Register January 2006 No. 601
Chapter DFI-Bkg 3
PARITY WITH NATIONAL BANKS
DFI-Bkg 3.001   Definition.
DFI-Bkg 3.01   Bank-owned banks, lending and depository authority.
DFI-Bkg 3.02   Bank-owned banks, limitations on lending and depository authority.
DFI-Bkg 3.03   Use of data processing equipment and furnishing of data processing service.
DFI-Bkg 3.04   Operations through subsidiaries.
DFI-Bkg 3.05   Leasing of personal property.
DFI-Bkg 3.06   Purchase of shares of investment companies.
DFI-Bkg 3.07   Procedure for chartering a savings and loan as a bank.
DFI-Bkg 3.08   Debt cancellation contracts and debt suspension agreements.
Ch. DFI-Bkg 3 Note Note: Chapter Bkg 3 was renumbered Chapter DFI-Bkg 3 under s. 13.93 (2m) (b) 1., Stats., and corrections made under s. 13.93 (2m) (b) 6. and 7., Stats., Register, June, 1997, No. 498, eff. 7-1-97.
DFI-Bkg 3.001 DFI-Bkg 3.001Definition. In this chapter:
DFI-Bkg 3.001(1) (1) “Depository institutions" means state or national banks, state or federal savings banks, state or federal savings and loan associations, or state or federal credit unions.
DFI-Bkg 3.001 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.
DFI-Bkg 3.01 DFI-Bkg 3.01Bank-owned banks, lending and depository authority.
DFI-Bkg 3.01(1) (1) A bank-owned bank organized under s. 221.1202, Stats., may provide banking and bank related services to or for all of the following:
DFI-Bkg 3.01(1)(a) (a) Subsidiaries or organizations owned by depository institutions;
DFI-Bkg 3.01(1)(b) (b) Directors, officers or employees of depository institutions, including any subsidiary or organization owned by a depository institution;
DFI-Bkg 3.01(1)(c) (c) Depository institution trade associations; and
DFI-Bkg 3.01(1)(d) (d) Depository institutions or their holding companies.
DFI-Bkg 3.01(2) (2) A bank-owned bank organized under s. 221.1202, Stats., may provide correspondent banking services at the request of other depository institutions or their holding companies.
DFI-Bkg 3.01 History History: Cr. Register, September, 1982, No. 321, eff. 10-1-82 ; am. (intro.), (2) and (3), cr. (4), Register, February, 1994, No. 458, eff. 3-1-94; renum. 3.01 to be (1) and am. (1) (intro.) and (d), cr. (2), Register, March, 1996, No. 483, eff. 4-1-96; corrections in (1) (intro.) and (2) made under s. 13.93 (2m) (b) 7., Stats., Register October 2001 No. 550.
DFI-Bkg 3.02 DFI-Bkg 3.02Bank-owned banks, limitations on lending and depository authority. The total loans made and deposits received of a bank-owned bank pursuant to s. DFI-Bkg 3.01 may not exceed the following:
DFI-Bkg 3.02(1) (1) The total loans made to all entities and individuals described in s. DFI-Bkg 3.01 may not exceed 10% of the total assets of the bank.
DFI-Bkg 3.02(2) (2) The total deposits received from all individuals and entities described in s. DFI-Bkg 3.01 may not exceed 10% of the total liabilities of the bank.
DFI-Bkg 3.02 History History: Cr. Register, September, 1982, No. 321, eff. 10-1-82.
DFI-Bkg 3.03 DFI-Bkg 3.03Use of data processing equipment and furnishing of data processing service. As part of its banking business and incidental thereto, a bank may collect, transcribe, process, analyze, and store, for itself and others, banking, financial, or related economic data. In addition, incidental to its banking business, a bank may:
DFI-Bkg 3.03(1) (1) Market a by-product (such as program or output) of a data processing activity described in this rule; and
DFI-Bkg 3.03(2) (2) Market excess time on its data processing equipment so long as the only involvement by the bank is furnishing the facility and necessary operating personnel.
DFI-Bkg 3.03 History History: Cr. Register, September, 1982, No. 321, eff. 10-1-82.
DFI-Bkg 3.04 DFI-Bkg 3.04Operations through subsidiaries.
