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Client Alert: Bank Regulatory & Legal Developments - Part I

A Client Alert Series For Changes In 2014

We are previewing some of the latest developments in the legal and regulatory landscape that may affect your financial institution this year. This is just the beginning. In the following weeks, we will continue this Client Alert series by identifying specific items you need to consider.

Tax Sharing Agreements

If your bank has a holding company and you have elected to file tax returns as a consolidated group, you should have an agreement between the bank and the holding company that, among other things, establishes the bank’s ownership rights in tax refunds generated by the bank. A few weeks ago, the federal banking agencies published a proposal that calls for institutions to review and revise their tax sharing agreements to specifically clarify the agency relationship between the holding company and the bank vis-a-vis tax refunds, and cautions institutions that tax sharing agreements must be in compliance with applicable affiliate transaction standards.

Many institutions are taking this opportunity to revisit their tax sharing agreements to ensure ongoing regulatory compliance and to ensure that their agreements are tailored to their specific circumstances and contain appropriate tax provisions and updates.

Code of Conduct / Code of Ethics

As annual meeting season approaches, it is time to review and update, as necessary, your institution’s code of ethics. Although the regulatory landscape continues to evolve in this regard, our recent experience with a number of regulatory agencies suggests that there will continue to be heightened scrutiny of the provisions, administration and enforcement of an institution’s code of ethics, particularly with regard to conflicts of interest. The regulators expect institutions to annually review and update their codes, as necessary, and it is considered a best practice to obtain annual acknowledgments from officers, directors and employees of their duties and obligations under the code of ethics.

Firearm Concealed Carry Laws

In July 2013, Illinois became the last state to allow its citizens to carry concealed firearms. Wherever your institution is operating, you should be aware of the impact of that state’s concealed carry law on your institution and what measures you may need to take to ensure ongoing compliance. For instance, in Illinois, if you wish to prohibit concealed firearms on bank premises, you must make certain required disclosures and postings.

You also will likely need to revise employee handbooks and bank policies to reflect the new environment in this regard. If you lease any bank locations, leases should be reviewed and may need to be amended to permit the bank to determine whether or not to permit concealed carry firearms on the premises, as applicable.  There are a number of legal issues involved that should be considered.

Contact Us

We are assisting many of our clients in reviewing and updating policies, tax sharing agreements and other regulatory and compliance matters.


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