TITLE 5

Banking

Banks and Trust Companies

CHAPTER 14. FOREIGN BANKS

Subchapter I. Foreign Bank Branches, Foreign Bank Limited Purpose Branches and Foreign Bank Agencies


This subchapter deals with conditions under which foreign banks may transact business in this State; it shall not be construed to limit the powers granted to any bank in this State to conduct its business.

65 Del. Laws, c. 444, § 6.;

(a) No foreign banks shall transact a banking business or maintain in this State an office for carrying on such business or any part thereof, except as otherwise provided in subchapter III of this chapter, unless such foreign bank has:

(1) Been authorized by the laws under which it was organized and by its charter to carry on such business;

(2) Furnished to the Commissioner such proof as to the nature and character of its business and as to its financial condition as the Commissioner may require; and

(3) Filed with the Commissioner an application containing the information required by § 1403 of this title and received a certificate of authority duly issued to it by the Commissioner as provided in § 1403 of this title.

(b) This section shall not be construed to prohibit foreign banks which do not maintain an office in this State for the transaction of the business from:

(1) Making loans or issuing letters of credit in this State secured by mortgages on real property, nor from contracting in this State with a banking organization to acquire from or through such banking organization a part interest or the entire interest in a loan or evidence of debt which such banking organization has heretofore or hereafter made, purchased or acquired, for its own account or otherwise, together with a like interest in any security or in any security instrument proposed to be given or heretofore or hereafter given to secure or evidence such loan or evidence of debt;

(2) Enforcing in this State obligations heretofore or hereafter acquired by it in the transaction of business outside of this State, or in the transaction of any business authorized by this section;

(3) Acquiring, holding, leasing, mortgaging, contracting with respect to, or otherwise protecting or conveying property in this State heretofore or hereafter assigned, transferred, mortgaged or conveyed to it as security for, or in whole or part, satisfaction of a loan or loans made by it or obligations made by it or obligations acquired by it in the transaction of business outside of this State, or in the transaction of any business authorized by this section; or

(4) Issuing letters of credit or otherwise guaranteeing the obligations of the State or any agency or political subdivision thereof.

65 Del. Laws, c. 444, § 6; 71 Del. Laws, c. 254, § 17.;

(a) The application of a foreign bank to procure a certificate of authority to establish and maintain a foreign bank branch, foreign bank limited purpose branch or foreign bank agency shall state:

(1) The name of the foreign bank and the country under the laws of which it was organized.

(2) The date of its incorporation and the period of its duration.

(3) The address of its principal office in the country under the laws of which it was organized.

(4) The names of other states and countries in which it is admitted or qualified to transact business and the nature of the worldwide business conducted by the foreign bank.

(5) The amount of its capital stock actually paid in cash and the amount subscribed for and unpaid.

(6) The actual value of the assets of the foreign bank, which must be at least $1,000,000 in excess of its liabilities; and a complete and detailed statement of its financial condition as of a date within 120 days prior to the date of such application or such other date as the Commissioner may determine.

(7) The location by street and post-office address and county where its business is to be transacted in this State and the name of the person who shall be in charge of the business and affairs of the proposed foreign bank branch, foreign bank limited purpose branch or foreign bank agency.

(8) The address of its proposed registered office in this State, and the name of its proposed registered agent in this State at that address for service of any paper, notice or legal process upon the applicant in connection with matters arising out of this chapter.

(9) Such additional information as shall enable the Commissioner to determine whether such foreign bank is entitled to a certificate of authority.

(b) At the time any such application is submitted to the Commissioner, such foreign bank shall also submit a duly authenticated copy of its charter and bylaws, or an equivalent thereof satisfactory to the Commissioner.

(c) Any application under this section shall be accompanied by a filing fee in the amount of $2,000 for the use of the State.

(d) In determining whether to approve any application under this section and to issue a certificate of authority to such applicant, the Commissioner shall consider:

(1) The financial and managerial resources of the foreign bank;

(2) The future prospects of the foreign bank and its proposed activity in this State;

(3) The financial history of the foreign bank;

(4) Whether the establishment of the proposed foreign bank branch, foreign bank limited purpose branch or foreign bank agency may result in undue concentration of resources or substantial lessening of competition in this State; and

(5) The convenience and needs of the public of this State.

(e) A certificate of authority issued in accordance with this section shall remain in effect until surrendered or revoked.

