Brief ⁽¹⁾

HB 2482, as amended, concerns the powers and duties of the State Banking Board and the Bank Commissioner and the general power of banks. The bill transfers to the Commissioner the following responsibilities currently delegated to the State Banking Board:

• approving a name change of bank corporations;
• approving a reduction in capital stock;
• authorizing the issuance of preferred stock;
• approving the reduction of a bank or trust company surplus;
• approving creation of a subsidiary which engages in certain securities activities;
• approving life insurance policies a bank may hold for the purposes of providing deferred compensation and benefit plans for officers, directors, or employees;
• approving the issuance of capital notes and debentures;
• approving applications for service corporations;
• approving emergency bank charters without subsequent approval of the Board;
• appointing special deputies to serve until relieved by the Commissioner, not the Board;
• approving applications for new branches or the relocation of an existing branch bank of an eligible bank, as defined (the State Banking Board would have approval of branches or the relocation of existing branches of banks not meeting the definition of eligible bank); and
• approving applications by eligible banks and trust companies for a change of location within the same city or town or from one city or town to another (the State Banking Board would have approval of such a change of location of banks and trust companies not meeting the definition of eligible bank or eligible trust company).
• 
  
  
  
  

The bill clarifies the role of the Banking Board to hear appeals from the Commissioner's final action approving or disapproving a branch or relocation of an existing branch or the relocation of the main bank in accordance with the provisions of the Kansas Administrative Procedure Act. Any decision of the State Banking Board is subject to review in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions.

HB 2482 also repeals two statutes that no longer have meaning for Kansas banks; one concerns interest rates and the other reserve ratios.

Regarding the general powers of banks, the bill adds to the list of powers banks are authorized to exercise new paragraph (29).

With the prior approval of the State Bank Commissioner, a financial subsidiary of a Kansas state-chartered bank is authorized to offer any products or services which a national bank may offer through its financial subsidiary, subject to safety and soundness requirements imposed by the Bank Commissioner. The powers authorized include:

• lending, exchanging, transferring, investing for others, or safeguarding money or securities;
• 
  
  
• insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability or death, or providing and issuing annuities, and acting as principal, agent, or broker;
• 
  
  
• providing financial, investment, or economic advisory services, including advising an investment company;
• 
  
  
• issuing or selling instruments representing interest in pools of assets permissible for a bank to hold directly;
• 
  
  
• underwriting, dealing in, or making a market in securities;
• 
  
  
• engaging in any activity that the Federal Reserve Board has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto;
• 
  
  
• engaging, in the United States, in any activity that is permitted a bank holding company operating outside the United States, the Board has determined to be usual in connection with the transaction of banking or other financial operations abroad; and
• 
  
  
• activities the Secretary of the Treasury determines are financial in nature, or incidental to a financial activity.

Background

HB 2482 was requested by the State Banking Department on behalf of the State Banking Board. A member of the Board said the Board supports the bill because it strengthens the Office of the State Bank Commissioner, preserves the policy and advisory role of the Board on issues of importance, and is in the public interest.

As amended, HB 2482 incorporates the provisions of HB 2146, which also was requested by the State Bank Commissioner to place in statute the powers granted earlier by the Bank Commissioner through the issuance of a special order. Three additional powers are allowed by the bill that were not included in the special order but were powers authorized for national banks by federal regulators.

The Deputy Commissioner noted that the subject of parity with national banks had been discussed with the Senate Committee during the 2000 Session of the Legislature and that Committee recommended issuance of a special order if it became necessary for the Commissioner to maintain parity for state chartered banks with national banks. The order was issued April 19, 2000.

The Office of State Bank Commissioner states that passage of this provision could increase its administrative costs, but the fiscal effect would be negligible.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi