TITLE 5

Banking

Banks and Trust Companies

CHAPTER 7. Corporation Law for State Banks and Trust Companies

Subchapter IV. Powers and Prohibitions

§ 761. General powers of corporations organized under this chapter.

(a) A corporation established under and in compliance with this chapter shall have power to:

(1) Sue and be sued, complain and defend in any court of law or equity;

(2) Make and use a common seal and alter the same at pleasure;

(3) Hold, purchase, convey, mortgage or lease real and personal property;

(4) Borrow and lend money;

(5) Discount bills, promissory notes or other evidences of debt;

(6) Receive deposits of money either on time or demand;

(7) Buy and sell gold and silver bullion and foreign money and coin;

(8) Purchase securities for the investment of the funds under its control and sell the same;

(9) Take mortgages and obligations of all kinds for payment of money for the investment of funds under its control and sell the same;

(10) Receive for safekeeping securities and all types of choses in action and all kinds of personal property;

(11) Keep deposit boxes and rent them to customers or patrons;

(12) Engage in the sale, distribution and underwriting of, and deal in, stocks, bonds, debentures, notes or other securities;

(13) Exercise the powers and engage in the activities permissible for such corporations through 1 or more subsidiaries;

(14) Act as an insurer and transact the business of insurance in accordance with the provisions of Title 18; except that no corporation established under and in compliance with this chapter shall have power to act as a title insurer and transact the business of title insurance;

(15) Act as guarantor or surety for the debt or obligation of another, including specifically but without limitation the rediscounting with recourse of commercial paper and the issuance of letters of credit as defined in § 5-103(1)(a) of Title 6 and standby letters of credit. As used herein, the term “standby letter of credit” includes every letter of credit (or similar arrangement however named or designated) which represents an obligation to the beneficiary on the part of the issuer to repay money borrowed by or advanced to or for the account of the customer, or to make payment on account of any evidence of indebtedness undertaken by the customer, or to make payment on account of any default by the customer in performance of an obligation. The terms “beneficiary,” “issuer” and “customer” as used herein have the same meaning as in § 5-103(1) of Title 6; and

(16) Authorize an affiliated insured depository institution (as those terms are defined in § 796 of this title) to engage in the authorized agency activities provided in § 796A of this title.

(17) Generally, use, exercise and enjoy all of the powers, rights, privileges and franchises incident to a banking corporation and, if established as a trust company, incident to a trust company, and which are necessary or proper for the transaction of the business of the corporation.

(b) All powers conferred by this section are subject to and are to be construed as qualified by the limitations, restrictions and regulations prescribed by the Commissioner or in other sections of this chapter or by this Code or any other statute of this State providing regulations for banks and trust companies.

38 Del. Laws, c. 94, §  15;  Code 1935, §  2384;  5 Del. C. 1953, §  761;  66 Del. Laws, c. 27, §  667 Del. Laws, c. 223, §  270 Del. Laws, c. 112, §  8

§ 762. Ownership of real estate used for transaction of business.

A corporation established under this chapter may hold real estate suitable for the transaction of its business; but, if the aggregate amount invested and proposed to be invested therein, including the cost of alterations and additions in the nature of permanent fixtures, exceeds, directly or indirectly, 50 percent of its capital, surplus and undivided profit accounts, the excess investment shall be made only with the approval of the State Bank Commissioner. The amount of money invested by the corporation in the securities of any corporation, trust or other organization which holds real estate in whole or in part used for the transaction of the business of the corporation or intended for such use, shall be included in determining the amount of real estate that may be held by the corporation under this section.

38 Del. Laws, c. 94, §  19;  Code 1935, §  2388;  5 Del. C. 1953, §  762;  62 Del. Laws, c. 3, §  3

§ 763. Membership in Federal Reserve System.

(a) Any bank or trust company incorporated under this Code or any other laws of this State may become a member of the Federal Reserve Bank, organized or to be organized in the Federal Reserve District in which such bank or trust company is located, under the act of Congress known as the Federal Reserve Act, approved December 23, 1913, and such bank or trust company may subscribe for, purchase, hold and surrender, from time to time, such amounts of the capital stock of such Federal Reserve Bank as the bank or trust company may deem advisable or as may be required under the Federal Reserve Act, or any amendment thereof, in order to obtain and continue such membership, and upon the purchase of such stock, to assume the liabilities and become entitled to the benefits recited in the Federal Reserve Act.

