AGO 1989-079.

• Case Date: June 29, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-079. June 29, 1989ATTORNEY GENERAL OPINION NO. 89-79Joan Finney State Treasurer 900 Jackson Suite 201 Topeka, Kansas 66612-1235 Re: Banks and Banking--Banking Code; Supervision; Board--Definition of Bankers' Bank Synopsis: To secure the deposit of public funds, a depository bank may deposit pledged securities in a facility of a bankers' bank if the depository bank does not own or control the bankers' bank. The degree to which the depository bank may have an interest in the bankers' bank without constituting ownership or control may be determined by the pooled money investment board. Cited herein: K.S.A.1988 Supp. 9-519 et seq.; K.S.A.1988 Supp. 9-1405; 9-1719; 9-1808; 75-4218; K.S.A. 75-4224; L.1967, ch. 447. * * * Dear Ms. Finney: As state treasurer, you request our opinion regarding the pledge of securities by a bank to secure a state bank account. A state bank account must be collateralized by the pledge of securities. The securities may be deposited for safekeeping in another bank, unless the facility is "owned or controlled directly or indirectly by the bank depositing the same." K.S.A.1988 Supp. 75-4218(b)(2); See also K.S.A.1988 Supp. 9-1405(b) (security for deposit of funds belonging to municipal corporations). The statutes relating to the deposit of public funds do not contain guidelines for determining whether a facility is "owned or controlled" by the depositing bank. You inquire whether K.S.A.1988 Supp. 75-4218(b)(2) would allow a bank to deposit pledged securities in a facility owned by a bankers' bank the depositing bank owns less than a 5% interest in the bankers' bank. A bankers' bank is defined as:

"a state bank which is owned exclusively . . . by other state banks, federally chartered banks or a [sic] one bank holding company and is organized to engage exclusively in providing services for other . . . banks. . . ." K.S.A.1988 Supp. 9-1808.

Therefore, the bankers' bank may or may not be owned or controlled to any degree by the depository bank. If the depository bank does not own an interest or have control over the bankers' bank, then the pledged securities may be deposited in a facility of the bankers' bank. The banking code defines control in K.S.A.1988 Supp. 9-1719(a) as ". . . the power directly or indirectly to direct the management or policies of...