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, §§ 66-70; 71 Del. Laws, c. 254, § 18; 72 Del. Laws, c. 35, §§ 8-10.;

(a)(1) A foreign bank holding a certificate of authority pursuant to this subchapter that has elected this State as its home state under the International Banking Act of 1978, 12 U.S.C. § 3101 et seq., as amended, may establish and maintain a foreign bank branch in this State at the location stated therein and may engage in a general banking business thereat.

(2) A foreign bank holding a certificate of authority pursuant to this subchapter may establish and maintain a foreign bank branch in this State at the location stated therein and may engage in a general banking business thereat, even though the foreign bank has not elected this State as its home state as provided in paragraph (a)(1) of this section, if the foreign bank upgrades an agency established under subsection (b) of this section or a limited purpose branch established under subsection (c) of this section, provided that such agency or limited purpose branch has been in operation for at least 5 years.

(b)(1) A foreign bank holding a certificate of authority pursuant to this subchapter may establish and maintain a foreign bank agency in this State at the location stated therein and may engage in a general banking business thereat; provided, however, that such foreign bank agency shall not:

a. Engage in the business of accepting deposits, provided that such foreign bank may maintain for the account of others credit balances incidental to, or arising out of, the exercise of its lawful powers including, but not limited to, balances arising out of the conduct of a travellers' check business or the exercise of any similar power and may accept deposits from persons or entities which are neither citizens nor residents of the United States; or

b. Have the power to act as a fiduciary of any sort including, but not limited to, an executor, administrator, guardian, trustee by will or other instrument, receiver or attorney-in-fact.

(2) For purposes of this section, the term "credit balances" shall include funds placed in an account which:

a. Are derived from the exercise of other lawful banking powers;

b. Are to serve a specific purpose;

c. Are not solicited from the general public;

d. Are not used to pay operating expenses;

e. Are withdrawn within a reasonable period of time after the specific purpose for which they were placed there has been accomplished; and

f. Are drawn upon in a manner reasonable in relation to the size and nature of the account.

(3) The Commissioner may adopt such rules and regulations as may be deemed necessary governing the extent to which and the conditions, in addition to those set forth in this subchapter and including appropriate reserves, upon which deposits may be established, maintained and paid out by a foreign bank agency. Notwithstanding anything to the contrary in paragraph (1) of this subsection, a foreign bank agency may, if authorized by regulations adopted by the Commissioner, accept any deposit, or exercise any other power, which it could accept or exercise if it were operating in this State as a federal agency pursuant to the International Banking Act of 1978, 12 U.S.C. § 3101 et seq., as amended.

(c) A foreign bank holding a certificate of authority pursuant to this subchapter may establish and maintain a foreign bank limited purpose branch in this State at the location stated therein and may engage in the activities of a foreign bank agency permitted in subsection (b) of this section and, in addition, may accept such deposits as would be permissible for a corporation organized under § 25A of the Federal Reserve Act (12 U.S.C. § 611 et seq.).

(d) No foreign bank holding a certificate of authority pursuant to this subchapter shall concurrently maintain in this State a federal branch or federal agency pursuant to the International Banking Act of 1978, as amended (12 U.S.C. § 3101 et seq.).

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, § 71; 71 Del. Laws, c. 254, § 19; 72 Del. Laws, c. 35, § 11; 73 Del. Laws, c. 247, § 6.;

(a) Each foreign bank holding a certificate of authority pursuant to this subchapter shall hold in this State currency, bonds, notes, debentures, drafts, bills of exchange or other evidence of indebtedness, including loan participation agreements or certificates, or other obligations payable in the United States or in United States funds or, with the prior approval of the Commissioner, in funds freely convertible into United States funds, or such other assets as the Commissioner shall by rule or regulation permit, in an amount which shall bear such relationship as the Commissioner shall by regulation prescribe to liabilities of such foreign bank payable at or through its foreign bank branch, foreign bank limited purpose branch or foreign bank agency, including acceptances, but excluding (without duplication) (1) accrued expenses, (2) amounts due and other liabilities to other offices, agencies or branches of, and wholly-owned (except for a nominal number of directors' shares) subsidiaries of, such foreign bank, (3) liabilities maintained on the books of an international banking facility located at such foreign bank branch, foreign bank limited purpose branch or foreign bank agency, and (4) such other liabilities as the Commissioner shall determine. For the purposes of this subsection, the Commissioner shall value marketable securities at principal amount or market value, whichever is lower, shall have the right to determine the value of any nonmarketable bond, note, debenture, draft, bill of exchange, other evidence of indebtedness, including loan participation agreements or certificates, or of any other asset or obligation held by or owed to the foreign bank or its foreign bank branch, foreign bank limited purpose branch or foreign bank agency within this State, and in determining the amount of assets for the purpose of computing the above ratio of assets to liabilities, shall have the power to exclude in whole or in part any particular asset. If, by reason of the existence or the potential occurrence of unusual and extraordinary circumstances, the Commissioner deems it necessary or desirable for the maintenance of a sound financial condition, the protection of depositors, creditors and the public interest, and to maintain public confidence in the business of the foreign bank branch, foreign bank limited purpose branch or foreign bank agency, such foreign bank may be required, subject to such terms and conditions as the Commissioner may prescribe, to deposit the assets required to be held in this State pursuant to this subsection with such banks or trust companies or national banks located in this State as the Commissioner may designate.