(b) Any corporation which becomes a member of the Federal Reserve System may, while it continues as a member bank of the System, have and exercise any and all of the corporate powers and privileges which may be exercised by member banks of the System.

28 Del. Laws, c. 107, §  138 Del. Laws, c. 94, §  21;  Code 1935, §§  2273, 2390;  5 Del. C. 1953, §  763; 

§ 764. Capital notes or debentures.

(a) With the approval of the State Bank Commissioner, any bank or trust company in this State, whether or not organized under this chapter, may at any time through action of its board of directors and without requiring any action of its stockholders issue and sell its capital notes or debentures. The capital notes or debentures shall be subordinate and subject to the claims of depositors and may be subordinated and subjected to the claims of other creditors.

(b) The term “capital” as used in this Code and any other laws of this State relating to banking shall be construed to embrace the amount of outstanding capital notes and debentures legally issued by any bank or trust company in this State and sold by it. The capital stock of any bank or trust company may be deemed to be unimpaired when the amount of the capital notes and debentures as represented by cash or sound assets exceeds the impairment as found by the State Bank Commissioner. Before any capital notes or debentures are retired or paid by the bank or trust company, any existing deficiency of its capital (disregarding the notes or debentures to be retired) must be paid in cash, to the end that the sound capital assets shall at least equal the capital stock of the bank or trust company.

(c) The capital notes or debentures shall in no case be subject to any assessment. The holders of capital notes or debentures shall not be held individually responsible as such holders for any debts, contracts, or engagements of the bank or trust company and shall not be held liable for assessments to restore impairments in the capital of the institution.

40 Del. Laws, c. 149, §  1;  Code 1935, §  2407;  5 Del. C. 1953, §  764;  63 Del. Laws, c. 3, §  4

§ 765. Power of trust company.

In the case of a corporation established as a trust company under this chapter, the powers conferred by § 761 of this title shall include the right or power to be appointed executor of a will, codicil or writing testamentary, administrator with the will annexed or administrator of the estate of any decedent, receiver, assignee, guardian, conservator or trustee by will or by any written instrument or other act of the parties, or by any court or official, under the same circumstances, in the same manner, and subject to the same control by the court having jurisdiction of the same, as a legally qualified individual.

38 Del. Laws, c. 94, §  22;  Code 1935, §  2391;  5 Del. C. 1953, §  765; 

§ 766. Power of trust company to act as agent, registrar, trustee, etc.

A trust company established under this chapter may act as agent for the purpose of issuing, registering or countersigning the certificates of stock, bonds, or other evidences of indebtedness of a corporation, association, municipal corporation, state or national government, on such terms as may be agreed upon, and may also act as trustee for the bondholders of a corporation, and for such purpose may receive transfers of real and personal property upon such terms as may be agreed upon.

38 Del. Laws, c. 94, §  25;  Code 1935, §  2394;  5 Del. C. 1953, §  766; 

§ 767. Limitations on powers and activities of banks and trust companies.

(a) Any bank or trust company which engages in any activity authorized by § 761(a)(14) of this title otherwise than through a subsidiary thereof shall engage in each such activity through a department or division which shall maintain financial records separate and distinct from other records of such bank or trust company; provided, that such division may be established and may engage in each such activity only in accordance with the provisions of Title 18.

(b) A bank or trust company which engages in any activity authorized by § 761(a)(14) of this title, whether through a department, division or subsidiary, may make loans to and transact other business with such department, division or subsidiary, provided such loan or other transaction is made on terms and under circumstances substantially the same as for comparable transactions with or involving other customers, or, in the absence of comparable transactions, upon terms and under circumstances that in good faith would be offered to or would apply to other customers.

(c) No department, division or subsidiary of a bank or trust company which engages in any activity authorized by § 761(a)(14) of this title shall utilize in any manner or for any purpose the information contained in any insurance contract between a nonaffiliated insurer and the insured which such company has obtained from the insured in connection with any request for an extension of credit.

(d) No bank or trust company which engages in any activity authorized by § 761(a)(14) of this title shall, in evaluating any request or application for the extension of credit, discriminate against an applicant on the basis that such applicant is a competitor of such bank or trust company in any such activity.

