the department's practice.

Subchapter E concerns banking house and other facilities. The adopted amendments to §3.91, which section governs the establishment of loan production offices, conform language to other proposed amendments and update statutory citations. Further, the adopted amendments broaden the section's parity provision to reflect the scope of Finance Code, §32.010, which provides parity for depository institutions in the United States and not just national banks. The adopted amendments also update §3.92, which implements the requirements of Finance Code, §§59.301 et seq. , related to safety at unmanned teller machines, by eliminating a dated paragraph and updating statutory citations.

Subchapter F addresses access to information held by the department. The adopted amendments to §3.111 and §3.112 update references and statutory citations.

The commission received no comments regarding the proposed new and amended sections.

Subchapter A. SECURITIES ACTIVITIES AND SUBSIDIARIES

Subchapter C. FOREIGN BANK AGENCIES