Governor Patrick signed a bill into law at the end of his term that overhauls the Massachusetts banking laws. Chapter 482 of the Acts of 2014, "An Act Modernizing the Banking Laws and Enhancing the Competitiveness of State Chartered Banks," was signed into law on January 7 and becomes effective on April 7. The new law will, among other provisions, grant new powers to institutions to engage in strategic transactions including mergers and acquisitions, broaden the authority of state chartered banks to engage in activities permissible for national banks, federal savings associations and out-of-state banks, and allow for more flexibility in the governance of banking organizations. For example, the new law will eliminate certain conditions under the existing Massachusetts parity law to the exercise of powers granted to competing institutions. Currently, Massachusetts law allows a state-chartered bank to engage in any power or activity authorized for a federal bank, federal savings association or bank chartered by another state if the power is identified in regulations of the Commissioner of Banks that have been approved by the Legislature. The new law amends the parity provisions to eliminate the requirement that such powers be previously identified in the Commissioner's regulations.
Nutter Notes: As mentioned above, the new law will also expand the authority of institutions to engage in certain strategic transactions including mergers and acquisitions. For example, under the new law, a Massachusetts mutual holding company will be permitted to merge with an out-of-state mutual holding company or mutual holding company organized under federal law; a subsidiary bank of a Massachusetts mutual holding company will be able to acquire by merger Massachusetts or federal credit unions, federal mutual banks, and out-of-state mutual banks; and a mutual holding company will be permitted to merge with a stock bank holding company, provided that the mutual holding company is the surviving entity in the merger. The new law also creates more flexibility for mutual banks to reorganize into the mutual holding company form, permits mutual holding companies to be unwound, grants express authority for Massachusetts banking organizations to form interim subsidiary banks for the purpose of facilitating merger transactions, and streamlines the regulatory application and approval process for certain transactions. The new law will provide additional flexibility in the governance of banks and holding companies, allowing a subsidiary bank to elect to follow the governance procedures under the Massachusetts business corporation law (Chapter 156D of the General Laws of Massachusetts) or the provisions applicable to its parent holding company. The new law provides similar flexibility in the governance of mutual holding companies. Nutter's Banking and Financial Services Group will issue a detailed summary of the new law by February 25. Please see related information in Report #4 below.