DFI-Bkg 3.04(1)(1)General. With the prior approval of the administrator of the division of banking, a bank may engage in activities which are a part of the business of banking or incidental to the business of banking by means of an operating subsidiary corporation. In order to qualify as an operating subsidiary hereunder, at least 80% of the voting stock of the subsidiary must be owned by the parent bank. No bank may commence any such activity unless the type, place and manner in which the activity is conducted has been approved by the administrator of the division of banking in writing or the administrator of the division of banking does not take written objection to the bank's completed application within 30 business days after it has been filed under this section.
DFI-Bkg 3.04(2) (2)Activities permitted. An operating subsidiary may perform any business function which is a part of the business of banking or incidental to the business of banking. For example, an operating subsidiary may, among other things, issue credit cards, service mortgages, lease property or operate a credit bureau.
DFI-Bkg 3.04(3) (3)Transactions with parent bank. Transactions between the parent bank and the operating subsidiaries are subject to the limitations contained in s. 221.0320, Stats., unless the subsidiary engages solely in furnishing services to or in performing services for a parent bank.
DFI-Bkg 3.04(4) (4)Applicability of banking laws. All provisions of the banking laws and rules applicable to the operations of the parent bank shall be equally applicable to the operations of its operating subsidiaries.
DFI-Bkg 3.04(5) (5)Consolidation of figures. Unless otherwise provided by banking laws or regulations, pertinent book figures of the parent bank and its operating subsidiaries, except agricultural credit corporations, shall be consolidated for the purpose of applying applicable statutory limitations, including but not limited to s. 221.0319, 221.0320, 221.0324 or 221.0328, Stats.
DFI-Bkg 3.04(6) (6)Examination and supervision. Each operating subsidiary shall be subject to examination and supervision by the administrator of the division of banking in the same manner and to the same extent as the parent bank. If, upon examination, the administrator of the division of banking ascertains that the subsidiary is created or operated in violation of the banking law or regulation or that the manner of operation is detrimental to the business of the parent bank and its depositors, the administrator of the division of banking may order the bank to dispose of all or part of the subsidiary upon such terms as the administrator of the division of banking may deem proper.
DFI-Bkg 3.04(7) (7)Report of disposition of operating subsidiary. Prior to disposition of an operating subsidiary, the parent bank shall inform the administrator of the division of banking by letter of the terms of the transaction.
DFI-Bkg 3.04 History History: Cr. Register, January, 1983, No. 325, eff. 2-1-83; am. (1), Register, December, 1987, No. 384, eff. 1-1-88; corrections in (3) and (5) made under s. 13.93 (2m) (b) 7., Stats., Register October 2001 No. 550,
DFI-Bkg 3.05 DFI-Bkg 3.05Leasing of personal property.
DFI-Bkg 3.05(1)(1)General authority.
DFI-Bkg 3.05(1)(a)(a) A bank may engage in lease financing transactions by complying with this subsection and either sub. (2) relating to leases on a net lease basis or sub. (3) relating to leases on a net, full-payout lease basis.
DFI-Bkg 3.05(1)(b) (b) A bank may enter into a lease financing transaction only if it can reasonably expect to realize a return of its full investment in the leased property, plus the estimated cost of financing the property over the term of the lease from:
DFI-Bkg 3.05(1)(b)2. 2. Estimated tax benefits; and
DFI-Bkg 3.05(1)(b)3. 3. The estimated residual value of the property, at the expiration of the term of the lease.
DFI-Bkg 3.05(1)(c) (c) "Net lease" means a lease under which the bank will not, directly or indirectly, provide or be obligated to provide for:
DFI-Bkg 3.05(1)(c)1. 1. The servicing, repair or maintenance of the leased property during the lease term;
DFI-Bkg 3.05(1)(c)2. 2. The purchasing of parts and accessories for the leased property. However, improvements and additions to the leased property may be leased to the lessee upon its request in accordance with any applicable requirements for maximum estimated residual value;
DFI-Bkg 3.05(1)(c)3. 3. The loan of replacement or substitute property while the leased property is being serviced;
DFI-Bkg 3.05(1)(c)4. 4. The purchasing of insurance for the lessee, except where the lessee has failed in its contractual obligation to purchase or maintain the required insurance; or
DFI-Bkg 3.05(1)(c)5. 5. The renewal of any license or registration for the property unless such action by the bank is necessary to protect its interest as owner or financier of the property.
