Texas Register, Volume 38, Number 35, Pages 5587-5800, August 30, 2013 Page: 5,621
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is cash shall equal and remain fixed as the product of the haircut on the
collateral received, as determined by reference to Table 2 of this sec-
tion [in the following Table 3], and the amount of cash transferred to
the other party.
(II) Non-cash collateral transactions. The credit
exposure arising from a securities borrowed transaction where the col-
lateral is other securities shall equal and remain fixed as the product of
the higher of the two haircuts associated with the two securities, as de-
termined by reference to Table 2 of this section [in the following Table
3], and the higher of the two par values of the securities. Where more
than one security is provided as collateral, the applicable haircut is the
higher of the haircut associated with the security borrowed and the no-
tional-weighted average of the haircuts associated with the securities
provided as collateral.
Figure: 7 TAC 12.12(c)(1)(B)(iv)(II)
[Figure- TAG 1 2.12()(1)( p()(II); ]
(C) Basel collateral haircut method. A state bank may
calculate the credit exposure of a securities financing transaction in the
manner provided by 32(b)(2)(i) and (ii) of the federal capital adequacy
guidelines.
(2) Mandatory or alternative use of method. The commis-
sioner may in the exercise of discretion require or permit a state bank
to use a specific [either the internal model method set forth in para-
graph (1 )(A of this subsection or the non-model] method or methods
set forth in [paragraph (1)(B) of] this subsection to calculate the credit
exposure arising from all securities financing transactions, from any
category of securities financing transactions, or from a specific deriva-
tives transaction if the commissioner finds in the exercise of discretion
that such method is consistent with [necessary to promote] the safety
and soundness of the bank.
[(d) Temporary exception. The requirements ofthis seti de
not apply to credit exposure arising from a derivati-ve transaction or a
secutwities fn ni g transaction until May 4 - 23.]
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal author-
ity to adopt.
Filed with the Office of the Secretary of State on August 16, 2013.
TRD-201303429
A. Kaylene Ray
General Counsel
Texas Department of Banking
Proposed date of adoption: October 18, 2013
For further information, please call: (512) 475-1300
SUBCHAPTER D. INVESTMENTS
7 TAC 12.91
The Finance Commission of Texas (the commission), on behalf
of the Texas Department of Banking (the department), proposes
to amend 12.91, concerning other real estate owned, to con-
form the section to recently enacted legislation.
Notwithstanding the general prohibition on real estate invest-
ment, a state bank is permitted to own its bank facilities as well
as real estate acquired for future use as a bank facility, because
such ownership is incidental to engaging in the business of bank-
ing. Once property is no longer used as a bank facility, or a bank
no longer intends to use real estate it originally acquired for future
expansion as a bank facility, the property is classified as "OtherReal Estate" or "Other Real Estate Owned" (shortened to ORE
or OREO), and the bank must dispose of the real estate just as
it would if it had acquired the property through foreclosure.
In general, Finance Code, 34.003(c), requires a state bank to
dispose of OREO within five years of the date it becomes OREO,
although the banking commissioner may grant one or more ex-
tensions of time if more rapid disposal is not feasible despite the
bank's good faith efforts, or if immediate disposal would other-
wise be detrimental to the bank. However, with respect to OREO
that once was property held for future use as a banking facility,
Finance Code, 34.003(c), formerly required a state bank to dis-
pose of such property within two years instead of five years. A
similarly situated national bank has five years to dispose of prop-
erty it once held for future expansion, measured from the date
the bank decided it no longer intended to use the property as a
banking facility.
The 83rd Texas Legislature recently enacted H.B. 1664, effective
June 14, 2013 (Acts 2013, 83rd Leg., R.S., Ch. 940). Among
other matters, H.B. 1664 amended Finance Code, 34.003(c),
to lengthen the time period from two years to five years for dis-
posal of real estate once held for future expansion but that the
bank no longer proposes to use as a bank facility. The proposed
amendments to 12.91(h) will conform the rule to the recently
amended statute.
Finance Code, 34.004, permits the reclassification of a non-
participating royalty interest from a real estate classification to
a personal property classification by the banking commissioner
upon application. A bank must then apply to the Federal De-
posit Insurance Corporation for permission to retain ownership
of the reclassified interest by the bank. The original language of
this section used terminology that is not consistent with Texas
oil and gas law and led to considerable confusion in the indus-
try regarding the type of interest that can qualify for this excep-
tion. H.B. 1664 amended Finance Code, 34.004, to revise the
terminology regarding qualifying royalty interests. The proposed
amendment to 12.91(a)(10) will conform the rule to the new ter-
minology.
Robert Bacon, Deputy Commissioner, Texas Department of
Banking, has determined that for the first five-year period the
proposed rule is in effect, there will be no fiscal implications
for state government or for local government as a result of
enforcing or administering the rule.
Mr. Bacon also has determined that, for each year of the first
five years the rule as proposed is in effect, the public benefit
anticipated as a result of enforcing the rule is conformity of the
section with underlying source law and consequent reduction of
potential public confusion.
For each year of the first five years that the rule will be in effect,
there will be no economic costs to persons required to comply
with the rule as proposed.
There will be no adverse economic effect on small businesses or
micro-businesses. There will be no difference in the cost of com-
pliance for small businesses as compared to large businesses.
To be considered, comments on the proposed amended sec-
tion must be submitted no later than 5:00 p.m. on September
30, 2013. Comments should be addressed to General Coun-
sel, Texas Department of Banking, Legal Division, 2601 North
Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Com-
ments may also be submitted by email to legal@dob.texas.gov.PROPOSED RULES August 30, 2013 38 TexReg 5621
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Texas. Secretary of State. Texas Register, Volume 38, Number 35, Pages 5587-5800, August 30, 2013, periodical, August 30, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth342086/m1/35/: accessed April 28, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.