In 1994 Congress allowed states to raise, lower, or abolish the bank
deposit cap, which says that banks may only have 30% of all the
deposits in the state (they are limited nationally to 10%). Banks may
exceed the limit by attracting new customers, but they may not grow
above the limit by acquisition. Most states chose to keep the 30%
level. Two - Michigan and Utah - abolished the cap. New Mexico raised
it to 40%, and several states lowered it. The lowest is in Iowa at 10%.
Interestingly, Iowa and North Dakota, two states that lowered the cap,
have one bank per 4,000 people, while Michigan and New Mexico have
about one per 14,000.
The 1994 interstate branching law says that no bank may control more
than 30% of a state's deposits or more than 10% of the nation's
deposits. (Congress did, however, allow states to raise, lower, or
abolish the bank deposit cap. To date Iowa, Missouri and Nebraska,
among others, have lowered the 30% cap). Banks may exceed the limit by
attracting new customers, but they may not grow above the limit by
acquisition.
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An interstate merger transaction shall not be permitted if, upon
consummation of such transaction, the resulting bank or its bank
holding company would have direct or indirect ownership or control of
deposits in Nebraska in excess of 22 percent of the total deposits of
all banks in Nebraska, plus the total deposits, savings accounts,
passbook accounts, and share accounts in savings and loan associations
and building and loan associations in Nebraska, as determined by the
director on the basis of the most recent calendar-year-end reports,
except as provided in subsection (4) or (5) of section 8-910.
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It is unlawful for any bank holding company in Missouri to obtain
control of any bank or depository financial institution if the total
deposits in such bank or institution together with the total deposits
in all banks and depository financial institutions in Missouri
controlled by the bank holding company exceed thirteen percent of the
total deposits in all depository financial institutions in the state,
determined as of December thirty-first of the most recent year for
which totals are available.
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Iowa is the only state where the cap has actually been an issue.
Norwest has held 9.9% of statewide deposits since 1992 and has demanded
each year that the legislature raise it--a proposition strongly opposed
by the state's banking and credit union associations.
View the Iowa market share cap statute.
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