P.R. Laws tit. 7, § 761
In addition to the general powers granted to the Puerto Rican corporations by our laws, the Bank shall have the following specific powers:
(a) To purchase, sell, discount and negotiate bills of exchange, drafts, promissory notes and other negotiable instruments; to make loans for a specified term to natural or [juridical] persons, with personal, collateral or mortgage security, or secured by goods in warehouse or standing crops; and to contract loans and advances with the Commonwealth Government, municipal corporations or other dependencies of the Commonwealth Government. The aggregate total of the loans secured by mortgages on real property may not exceed the aggregate paid-in capital stock and the reserve fund of the bank, nor exceed the aggregate total of its deposits in savings accounts and term accounts, whichever is greater. This limitation is not applicable when a mortgage is given by a borrower as additional and secondary collateral and merely to secure the loan in last instance, nor is it applicable to loans secured under the “National Housing Act”, provided there exists a binding obligation on the part of the federal government or of the government of any state of the Union, or of the Government of the Commonwealth of Puerto Rico or its agencies or instrumentalities, or any public or private retirement system or any financial institution of proved economic solvency, to buy such loans.
(b) To receive deposits, in current accounts as well as on fixed terms.
(c) To buy and sell drafts and deal in gold and silver, receive securities on deposit, and make collections and payments for account of others.
(d) To borrow, temporarily, a[n] amount not exceeding one hundred percent (100%) of its paid-in capital and reserve fund. If the Bank makes this kind of loan it may pledge assets up to an amount which shall not exceed one hundred and twenty percent (120%) of the loan. This limitation shall not be applicable to loans secured by bonds of the United States of America or of the Commonwealth of Puerto Rico, of the authorities, instrumentalities or dependencies of the Commonwealth Government, or, of the municipalities of Puerto Rico. The Commissioner of Financial Institutions may authorize loans in excess of this amount and may also authorize, when special circumstances so justify it, the pledging of assets up to amounts exceeding one hundred and twenty percent (120%) of the sum borrowed. Any pledge in excess of this sum shall be void unless approved by the Commissioner. The Bank may rediscount and endorse in good faith its negotiable securities without limitation. It may not issue certificates of deposits for the purpose of borrowing money.
(e) To buy and sell bonds, securities and other evidences of indebtedness of the United States Government, or which are wholly secured, directly or indirectly, by said Government, and bonds, securities and other evidences of indebtedness of the Commonwealth Government, and current debt bonds, not in default, of the authorities, instrumentalities or dependencies of the Commonwealth Government or the municipalities of Puerto Rico, or of any state of the United States or municipalities and quasi-municipalities of any state of the United States, whose interest is not in arrears; and to buy and sell, without further liability, debentures which represent debts of any person, partnership, association, or corporation in the form of bonds, promissory notes, or debentures, known as “investment securities”, subject to the additional definitions of the term “investment securities” that the Commissioner may prescribe, and under the limitation of the aggregate total of said investment securities, debtor or mutuary, as the Commissioner may determine.
(f) To become a member of the Federal Deposit Insurance Corporation, and with the [authorization] of the Commissioner of Financial Institutions, of the Federal Reserve Bank System, by meeting all the requirements prescribed by the laws creating both organizations.
(g) To accept drafts or bills of exchange in its charge and which have a maturity date not exceeding six (6) months and which are a result of transactions involving the importing or exporting of article[s] of commerce from or to foreign countries; or which result from transactions involving the shipping of articles or [sic] commerce within the jurisdictional limits of the Commonwealth of Puerto Rico or to continental United States and its territories and possessions; but the Bank shall not accept such drafts or bills of exchange in favor of any person, company, firm or corporation in a sum that in the aggregate exceeds ten percent (10%) of its unimpaired paid-in capital stock and reserve fund, unless the Bank is secured by the shipping documents transferring or securing the right over the merchandise, and these documents are annexed to said drafts or bills of exchange when the acceptance is issued, or unless they are secured, on acceptance, by the warehouse receipts or any other document evidencing title and right to current staples easily salable; in which case the Bank may accept such drafts or bills of exchange up to a sum equivalent to one-half (1 / 2) of its unimpaired paid-in capital stock and its reserve fund. The Commissioner of Financial Institutions may authorize the Bank to accept such documents.
(h) To purchase, hold and receive by conveyance any real property for the following purposes, but for no others; save as provided in subsection (o) of this section:
First. — Such as may be necessary to install the offices for the transaction of its business. Unused space in the same building, whether equipped or not, may be leased to others.
Second. — Such as shall be conveyed to it in satisfaction of personal or mortgage debts previously contracted in the course of its operations.