(e) The offer to sell or the sale of any insurance product authorized to be sold under this section shall be made only by those individuals who are validly licensed as insurance agents or brokers in the State or other jurisdiction in which the sale of insurance is offered or consummated. The offer to sell insurance products shall include, but not be limited to, solicitation by mail, telephone, electronic or print media, and by personal contact. Violation of this subsection shall subject the violator and the employer of the violator to the penalties prescribed in Title 18 for solicitation or sale of insurance and the receipt or payment of commissions to unauthorized persons, if the violation occurred in this State. The Banking Commissioner and the Insurance Commissioner shall be charged to advise regulators in other states or jurisdictions when it is discovered that such violations have occurred in such other state or jurisdiction.

38 Del. Laws, c. 94, §§  16, 26;  Code 1935, §§  2385, 2395;  5 Del. C. 1953, §  767;  63 Del. Laws, c. 3, §  566 Del. Laws, c. 27, §  767 Del. Laws, c. 223, §  467 Del. Laws, c. 224, §§  1, 270 Del. Laws, c. 112, §  971 Del. Laws, c. 254, §  8

§ 768. Loans on security of and purchase of its own capital stock.

No corporation established under this chapter or under Chapter 15 of this title shall directly or indirectly make a loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith. The stock so purchased or acquired shall, within 6 months after its purchase or acquisition, be sold or disposed of at public or private sale. Notwithstanding the foregoing, the Commissioner may approve the purchase by such a corporation of the shares of its own capital stock, subject to such terms and conditions, if any, as the Commissioner may require.

38 Del. Laws, c. 94, §  18;  Code 1935, §  2387;  5 Del. C. 1953, §  768;  64 Del. Laws, c. 42, §  471 Del. Laws, c. 19, §  2280 Del. Laws, c. 1, §  1

§ 769. Ownership of capital stock of another bank or trust company.

No bank or trust company shall hold more than 10 percent of the capital stock of any other bank or trust company without the approval of the Commissioner. In determining whether to grant such approval, the Commissioner shall consider the convenience and needs of the public of this State. Any acquisition by a bank or trust company of more than 10 percent of the capital stock of any other bank or trust company that was approved by the Commissioner before January 1, 1996, shall be deemed to have been approved by the Commissioner without the survival of any conditions required by former subsection (b) of this section.

32 Del. Laws, c. 103, §  2138 Del. Laws, c. 93, §  1(8)38 Del. Laws, c. 94, §  29;  Code 1935, §§  2309, 2398;  5 Del. C. 1953, §  769;  64 Del. Laws, c. 386, §  464 Del. Laws, c. 461, §  168 Del. Laws, c. 303, §  1170 Del. Laws, c. 112, §§  10, 1170 Del. Laws, c. 327, §  5

§ 770. Branch office.

(a) (1) Any bank or trust company, if authorized by its charter, may open a branch office or place of business, or branch offices or places of business in this State, upon application submitted to and approved by the State Bank Commissioner and upon the issuance of a certificate of authority of the State Bank Commissioner. For the purposes of this section, a branch office or place of business shall include any location, except as provided by §§ 771 and 772 of this title, at which deposits are received or checks paid or money lent. The application shall state the exact location of the intended branch office and the necessity for its opening and the Commissioner shall inquire into the matter, and if the Commissioner deems that the public convenience will be served thereby and that there is good and sufficient reason that the corporation shall have the branch office, the Commissioner shall issue its written permission for the opening of the branch office. Any certificate of authority issued by the Commissioner shall be void and of no effect if after the expiration of a reasonable period of time, as determined by the State Bank Commissioner, such branch is not actually opened for business. The Commissioner shall by regulations prescribe the criteria to be applied in determining what constitutes a reasonable period of time.

(2) The applicant shall pay to the Commissioner an investigation fee of $250, which shall not be refundable and shall be submitted with the application.

(b) Nothing in this section contained shall deny any bank or trust company the right to continue a branch office or branch offices if such branch office or branch offices shall have been actually established prior to the 1st day of January, 1934, and business continuously conducted thereat since such establishment.

