 National banks may engage in personal property leasing activities under two separate authorities,
12 USC 24 Seventh and
12 USC
24 Tenth
 CEBA
Leases
- National bank may invest in tangible personal
property, including vehicles, manufactured homes, machinery, equipment, or
furniture, for the purpose of, or in connection with leasing that property, if
the aggregate book value of the property does not exceed 10 percent of the
banks consolidated assets and the related lease is a conforming lease
-
12 USC 24 Tenth.
OCC Interpretive Letter No 770
2.10.97
- National banks may also engage in lease financing
if the lease is the functional equivalent of a loan under section 24 Seventh
- The OCC has interpreted this to mean that section
24 Seventh leases must be net, full-payout leases
- Under this requirement, national banks may rely
on the estimated residual value only to a limited extent, i.e., the unguaranteed portion of the estimated residual value relied upon by the bank, plus the estimated cost of financing the property, must not exceed a specified percentage of the original cost of the property to the lessor 12 CFR 23
Consulting
Services Relating to Leasing
- National banks may engage in property leasing
activities through a subsidiary, including lease consulting services, finder
services, and lease servicing
- OCC Interpretive Letter No 567, reprinted in
1991-1992 Transfer Binder Fed Banking L Rep CCH 83,337
10.29.91
-
12 CFR 5.34(e)(2)(ii)(M)
Data
Processing Equipment Leasing
- National banks operating subsidiary may enter
into a general partnership with a corporation for the leasing of electronic data
processing equipment on a net, full-payout basis
- OCC Interpretive Letter No 369, reprinted in
1985-1987 Transfer Binder Fed Banking L Rep CCH 85,539
9.25.86
DPC
Property Leases
-
National banks may enter into a lease agreement regarding Debt Previously
Contracted DPC
property, subject to conditions and limitations
- OCC Interpretive Letter No L-5, reprinted in
1977-1978 Transfer Binder Fed Banking L Rep CCH 85,022
9.02.77
-
12 USC 29
First
Equipment
and Personal Property Leasing
- National banks may invest in tangible personal
property, including without limitation, vehicles, manufactured homes, machinery,
equipment, or furniture, for lease financing transactions on a net lease basis,
provided the aggregate book value of all such property does not exceed 10
percent of the consolidated assets of the bank
-
12 USC 24 Seventh
-
12 CFR 23.1
et seq; OCC Interpretive Letter No 567, reprinted in
1991-1992 Transfer Binder Fed Banking L Rep CCH 83, 337
10.29.91
- OCC Interpretive Letter No. 556, reprinted in
[1991-1992 Transfer Binder] Fed. Banking L. Rep. (CCH) 83,306
8.06.91
Excess
Space
- National banks may lease excess space on bank
premises to other businesses, share space with other businesses, or offer its
services in space owned or leased to other businesses
-
12 CFR 7.3001
Lease
Financing, Historic Preservation
- National banks can establish operating
subsidiaries to acquire a leasehold interest in historic buildings and thus
acquire the tax credits associated with those buildings. This allows the bank to
reduce the borrowers costs of financing the rehabilitation and at the same time
earn an improved return
- The substance of this type of transaction is a
financing
-
Corporate Decision No. 99-07, 1999 OCC QJ
LEXIS 97 3.26.99
Lease Interest in Natural Gas
- National banks operating subsidiary may own an
interest in a natural gas lease when ownership interest is equivalent to secured
lending
-
Corporate Decision No 98-17
3.23.98
- National banks may acquire an otherwise
impermissible property interest in minerals, eg, oil and gas
production payments, when it is acquired in connection with the banks express
power to lend money
- OCC Interpretive Letter 10.04.94
Lease
of Personal Property for Banks Use
- National banks may be the lessee of personal
property for their own use
- OCC Interpretive Letter 7.14.76
Lease
of Public Facilities
- National banks may lease a building to a
municipality as long as the lease agreement provides that the municipality will
become owner of the building on expiration of the lease
-
12 CFR 7.1000(d)
Lease
of Real Property
- National banks may lease real property that is incidental to a permissible lease of personal property,
eg, land upon which a leased manufacturing facility stands
-
OCC Interpretive Letter No 770,
2.10.97
-
Corporate Decision No 98-35,
6.10.98
Leasing
Bank Employees from Third Party
- National banks may lease the services of its
employees from a third party as long as the board of directors continues to
retain and exercise general supervision over the affairs of bank
- OCC Interpretive Letter No 431, reprinted in
1988-1989 Transfer Binder Fed Banking L Rep CCH 85,655
11.05.87
-
12 CFR 7.2010
Leasing
Bank Lobby to Securities Brokers, Real Estate Brokers, Insurance Agents, and
Travel Agents
- National banks may lease bank premises to
unaffiliated entities and the rental payments made to the bank may be based on a
percentage of gross commissions received by the tenant
-
12 CFR 7.3001(a)
Leasing/Selling
Excess Capacity
- National bank may lease excess monitoring
capacity of its security/fire alarm system or other equipment to other financial
institutions
- OCC Interpretive Letter 9.17.87
- National banks may market excess capacity on mail
sorting equipment to other companies and may resell excess capacity on their
long line telecommunications and data processing equipment to third parties
- OCC Interpretive Letter 12.13.83
- OCC Interpretive Letter 12.20.89
Murabaha
Financing Transactions
SEC_CODE_REF_0090001192884
- National bank may enter into net leases or
installment sales of real estate to serve the home finance needs of its
customers, who are prohibited by religious principles from paying interest and
therefore from obtaining traditional mortgages
-
OCC Interpretive Letter No 806
10.17.97
-
OCC Interpretive Letter No 867
6.01.99
Noncontrolling Investment in Trust to Purchase, Own, Lease Aircraft
- Noncontrolling investment in a trust established
to purchase, own, and lease commercial aircraft is permissible, however, because
of safety and soundness concerns, the bank must charge off the investment in its
entirety
-
OCC Interpretive Letter No 887
4.30.00
Purchase of Off-lease Equipment
- National bank may purchase from lessors and
resell, as principal, off-lease equipment
- Alternatively, it may act as agent for such lessors
in selling the equipment
- The letter finds that these activities are part
of the business of banking and authorized under 12 USC 24 Seventh, 12 USC 24 Tenth, and
12 CFR
Part 23
-
OCC Interpretive Letter No 953
12.04.02
Real
Estate Leasing
- A national banks financial subsidiary proposed
to engage in real estate leasing of the type that the Board of Governors of the
Federal Reserve System has determined to be permissible in
section 225.28(b)(3)
of Reg Y
- The financial subsidiary also proposed to become
a general partner of a limited partnership that would also engage in real estate
leasing permitted by Reg Y
- Financial Subsidiary Filing 12.06.01
|
