One of our commercial lenders has asked if we can secure a loan with bank stock from two other finanacial institutions. (not ours). I cannot find where this is or is not allowed. We are a National Bank, and the stock that has been offered as collateral is from both a small, local State bank and a large Trust. Can anyone give me chapter and verse where this is addressed?
Thanks! (Why do questions like this always come up on the Friday afternoon of a long holiday weekend?)
Leslie

12 CFR 7.2019 outlines the kinds of agreements, including the taking of own bank stock as collateral, a national bank may enter into. However, it applies only to national banks.

If there are limitations on the taking of other bank stock as collateral, they would appear in state law. I am not waware of any Maryland law which would place limits on taking someone else's stock as collateral.

Depending on the size and nature of the loan and the stock held, Regulation U may require certain disclosures of the borrower.

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Opinions expressed are not necessarily those of my employer.

Paul Brinker CRCM
Director, Corporate Compliance
First National Bank of Omaha
402-964-8313