Third. — Such as may be purchased or acquired at judicial sales, decrees, or mortgages held by the Bank, or that may be purchased or acquired to secure amounts due to it.
Except when an extension is granted in writing by the Commissioner of Financial Institutions in addition to the term fixed, the Bank shall not hold any real property acquired by virtue of the provisions of subdivisions third and fourth [sic] of this subsection for a period longer than five (5) years. After the lapse of said five (5) years, or of the extension granted by the Commissioner, if any, if the Bank has not disposed of said property, the Commissioner may sell the same at public auction and turn over to it the net proceeds of the sale to the Bank, fixing as the minimum price thereof the official assessed value of the property to be so sold. The Bank shall not, without the approval of the Commissioner, (1) invest in real property for the use of the Bank, or in shares, bonds, debentures or other debentures of any corporation owning the premises occupied by the Bank; nor (2) make loans to, or with the security of shares in such corporation, if the total of such investments and loans exceeds the amount of fifty percent (50%) of the paid-in capital of the Bank.
(i) To establish branches in Puerto Rico, in the continental United States and its possessions, or in foreign countries, as it deems convenient to its interests. The Bank shall not open branches in Puerto Rico, the continental United States and its possessions, or in foreign countries without having first obtained the written approval of the Commissioner of Financial Institutions. With the written approval of the Commissioner, the Bank may establish and operate mobile branches for the purpose of exercising those of its powers that may enable it to provide such type of banking service as it may be authorized to provide in predetermined places, hours and days of each week. As soon as the Commissioner receives a written application from the Bank to open a branch, he shall make such investigations as he may deem necessary to ascertain whether the opening of such branch will be of public benefit, and whether the Bank has capital sufficient for the establishment of said branch.
(j) To establish and conduct a savings department.
(k) To take, accept and comply with or execute all kinds of trusts that may lawfully be committed to it, acting as trustee in all cases prescribed by law, receiving deposits of money in trust for any end or and specific purpose, and, in general, to carry out all kinds of trusts transactions with ample power and authority. In order to carry out these acts, the Bank shall previously deposit a [ten thousand dollar] ($10,000)-bond, in bonds of the Commonwealth of Puerto Rico, of the municipalities, public corporations and instrumentalities of the Commonwealth, or of the federal government, held by the Secretary of the Treasury who shall, upon receipt of said bond, issue it a license to act as trustee in all such trusts as are granted or committed to it. The Bank shall comply with all orders, rules and regulations prescribed by the Commissioner of Financial Institutions in connection with this type of transactions. This chapter in no wise changes or alters the provisions and liabilities established in the act that authorizes the incorporation and regulation of trust companies in Puerto Rico.
[(l)
(1) To grant personal loans, subject to applicable laws and regulations.
(m) To acquire and own common stock and obligations issued by the Federal National Mortgage Association, or by any bank organized under the “Federal Farm Loan Act of 1916”, as amended.
(n) To invest a sum not in excess of ten percent (10%) of its capital in shares of any corporation exclusively devoted to running the business of safety boxes and maintaining facilities in the same building used by the Bank for conducting its business, or in an adjacent building. The amount to be invested in such stock shall be obtained by the Bank through the issuance of capital notes.
(ñ) To invest, subject to the conditions that the Commissioner of Financial Institutions may require, a sum not to exceed two percent (2%) of its capital and reserve fund, in capital stock of any corporation organized under the laws of Puerto Rico and authorized by competent authority to do business in Puerto Rico as a small-business investment company under the provisions of the federal law applicable to these organizations. The Commissioner may, when in his judgment he deems it necessary or advisable, examine any small-business investment company doing business in Puerto Rico, if twenty-five percent (25%) or more of its voting stock is directly or indirectly owned or controlled by the Bank.
(o) May be the depositary of the public funds of the Commonwealth of Puerto Rico. It may receive current accounts and fixed term deposits from any agencies, instrumentalities, public corporations, municipalities and political subdivisions of the Government of the Commonwealth of Puerto Rico, subject to the provisions of law and regulations on collaterals of the Department of the Treasury. The Secretary of the Treasury is hereby empowered to relieve the Bank from compliance with the collateral requirement through an administrative determination.
(p) The Bank may issue capital notes with the approval of the Commissioner of Financial Institutions. Such capital notes shall be legally subordinate to the obligations with the depositors and other creditors of the issuing Bank, and shall not be issued for a maturity period longer than twenty (20) years. The Commissioner may suspend the payment of the principal and interest on capital notes on or before they fall due, when such payment may reduce the amount of capital, and when in his judgment such payment may affect the financial solvency of the Bank and endanger the interests of the depositors and of the general public. Capital notes shall be deemed as part of the capital, but shall be presented and designated separately in all financial statements, and shall not be subject to the payment of taxes. The Bank shall not acquire its own capital notes as investment of its trust funds or for its investment portfolio.
