HB0497sam002 95TH GENERAL ASSEMBLY

Sen. Terry Link

Filed: 5/8/2007

09500HB0497sam002 LRB095 05354 MJR 36048 a

AMENDMENT TO HOUSE BILL 497

AMENDMENT NO. ______. Amend House Bill 497 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Banking Act is amended by adding Section 21.5 as follows:

(205 ILCS 5/21.5 new)

Sec. 21.5. Prohibition against establishment of branches on or near the premises of certain affiliates.

(a) For purposes of this Section:

"Affiliate" includes (i) any company that controls the bank; (ii) any company that is controlled by the company that controls the bank; and (iii) any company controlled directly or indirectly, by trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the bank or any company that controls the bank.

"Bank" has the meaning ascribed to that term in the Federal Deposit Insurance Act and includes any out-of-state bank.

"Bank holding company" and "financial holding company" have the meanings ascribed to those terms in the federal Bank Holding Company Act of 1956.

"Control" by a company shall mean (i) ownership or power to vote 25% or more of any class of voting securities of the other company, whether such ownership or power to vote is exercised directly or indirectly, or through one or more other persons or companies; (ii) the ability, directly or indirectly, or through one or more other persons or companies, to elect the majority of the directors or trustees of the other company; or (iii) as determined by the Commissioner, after notice and an opportunity for hearing, the exercise by the company, directly or indirectly, or through one or more other persons or companies, of a controlling influence over the management or policies of the other company.

A location is considered "adjacent to" the premises of an affiliate if the location is not separated from the boundary of the premises of the affiliate by real property that is owned by a person or entity having no business relationship with the bank or with the affiliate and that is not leased to or used by the bank or affiliate.

(b) Notwithstanding any other provision of this Act, after the effective date of this amendatory Act of the 95th General Assembly, no bank may establish a bank office or branch on or adjacent to the premises of an affiliate of the bank if the affiliate engages in any commercial activity that could not lawfully be conducted by a bank holding company, a financial holding company, or a subsidiary of the bank holding company or financial holding company pursuant to federal law unless: (i) the bank had received its charter and was accepting consumer deposits in this State prior to May 1, 2007; or (ii) the bank does not accept any deposits at the bank office or branch on or adjacent to the premises of the affiliate at any time after the effective date of this amendatory Act of the 95th General Assembly. The prohibition against establishing a bank office or branch on or adjacent to the premises of an affiliate shall not be applicable if the affiliate operates solely for the purpose of owning or leasing the real estate on which the bank office or branch is located.

(c) No bank that was not chartered and accepting consumer deposits in this State prior to May 1, 2007 may acquire the right or authority to establish a bank office or branch on or adjacent to the premises of an affiliate of that bank by acquiring through purchase, change in control, merger, or any other means the charter, bank office, or branch of another bank.

(d) It is the intent of this Section that no entity be permitted to circumvent the prohibition stated in this Section by first establishing a bank office or branch and then subsequently locating an office of an affiliate on or adjacent to the premises of the bank office or branch. If any entity attempts to locate an office of an affiliate on or adjacent to the premises of the bank office or branch, the entity must cease to operate its bank office or branch at a location that would violate the intent of this Section.

(e) If a federal agency with authority to approve or disapprove an application for the establishment of a branch in this State or a court of competent jurisdiction determines that any provision of this Section is inconsistent with the provisions of the federal Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and would have the effect of nullifying the laws of this State that permit interstate branching on a reciprocal basis, this Section shall be deemed to be null and void without further review or action being necessary. It is the intent of this Section, and specifically of this subsection (e), to ensure the continuity of this State's interstate branch banking laws and to ensure that nothing contained in this Section shall be given effect in a manner that disqualifies Illinois banks from establishing branches in other states as permitted by the laws of this State and other states and by federal law.

Section 10. The Savings Bank Act is amended by adding Section 1006.10 as follows:

(205 ILCS 205/1006.10 new)

Sec. 1006.10. Prohibition against establishment of offices or branches on or adjacent to the premises of certain affiliates.

(a) For purposes of this Section:

"Affiliate" has the meaning defined in this Act.

"Savings bank" means a savings bank operating under this Act, an out-of-State savings bank as defined under this Act, or a savings association defined in the Federal Deposit Insurance Act.

"Savings bank holding company" has the meaning ascribed in this Act.

A location is considered "adjacent to" the premises of an affiliate if the location is not separated from the boundary of the premises of the affiliate by real property that is owned by a person or entity having no business relationship with the savings bank, savings bank holding company, or with the affiliate and that is not leased to or used by the savings bank or affiliate.

(b) Notwithstanding any other provision of this Act, after the effective date of this amendatory Act of the 95th General Assembly, no savings bank may establish an office or branch on or adjacent to the premises of an affiliate of the savings bank if the affiliate engages in any commercial activity that could not lawfully be conducted by a savings bank holding company or a subsidiary of the savings bank holding company pursuant to federal law unless: (i) the savings bank had received its charter and was accepting consumer deposits in this State prior to May 1, 2007; or (ii) the savings bank does not accept any deposits at the office or branch on or adjacent to the premises of the affiliate at any time after the effective date of this amendatory Act of the 95th General Assembly. The prohibition against establishing an office or branch on or adjacent to the premises of an affiliate shall not be applicable if the affiliate operates solely for the purpose of owning or leasing the real estate on which the savings bank's office or branch is located.

(c) No savings bank that was not chartered and accepting consumer deposits in this State prior to May 1, 2007 may acquire the right or authority to establish an office or branch on or adjacent to the premises of an affiliate of that savings bank by acquiring through purchase, change in control, merger or any other means the charter, office, or branch of another depository institution.

(d) It is the intent of this Section that no entity be permitted to circumvent the prohibition stated in this Section by first establishing a savings bank office or branch and then subsequently locating an office of an affiliate on or adjacent to the premises of the savings bank office or branch. If any entity attempts to locate an office of an affiliate on or adjacent to the premises of the savings bank office or branch, the entity must cease to operate its savings bank office or branch at a location that would violate the intent of this Section.

(e) If a federal agency with authority to approve or disapprove an application for the establishment of a branch in this State or a court of competent jurisdiction determines that any provision of this Section is inconsistent with the provisions of the federal Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and would have the effect of nullifying the laws of this State that permit interstate branching on a reciprocal basis, this Section shall be deemed to be null and void without further review or action being necessary. It is the intent of this Section, and specifically of this subsection (e), to ensure the continuity of this State's interstate branch banking laws and to ensure that nothing contained in this Section shall be given effect in a manner that disqualifies Illinois savings banks from establishing branches in other states as permitted by the laws of this State and other states and by federal law.

Section 99. Effective date. This Act takes effect upon becoming law.".