SECTION 3.53. Asset Deposit and Pledge Requirement Applicable to Branch or Agency with Nonrelated Deposit Liabilities

(a) Asset pledge required. A foreign bank that maintains and operates a Texas state branch or agency, and carries nonrelated deposit liabilities on the books and records of its Texas state branch or agency as liabilities of such branch or agency, must pledge and keep assets on deposit with a depository in accordance with this subchapter.

(b) Amount of deposit. Subject to a minimum deposit of $100,000, the amount of assets required to be deposited under subsection (a), based upon the lower of principal amount or market value, is equal to the lesser of:

(1) one percent of the average total nonrelated liabilities, consisting of nonrelated deposit liabilities and nonrelated other liabilities, for the previous calendar quarter of such branch or agency appearing on the books, accounts and records of such branch or agency; or

(2) $100 million.

(c) Pledge of assets to banking commissioner. The assets required to be deposited under this section are deemed to be pledged to the banking commissioner for the benefit of the creditors and depositors of the Texas state branch's or agency's business in this State. Notwithstanding any provision of the Uniform Commercial Code to the contrary, the banking commissioner is deemed to have a security interest in such assets. The foreign bank must ensure that the banking commissioner has a perfected, first-priority security interest in such assets under applicable law at all times.

(d) Projection of liabilities. Prior to its first Texas state branch or agency carrying nonrelated deposit liabilities on the books and records of such branch or agency, a foreign bank must deposit assets based upon such branch's or agency's projection of total nonrelated liabilities, consisting of nonrelated deposit liabilities and nonrelated other liabilities, at the end of its first year of such operations.

(e) Increase in amount of required deposit. The banking commissioner may increase the amount required to be deposited by a foreign bank under this section if necessary or desirable to:

(1) maintain the Texas state branch or agency in sound financial condition;

(2) protect the depositors, creditors and the public interest in Texas; or

(3) support public confidence in the business of the Texas state branch or agency.

Source Note: The provisions of this §3.53 adopted to be effective November 12, 2003, 28 TexReg 9823; amended to be effective September 8, 2022, 47 TexReg 5328