(q) And may transact any other business proper to the nature of a banking institution.
(2) To lend money with or without collateral, to cooperatives, special corporations owned by workers, persons, firms, corporations or other private organizations, when such loans are to be used in activities which contribute to the development of the economy of Puerto Rico. These loans shall be evidenced by promissory notes, bonds, negotiable instruments, convertible instruments, stock-acquisition entitlement certificates, equipment-trust certificates, stock received through the organizations of the issuing entity, or other debentures or documents of said debtors. The total debt of any Bank loan shall be subject to the limitations on loans to a single debtor provided in this chapter.
(3) To secure the payment of principal and interest of loans granted by other cooperative organizations of Puerto Rico.
(4) To invest up to a maximum of ten percent (10%) of its total assets in the creation of operational subsidiary or affiliate enterprises through a resolution of its Board of Directors, for any of the following purposes:
(i) Office equipment and [business supplies], to supply the cooperatives and the community in general.
(ii) To loan money, with or without a security, to cooperatives and small businesses, provided that such loans are to be used in activities which promote the commercial, agricultural, industrial and services development.
(iii) To operate a financial and operational leasing business.
(iv) To operate a mortgage bank business.
(v) To create operational subsidiary or affiliate enterprises when, in the judgment of the Board of Directors, such an action is advisable, desirable or needed to carry out the functions of the Bank or to comply with its institutional purposes or to exercise its powers. The Bank may sell, cede, transfer, lease or lend any of its assets to the subsidiaries or affiliates.
(vi) After express approval of the Commissioner of Financial Institutions, the Bank may create financial subsidiaries, which shall have the sole purpose of issuing stock secured with the assets transferred thereto by the Bank for such purposes. No profit nor loss shall be recognized in the transfer of assets to the financial subsidiaries. The proceeds of any issue made by the financial subsidiary shall revert to the Bank, after deducting the transaction’s expenses, and any sum set aside to cover expenses for servicing such assets or that has been set aside as an additional security. Any stock issued by these financial subsidiaries shall be exempt from payment of income, property, excise and municipal license taxes. The Bank may not transfer to the financial subsidiary, any assets in excess of thirty percent (30%) of its total assets. Any transfer of assets to the financial subsidiary shall be for its book value.
(vii) To sponsor, promote the creation of, expedite the financing of, and participate as members or preferred stock holders in cooperatives that provide multiple services, and in cooperative enterprises engaged in commercial, industrial or agricultural activities, or which contribute in any way to the creation of jobs and to encourage production. In the specific case of construction loans, these shall be granted solely for the projects originating in the cooperatives and those in which the Bank participates as a partner.
The Bank shall not invest more than one half (1 / 2) of ten percent (10%) of its assets in one single operational subsidiary. No loan shall be granted by an operational subsidiary or affiliate unless the application, evaluation and approval process of the same is duly documented following to the documentation standards that apply to this kind of loan by the laws and regulations that govern the Bank.
Not less than one third (1 / 3) of the members that constitute the Board of Directors of each operational and financial subsidiary shall be directors or officials at the Bank.
(r) Offer and maintain escrow accounts for all financial institutions, including savings and credit unions, said accounts being allowable for other such financial institutions.
(s) To take on loans by issuing bonds, promissory notes, commercial paper or other obligations or secured debt instruments (hereinafter “secured instruments”) with securities acquired from the proceeds from the sale of said “secured instruments”, under such terms and conditions that from time to time the Board of Directors may establish to (i) acquire funds for any of the corporate purposes of the Bank, including, among others, to pay interest on other Bank debts, (ii) to establish reserves or to defray the acquisition of assets or businesses, or (iii) to defray other expenses, be them incidental, necessary or convenient in the exercise of its powers and the attainment of its corporate purposes; Provided, That, the principal of the “secured instruments” owed at any time shall not exceed five hundred million dollars ($500,000,000). The Bank may issue additional “secured instruments” up to a principal cap of five hundred million dollars ($500,000,000) insofar as the secured instruments already issued are being paid, in whole or in part. The authorization of the Commissioner of Financial Institutions shall not be necessary for the Bank to issue “secured instruments”, pursuant to the provisions of this chapter.
History —June 21, 1966, No. 88, p. 257, § 11; Sept. 25, 1992, No. 79. § 6; Aug. 17, 2001, No. 115, § 1; Aug. 9, 2008, No. 237, § 1.