20:07:16:10Requirement of special bank subsidiaries.

A special bank subsidiary must meet the following requirements: (1) The subsidiary is adequately capitalized, as determined by the director; (2) The subsidiary is physically separate and distinct in its operations from the operations of the parent bank; (3) Physical separation is achieved at a minimum by separate offices clearly designated as belonging to the subsidiary, access to which is through a separate entrance from that used for the parent bank, except that the parent bank and the subsidiary's offices may be reached through common outer entry; (4) The subsidiary does not share a common name or logo with the parent bank; (5) The subsidiary conducts business pursuant to independent policies and procedures designed to make known to the public that the subsidiary exists as an organization separate from the parent bank; (6) The subsidiary maintains separate accounting procedures and corporate records that are open to examination by the division; (7) The subsidiary observes separate corporate formalities; (8) The subsidiary retains separate employees who are not employees of the parent bank and are compensated by the subsidiary; (9) The subsidiary shares not more than one common officer with the parent bank; (10) A majority of the subsidiary's board of directors is composed of persons who are neither directors nor officers of the parent bank; and (11) Application for operation of the subsidiary is approved by the director.

Source: 12 SDR 106, effective January 1, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.