The Texas Banking Department on Tuesday scored a major legal victory in its battle to keep national banks from entering the state using a controversial branching rule.
U.S. District Court Judge David Briones ruled that national banks may not branch into the Lone Star State while retaining offices in adjoining states.
"This is a huge decision," Texas Banking Commissioner Catherine A. Ghiglieri said in a interview. "It says Texas' decision to prohibit interstate branching stands, and the Office of the Comptroller of the Currency cannot change it."
The case pitted the Texas Banking Department against the OCC and Sun World, a subsidiary of NationsBank Corp. The OCC in August approved an application by the $134 million-asset institution to move its main office from El Paso to Santa Teresa, N.M., while retaining its two Texas offices as branches.
The Texas legislature voted last year to prevent banks from branching across the state line until 1999.
Texas regulators won a separate, more specific case in May when a U.S. district court overturned an OCC decision authorizing Commercial National Bank of Texarkana to move its headquarters into Texas while retaining its Arkansas operations as branches. The OCC has appealed this decision, and is expected to do the same with Tuesday's ruling.
Both cases involve a controversial rule allowing a national bank to move its headquarters anywhere within a 30-mile radius.