Requirements For Determining Reciprocity Of State Banking Laws For The Purpose Of Bank Mergers - Q4 1998

By the Division of Banks

Mass. Gen. Laws chapter 167A, section 2, provides that an out-of-state bank holding company, with the prior approval of the Board of Bank Incorporation, may acquire direct or indirect ownership or control of a banking institution, provided, however, " . . . that the laws of the state in which operations of the subsidiary banks of such out-of-state holding company are principally conducted expressly authorize, under conditions no more restrictive than those imposed by the laws of the commonwealth as determined by the commissioner, the . . . acquisition of direct or indirect ownership or control of . . . one or more banks in that state, by bank holding companies whose banking institutions principally conduct their operations in the commonwealth . . . ." In reviewing other states' laws to determine reciprocity, the Division of Banks recognizes that some differences are inevitable. The Division generally seeks to determine that an acquisition can be accomplished substantively under the laws of the other jurisdiction, as opposed to making a finding that the laws are a mirror image of those of the Commonwealth. Based upon a review of Connecticut law, it is the Division's position that a bank holding company in Connecticut could acquire a Massachusetts bank since the terms imposed by the laws of Connecticut are no more restrictive than those terms required by the Commonwealth's General Laws for such acquisition.