Branch Banking Measure Signed amid Concerns

Article excerpt

Gov. Henry Bellmon Thursday signed into law a bill allowing banks to be acquired as branch facilities by other banks without first being declared insolvent by the Federal Deposit Insurance Corp., while concerns were voiced by Oklahoma Banking Commissioner Wayne Osborn that an amendment placed in another measure by the Oklahoma House of Representatives Banking Committee Thursday might circumvent the new law.

House Bill 1679, authored by Rep. Steve Lewis, D-Shawnee, was signed by the governor late Wednesday. Provisions of the measure go into effect immediately.

House Bill 1679 would allow a bank to be acquired by other bank for branching purposes before that bank is declared insolvent.

State law had required that banks have to be closed by the Federal Deposit Insurance Corp. before they could be acquired by other banks for branching purposes.

"Principally, this law will be a major step toward the orderly consolidation of banks in Oklahoma," Bellmon was quoted as saying in a press release issued Thursday.

"It does not permit the opening of new branches of existing banks, rather it encourages purchase of banks as branches of existing banks. In other words, the branches will be created by acquisition only.

"In this sense, it is protective of our banking system," Bellmon concluded.

While Bellmon was commending the merits of House Bill 1679 and its potential effect on Oklahoma's banking community, the House Banking and Finance Committee was approving an amendment to a housecleaning bill for the banking commission, which Osborn fears might circumvent the new law.

The amendment to Senate Bill 501 provides that a bank may appoint and authorize other banks as its agents in order for customers to make deposits, withdrawals and transfers between accounts, if 50 percent of more of the outstanding stock of such banks is owned by the same stockholders.

Meanwhile, Osborn said that although the new branching law probably will not put an end to bank closings, it may prevent a few closings from occurring in the near future.

"This may start off slow; mostly what we'll see will be banks obtaining smaller banks controlled by the same holding company," he said.

"I don't think it will put a stop to bank closings in Oklahoma but I think it will prevent some from happening two or three years down the road," Osborn added. "The new law is important because it will help reduce the overhead costs that cause problems for many banks. …