(b) In the event that any of the deposits received within this State by a foreign bank are insured by the Federal Deposit Insurance Corporation, the Commissioner shall specify what reasonable percentage of deposit liabilities may be excluded in determining the aggregate amount of liabilities of such foreign bank for deposits received within this State for purposes of subsection (a) of this section by reason of the fact that all or a part of such deposit liabilities are insured by the Federal Deposit Insurance Corporation.

(c) Each foreign bank holding a certificate of authority pursuant to this subchapter shall keep the assets of its business in this State separate and apart from the assets of its business outside this State.

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, § 72; 71 Del. Laws, c. 254, § 20; 72 Del. Laws, c. 35, § 12.;

(a) Every foreign bank holding a certificate of authority pursuant to this subchapter shall at such times and in such form as the Commissioner shall prescribe, make written reports to the Commissioner under the oath of 1 of its officers, managers or agents transacting business in this State, showing the amount of its assets and liabilities and containing such other matters as the Commissioner shall prescribe. If any such foreign bank shall fail to make such report as directed by the Commissioner, or if any such report shall contain any false statement knowingly made, the same shall be grounds for revocation of the foreign bank's certificate of authority.

(b) Each foreign bank holding a certificate of authority pursuant to this subchapter shall cause to be kept, at its place of business in this State, correct and complete books and records of account of its business operations transacted by such foreign bank branch, foreign bank limited purpose branch or foreign bank agency, and shall make such records available to the Commissioner, upon request, at any time during regular business hours of the foreign bank branch, foreign bank limited purpose branch or foreign bank agency. Such foreign bank branch, foreign bank limited purpose branch or foreign bank agency shall also make available to the Commissioner, upon request, current copies of the charter and bylaws of the foreign bank, and minutes of the proceedings of its directors or committees relative to the operations of the foreign bank branch, foreign bank limited purpose branch or foreign bank agency. Any failure to keep such records as aforesaid or any refusal to produce such records or other documents upon request by the Commissioner shall be grounds for revocation of the foreign bank's certificate of authority.

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, § 73; 72 Del. Laws, c. 35, § 13.;

In addition to any other authority granted under this title, the Commissioner may adopt rules and regulations and issue orders under this subchapter for the following purposes:

(1) To prescribe information or forms required in connection with an application pursuant to § 1403(a) of this title;

(2) To authorize permissible activities of foreign bank branches, foreign bank limited purpose branches or foreign bank agencies pursuant to § 1404 of this title;

(3) To prescribe the nature and amount of assets required to be maintained in this State pursuant to § 1405 of this title and to establish procedures governing the determination thereof;

(4) To establish procedures in connection with approvals pursuant to §§ 1403 and 1408 of this title and the filing of required reports pursuant to § 1406 of this title; and

(5) To issue orders under § 1410 of this title and establish procedures governing such issuances.

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, §§ 74, 75; 72 Del. Laws, c. 35, § 14.;

(a) Any foreign bank holding a certificate of authority pursuant to this subchapter may make a written application to the Commissioner for leave to do 1 or more of the following:

(1) To change its place of business from the place designated in the certificate of authority to another place in this State. An application for such change shall be accompanied by a filing fee of $500.

(2) To change its corporate name or the duration of its corporate existence if such change has been effected under the laws under which it was organized.

(b) No certificate of authority issued by the Commissioner pursuant to this subchapter shall be transferable or assignable without approval by the Commissioner.

65 Del. Laws, c. 444, § 6; 71 Del. Laws, c. 254, § 21.;

In the event a foreign bank holding a certificate of authority pursuant to this subchapter is dissolved or its authority or existence is otherwise terminated or cancelled under the laws under which it was organized, a certificate of the official responsible for maintaining records of banks of the jurisdiction of organization of such foreign bank attesting to the occurrence of any such event, or a certified copy of an order or decree of a court of such jurisdiction directing the dissolution of such foreign bank, the termination of its existence or the cancellation of its authority shall be delivered to the Commissioner. The filing of the certificate, order or decree shall have the same effect as the revocation of its certificate of authority under § 1410 of this title. The Commissioner shall continue as agent of the foreign bank upon whom process against it may be served in connection with matters out of this subchapter prior to the filing of such certificate, order or decree.

