Ó£»¨ÊÓƵ

BANKING

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF BANKING

Bank Holding Companies

Proposed Readoption with Amendments: N.J.A.C 3:13

Authorized By: Donald Bryan, Acting Commissioner,

Department of Banking and Insurance

Proposal Number: PRN 2001-71

Submit comments by April 20, 2002 to:

Karen Garfing, Assistant Commissioner

Regulatory Affairs

Ó£»¨ÊÓƵ Department of Banking and Insurance

PO Box 325

Trenton, NJ 08625-0325

Fax: (609) 292-0896

Email: legsregs@dobi.nj.gov

The agency proposal follows:

The Department of Banking and Insurance ("Department") proposes to readopt its rules governing bank holding companies and mutual savings bank holding companies. Pursuant to N.J.S.A. 52:14B-5.1c, the rules in this chapter are scheduled to expire January 21, 2002. In accordance with N.J.S.A. 52:14B-5.1c, the submission of this notice of proposal to the Office of Administrative Law extended that expiration date 180 days, July 20, 2002. The Department has reviewed the rules and has determined that they continue to be necessary, reasonable and proper for the purpose for which they were originally promulgated.

Subchapter 1 sets forth the procedures for a person to acquire a Ó£»¨ÊÓƵ bank or Ó£»¨ÊÓƵ bank holding company. This subchapter is proposed for minor amendment to recognize the merger of Ó£»¨ÊÓƵ's Community and Savings Bankers and the Ó£»¨ÊÓƵ Savings League into the Ó£»¨ÊÓƵ League Community and Savings Bankers.

Subchapter 2 sets forth the filing requirements by all persons controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding company systems.

Subchapter 3 provides for the examination by the Commissioner of Banking and Insurance ("Commissioner") of any company and provides that the Commissioner shall charge for any such examination a per diem per examiner charge in an amount set forth in N.J.A.C. 3:1-6.6. This subchapter is proposed for minor amendment to conform with the 1996 amendment to N.J.A.C. 3:1-6.6, changing the per diem charge to individual per examiner per hour charges plus a per diem travel expense charge.

Subchapter 4 remains reserved.

Subchapter 5 sets forth requirements for the formation of mutual savings bank holding companies, including the application procedures, approval procedures, requirements governing the board of directors and officers of a mutual savings bank holding company and sets forth requirements governing division of surplus of such an entity.

The rules proposed to be readopted thus will continue to provide the regulatory framework to enable the Commissioner to properly monitor bank holding companies, as well as approve acquisition of Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies or the formation of mutual savings bank holding companies, pursuant to law.

A 60 day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, the proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

The rules proposed for readoption with amendments apply to all persons controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies. They will continue to require filing of financial reports by all persons controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies. These rules will continue to allow the Commissioner to monitor the activities of these persons thereby affording the general banking public a level of protection through reporting and bank examination. They also make it clear to persons wishing to form or acquire a Ó£»¨ÊÓƵ bank or bank holding company what the requirements and application procedures are. Thus, the rules proposed for readoption with amendments will continue to have a beneficial social impact on the general public, consumers of Ó£»¨ÊÓƵ banks and those controlling Ó£»¨ÊÓƵ banks and Ó£»¨ÊÓƵ bank holding companies.

It is not expected that the rules proposed for readoption with amendments will have a significant negative economic impact on those controlling Ó£»¨ÊÓƵ banks and Ó£»¨ÊÓƵ bank holding companies. The requirement that those controlling Ó£»¨ÊÓƵ banks and Ó£»¨ÊÓƵ bank holding companies apply to, report to and be subjected to examination by the Department is a reasonable and anticipated commercial requirement. The various filing and application fees are not unduly burdensome and are unchanged from the current rules. The amendment changing the per diem per examiner charge to an hourly one plus a per day travel expense charge may have a positive economic effect when examinations are concluded before the end of a day. The other amendments will not have any economic impact because they are technical in nature and will impose no new requirements.

The proposed amendments and rules proposed for readoption remain consistent with and do not exceed the requirementss of 12 U.S.C.§§1841 et seq. and the rules promulgated thereunder, 12 C.F.R. 225.1 et seq. Therefore no Federal Standards analaysis is required..

The Department does not anticipate that any jobs will be generated or lost as a result of the rules proposed for readoption with amendments. Those controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies will use existing staff for continued compliance with the existing rules. Those controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies should not have to employ professional services to meet the application, reporting and other compliance requirements. The amendments will not require additional staff because they are technical in nature and will impose no new requirements.

The Department invites commenters to submit any data or studies concerning the jobs impact of the proposed readoption with amendments together with their written comments on other aspects of this proposal.

The Department does not expect any agriculture industry impact from the rules proposed for readoption with amendments.

Some persons controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies may be small businesses as defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. The rules proposed for readoption with amendments will continue to impose compliance requirements on these entities. The rules proposed for readoption with amendments will continue to regulate those controlling Ó£»¨ÊÓƵ banks or Ó£»¨ÊÓƵ bank holding companies and require them to submit to examinations. The costs for compliance are set out in the Economic Impact Statement. The Department believes that compliance with the rules will be handled by existing staff and no holding company will have to obtain or increase the use of professional services in order to comply with the rules proposed for readoption and amendment. The Department invites commenters to submit any data or studies concerning economic impact of the rule proposed for readoption and amendment together with their written comments on other aspects of this proposal.

The Department believes that these requirements are generally mandated pursuant to N.J.S.A. 17:9A-8.1 et seq., 17:9A-382 et seq. and 17:12B-292 et seq. Moreover, the Department does not believe that these requirements are unduly burdensome. The purpose of these rules is to protect the financial integrity of Ó£»¨ÊÓƵ banks and Ó£»¨ÊÓƵ bank holding companies and in turn to protect the consumers who use those establishments. Thus, the purpose of these requirements does not vary based upon business size. Accordingly, no differentiation in compliance requirements based on business size is provided.

Full text of the rules proposed for readoption may be found in the Ó£»¨ÊÓƵ Administrative Code at N.J.A.C. 3:13.

Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 1. BANK HOLDING COMPANY APPLICATIONS

3:13-1.2 Application

(a) (No change.)

(b) Upon receipt of a completed application, the Department shall send notice to the applicant and to the Ó£»¨ÊÓƵ Bankers Association, the Ó£»¨ÊÓƵ[’s] League of Community and Savings Bankers [and the Ó£»¨ÊÓƵ Savings League] , and/or their successor organizations, if any, for publication in their weekly bulletins.

(c) – (d) (No change.)

SUBCHAPTER 3. BANK HOLDING COMPANY EXAMINATIONS

3:13-3.1 Examination charges

The Commissioner may examine any company which controls a Ó£»¨ÊÓƵ bank or Ó£»¨ÊÓƵ bank holding company, and shall charge for such an examination [a per diem] an individual per hour per [person examination] examiner charge plus a per day travel expense charge in [an] amounts set forth in N.J.A.C. 3:1-6.6.

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