DFI-Bkg 3.05(1)(d) (d) If, in good faith, a bank determines that there has been an unanticipated change in conditions which threatens its financial position by significantly increasing its exposure to loss, the bank may:
DFI-Bkg 3.05(1)(d)1. 1. As the owner and lessor under a net lease or a net, full-payout lease, take reasonable and appropriate action to salvage or protect the value of the property or its interests arising under the lease; or
DFI-Bkg 3.05(1)(d)2. 2. As the assignee of a lessor's interest in a lease, become the owner and lessor of the leased property pursuant to its contractual right, or take any reasonable and appropriate action to salvage or protect the value of the property or its interest arising under the lease.
DFI-Bkg 3.05(1)(e) (e) The limitations contained in par. (c) do not prohibit a bank from:
DFI-Bkg 3.05(1)(e)1. 1. Including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in par. (d); or
DFI-Bkg 3.05(1)(e)2. 2. Arranging for any of the services listed in par. (c) to be provided by a third party to a lessee, at the expense of the lessee, with respect to property leased by the lessee.
DFI-Bkg 3.05(1)(f) (f) A bank may acquire specific property to be leased only after the bank has entered into either:
DFI-Bkg 3.05(1)(f)1. 1. A legally binding written agreement which indemnifies the bank against loss in connection with its acquisition of the property; or
DFI-Bkg 3.05(1)(f)2. 2. A legally binding written commitment to lease the property on terms which comply with the provisions of this subsection and either sub. (2) or (3).
DFI-Bkg 3.05(1)(g) (g) At the expiration of the lease, including any renewal or extensions with the same lessee, or in the event of a default on a lease agreement prior to the expiration of the lease term, all of the bank's interest in the property shall either be liquidated or re-leased in conformance with this subsection and either sub. (2) or (3), as soon as practicable, but in no event later than 2 years from the expiration of the lease. Property which the bank retains in anticipation of re-lease must be revalued at the lower of current fair market value or book value prior to any subsequent lease.
DFI-Bkg 3.05(1)(h) (h) On the return of leased property at the expiration of a conforming lease term, or on the default of a lessee, a short-term bridge or interim lease is permissible if it otherwise conforms with the net lease requirements of par. (c). Such leases need not comply with sub. (2) or (3) and may be used pending the sale of off-lease property, or its re-lease as a conforming long-term financing transaction.
DFI-Bkg 3.05(1)(i) (i) Where a bank enters into leases pursuant to both subs. (2) and (3), the bank must segregate the records it maintains with respect to each type of lease.
DFI-Bkg 3.05(1)(j) (j) Nothing in this section shall be construed to be in conflict with the duties, liabilities and standards imposed by the Consumer Leasing Act of 1976, 15 USC 1667 et. seq., or the Wisconsin Consumer Act, chs. 421 to 427, Stats.
DFI-Bkg 3.05(1)(k) (k) Leases permissible under this section are subject to the limitations on obligations under s. 221.0320, Stats.
DFI-Bkg 3.05(2) (2)AUTHORITY TO LEASE PERSONAL PROPERTY ON A NET LEASE BASIS.
DFI-Bkg 3.05(2)(a)(a) Subject to the limitations of this subsection and sub. (1), and provided that the aggregate book value of all tangible personal property held for lease under this subsection does not exceed 10% of the consolidated assets of the bank, a bank may:
DFI-Bkg 3.05(2)(a)1. 1. Invest in tangible personal property, including, without limitation, vehicles, manufactured homes, machinery, equipment or furniture for lease financing transactions on a net lease basis; or
DFI-Bkg 3.05(2)(a)2. 2. Become the owner and lessor of such tangible personal property by purchasing the property from another lessor in connection with its purchase of the related lease.
DFI-Bkg 3.05(2)(b) (b) Lease financing transactions entered into under this subsection shall have an initial lease term of not less than 90 days. However, such period shall not be applicable to the acquisition of property subject to an existing lease with a remaining maturity of less than 90 days, provided that at its inception such lease complied with the provisions of this subsection and sub. (1).
DFI-Bkg 3.05(3) (3)AUTHORITY TO LEASE PERSONAL PROPERTY ON A NET, FULL-PAYOUT LEASE BASIS.
DFI-Bkg 3.05(3)(a)(a) Subject to the limitations of this subsection and sub. (1), and provided the lease is a net, full-payout lease representing a noncancelable obligation of the lessee, notwithstanding the possible early termination of that lease, a bank may:
DFI-Bkg 3.05(3)(a)1. 1. Become the legal or beneficial owner and lessor of specific personal property or otherwise acquire such property; or
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.