65 Del. Laws, c. 444, § 6.;

(a) Upon the determination of the Commissioner that any foreign bank holding a certificate of authority pursuant to this subchapter is engaging in any activity not permitted by § 1404 of this title or is not in a safe and satisfactory condition; then, in any such event, the Commissioner may issue an order to such foreign bank requiring it by a date certain to take the steps set forth in such order to cure such violation.

(b) Upon the determination of the Commissioner, after due notice and an opportunity to be heard has been afforded, that any foreign bank holding a certificate of authority pursuant to this subchapter has failed to timely comply with any order issued under subsection (a) of this section, the Commissioner shall, by order effective no earlier than 10 nor later than 30 days after issuance, revoke such foreign bank's certificate of authority. Upon the effective date of such order, and so long as such order has not been suspended or set aside pursuant to subsection (c) of this section or withdrawn by the Commissioner, such foreign bank shall cease all business activity of any kind conducted by such foreign bank branch, foreign bank limited purpose branch or foreign bank agency.

(c) The Court of Chancery of the State shall have exclusive original jurisdiction of any judicial review of an order issued under subsection (b) of this section, any other provision of law notwithstanding. Such review may be sought by the foreign bank affected at any time within 1 year of the date of such order. Review of such an order shall be de novo and such order will be specifically enforced by the Court of Chancery upon a final determination that at the time of its issuance the order was valid in all respects. The Court of Chancery, may, in the exercise of its equitable jurisdiction in appropriate cases, suspend the operation of an order issued under subsection (b) of this section while judicial review of such order proceeds. An order issued under subsection (a) of this section shall not be subject to judicial review.

65 Del. Laws, c. 444, § 6; 70 Del. Laws, c. 112, § 76; 71 Del. Laws, c. 254, § 22; 72 Del. Laws, c. 35, § 15.;

Every foreign bank holding a certificate of authority pursuant to this subchapter shall be deemed and held to be subject to this title and any other law or laws of this State making provision for the regulation of banks and trust companies where the same are not inconsistent with the express provisions of this subchapter including, without limitation, §§ 131 and 132 of this title. Notwithstanding the foregoing, every foreign bank holding a certificate of authority pursuant to this subchapter shall be exempt from the requirements of and any prohibitions contained in subchapter XVI of Chapter 1 of Title 8; and the prohibition of § 901 of this title shall not apply to a foreign bank holding a certificate of authority pursuant to this subchapter.

65 Del. Laws, c. 444, § 6; 79 Del. Laws, c. 122, § 9.;

In maintaining any suit, action or proceeding in this State, a foreign bank holding a certificate of authority pursuant to this subchapter shall maintain such suit, action or proceeding in like manner and subject to the same limitations as are applicable in the case of a suit, action or proceeding maintained by a domestic banking organization, except as otherwise prescribed by statute.

65 Del. Laws, c. 444, § 6.;

(a) A suit, action or proceeding against a foreign bank holding a certificate of authority pursuant to this subchapter may be maintained by a resident of this State for any cause of action. For purposes of this subsection, the term "resident of this State" shall include any corporation formed under any law of this State.

(b) Except as otherwise provided in this subchapter, a suit, action or proceeding against a foreign bank holding a certificate of authority pursuant to this subchapter may be maintained by another foreign corporation or foreign bank or by a nonresident in the following cases only:

(1) Where the action is brought to recover damages for the breach of a contract made or to be performed within this State, or relating to property situated within this State at the time of the making of the contract;

(2) Where the subject matter of the litigation is situated within this State;

(3) Where the cause of action arose within this State, except where the object of the action or proceeding is to affect the title of real property situated outside the State;

(4) Where the suit, action or proceeding is based on a liability for acts done within this State by a foreign bank holding a certificate of authority pursuant to this subchapter;

(5) Where the defendant is a foreign bank holding a certificate of authority pursuant to this subchapter doing business in this State.

(c) The limitations contained in subsection (b) of this section do not apply to a corporation formed and existing under the laws of the United States and which maintains an office in this State.

