Reciprocity Of Laws With Respect To Interstate Mergers Between Connecticut and Massachusetts - Q2 2000

By the Division of Banks

A Connecticut bank proposes to merge with a Massachusetts bank. Connecticut General Statute section 36(a) provides that an out-of-state bank may, with the approval of the commissioner, merge with a Connecticut bank provided that..." the laws of the home state of such out-of-state bank authorize, under conditions no more restrictive than those imposed by the laws of this state (Connecticut) as determined by the commissioner". Section 36(a) provides a number of conditions relative to such a merger, which include; a limitation on deposit concentration subject to a waiver by the commissioner, a requirement that the merger satisfy all filing requirements required for mergers in Connecticut, and consideration by the commissioner that the merger would produce benefits to the public which would clearly outweigh possible adverse effects including decreased or unfair competition.

In the Commonwealth, Chapter 238 of the Acts of 1996 authorizes interstate branching, mergers and acquisitions. Mass. Gen. Laws chapter 167, section 39 B provides that any "...out-of-state bank or out-of-state federal bank...may...establish and maintain branches through a merger or consolidation with...any Massachusetts bank; provided however, that in each instance the laws of the jurisdiction in which such out-of-state bank or out-of-state federal bank...has it's principal place of business expressly authorize, under the conditions no more restrictive than those imposed by this chapter as so determined by the commissioner, a Massachusetts bank to exercise like authority therein."

It is the position of the Division that a state- or federally-chartered bank located in Connecticut could acquire a Massachusetts Bank through merger or consolidation since the terms imposed by the laws of Connecticut for such a transaction are no more restrictive than those terms required by the Commonwealth's General Laws for such a merger.