(c) (1) Any bank or trust company that is authorized by its charter to operate a branch office may open a mobile branch upon application submitted to and approved by the Commissioner and upon the issuance of a certificate of authority of the Commissioner. For purposes of this section, a “mobile branch” means a branch that operates at more than one location. The application for a mobile branch shall specify the manner of operation of the mobile branch, the area in which the mobile branch will operate, and the necessity for the opening of the mobile branch. If the Commissioner deems that the public convenience will be served and that there is good and sufficient reason that the bank or trust company should operate the mobile branch, the Commissioner shall issue written permission for its opening. Any certificate of authority that the Commissioner issues shall be void and have no affect if, after the expiration of a reasonable period of time as determined by the Commissioner, the mobile branch is not actually open for business. The Commissioner shall by regulation prescribe the criteria to be applied for determining what constitutes a reasonable period of time.

(2) The applicant for a mobile branch shall pay the Commissioner an investigation fee of $250 which shall not be refundable and shall be submitted with the application.

32 Del. Laws, c. 103, §  438 Del. Laws, c. 93, §  1(1)38 Del. Laws, c. 94, §  20;  Code 1935, §§  2292, 2389;  46 Del. Laws, c. 251, §§  1, 2;  5 Del. C. 1953, §  770;  49 Del. Laws, c. 12756 Del. Laws, c. 15557 Del. Laws, c. 740, §  19A60 Del. Laws, c. 268, §§  5, 662 Del. Laws, c. 245, §  163 Del. Laws, c. 3, §  663 Del. Laws, c. 255, §  167 Del. Laws, c. 260, §  168 Del. Laws, c. 303, §  1269 Del. Laws, c. 165, §  1570 Del. Laws, c. 186, §  171 Del. Laws, c. 19, §  2371 Del. Laws, c. 25, §  1173 Del. Laws, c. 22, §  1

§ 771. Foreign branch offices.

(a) Any bank or trust company having a paid-in capital and surplus exceeding $1,000,000 or more may open branch offices or places of business without the State, in the United States of America, or its possessions or in any other state of the United States of America or in foreign countries upon issuance of a certificate of authority by the State Bank Commissioner and upon such conditions and under such regulations as the State Bank Commissioner may prescribe; provided, however, that the Commissioner shall be authorized to exempt from the coverage of this section such places of business or classes of places of business as the Commissioner shall find inappropriate to include in order to effectuate the purposes of this section.

(b) If any bank or trust company has opened and occupied a branch office in a foreign country pursuant to subsection (a) of this section, it may, unless otherwise advised by the State Bank Commissioner, open and occupy an additional branch office or branch offices in such country without having to apply for the approval of the Commissioner provided that it gives the Commissioner notice of at least 30 days (or such shorter period as the Commissioner in individual cases may approve) before opening and occupying any such additional branch office.

(c) The applicant shall pay to the Commissioner an investigation fee of $250, which shall not be refundable and shall be submitted with the application for the issuance of a certificate under subsections (a) or (e) of this section.

(d) Electronic devices or machines located without the State which may be utilized to accomplish banking transactions by customers of banks located within the State, by whatever arrangement, shall not be deemed to be a branch office under this section or any other provision of Delaware law, nor shall any such arrangement require approval of the State Bank Commissioner.

(e) Any corporation established under this chapter or Chapter 16 of this title or by act of the General Assembly having paid-in capital and surplus exceeding $1,000,000 may open affiliated offices or places of business inside or outside this State, in the United States of America or its possessions or in foreign countries solely to conduct activities authorized by § 761(a)(14) or § 1661(a)(14) of this title upon the issuance of a certificate of authority by the Commissioner, and upon such conditions and under such regulations as may be prescribed.

63 Del. Laws, c. 3, §  763 Del. Laws, c. 255, §  267 Del. Laws, c. 223, §  767 Del. Laws, c. 260, §  170 Del. Laws, c. 112, §  1270 Del. Laws, c. 186, §  171 Del. Laws, c. 25, §§  12, 1373 Del. Laws, c. 22, §  2

§ 772. Automated service branch.

Any bank or resulting bank (as defined in § 795 of this title) may install or operate 1 or more automated service branches in this State without approval of, or notice to, the Commissioner.

68 Del. Laws, c. 303, §  1369 Del. Laws, c. 165, §  1671 Del. Laws, c. 19, §§  24-2674 Del. Laws, c. 210, §§  1-3