65 Del. Laws, c. 444, § 6.;

(a) A foreign bank holding a certificate of authority pursuant to this subchapter shall have and continuously maintain in this State:

(1) A registered office which may be, but need not be, the same as its place of business in this State; and

(2) A registered agent, which agent may be either an individual, resident in this State, whose business office is identical with such registered office, or a corporation authorized to transact business in this State having a business office identical with such registered office.

(b) A registered agent may at any time vacate its office as registered agent by filing in the office of the Commissioner a statement setting forth its resignation and the effective date thereof, which shall not be less than 60 days after the date of filing. A copy of the statement shall be served on the foreign bank by the registered agent so resigning by registered or certified mail addressed to such foreign bank at its principal office as such is known to such resigning agent and directed to the attention of the secretary or other comparable officer of such corporation at least 30 days prior to the date of filing of said certificate.

(c) A foreign bank may from time to time change the address of its registered office; and shall change its registered agent if the office of the registered agent becomes vacant for any reason or if its registered agent becomes disqualified or incapacitated to act, or if it revokes the appointment of its registered agent. Any such change of registered office or registered agent may be effected by filing in the office of the Commissioner duplicate originals of a statement setting forth the details with respect to such change and the effective date thereof.

65 Del. Laws, c. 444, § 6.;

(a) Service of process in any suit, action or proceeding or service of any notice or demand required or permitted by law to be served on a foreign corporation may be made on a foreign bank holding a certificate of authority pursuant to this subchapter by service thereof on the registered agent of such foreign bank. Whenever any foreign bank holding a certificate of authority fails to appoint or maintain a registered agent upon whom service of legal process or service of any such notice or demand may be had, or whenever such registered agent cannot with reasonable diligence be found at the registered office of such foreign bank, or whenever the certificate of authority of any such foreign bank is revoked, then in every such case the Commissioner shall be irrevocably authorized as the agent and representative of such foreign bank to accept service of any process or service of any notice or demand required or permitted by law to be served on such foreign bank. Service on the Commissioner of any such process, notice or demand against any such foreign bank shall be made by delivering to and leaving with the Commissioner, or with any official having charge of the banking department of the Commissioner's office, duplicate copies of such process, notice or demand. If any process, notice or demand is served on the Commissioner, a copy thereof shall immediately be forwarded by registered mail addressed to such foreign bank at its principal office as the same appears on the Commissioner's records.

(b) Nothing in this subchapter limits or affects the right to serve any process, notice or demand required or permitted by law to be served upon a foreign corporation in any other manner now or hereafter permitted by law.

(c) The Commissioner shall keep a record of all processes, notice and demands served pursuant to this section and shall record therein the time of such service and the action taken with reference thereto.

65 Del. Laws, c. 444, § 6.;

(a) The Commissioner may make such examination of any foreign bank branch, foreign bank limited purpose branch or foreign bank agency in this State as the Commissioner may deem necessary to determine compliance with the laws of this State and operation in a safe and sound manner. This title shall apply to such examinations.

(b) The Commissioner, as a home state regulatory authority, may enter into cooperative agreements with the appropriate host state regulatory authorities for the periodic examination of and otherwise to facilitate a single point of contact with respect to any foreign bank branch, foreign bank limited purpose branch or foreign bank agency in this State and any such other entities operating in other United States jurisdictions. Additionally, the Commissioner, as a host state regulatory authority, may enter into cooperative agreements with the appropriate home state regulatory authorities for the periodic examination of and otherwise to facilitate a single point of contact with respect to any foreign bank branch, foreign bank limited purpose branch or foreign bank agency operating in this State, and may accept reports of examination and other records from a home state regulatory authority of such entities in lieu of conducting the Commissioner's own examination of such entities operating in this State. The Commissioner, as a home state or host state regulatory authority, may enter into joint actions, including with respect to asset maintenance, pledge of assets, separation of assets and liquidation, with other regulatory authorities with respect to foreign bank branches, foreign bank limited purpose branches or foreign bank agencies in this State, or may take such actions independently with notice to the appropriate home state or host state regulatory authorities to carry out the Commissioner's responsibilities to assure the safety and soundness of any such entity in this State and to assure compliance with applicable banking laws of this State. For purposes of this subsection, the term "home state" in reference to a foreign bank has the meaning set forth in § 5(c) of the International Banking Act of 1978, as amended, at 12 U.S.C. § 3103(c), and the term "host state" means a State other than the home state.

(c) A foreign bank holding a certificate of authority pursuant to this subchapter may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of this State and regulations of the Commissioner.

71 Del. Laws, c. 254, § 23; 72 Del. Laws, c. 35, §§ 16, 17.;