P.R. Laws tit. 7, § 811
In addition to the powers granted to Puerto Rican corporations by the laws of Puerto Rico, the Labor Bank shall have the following general powers:
(a) To accept deposits in checking accounts, savings deposits and fixed-term deposits and to issue evidence thereof. But the Bank may:
(1) Refuse any amounts tendered in deposit.
(2) Return any deposit at any time.
(3) Classify and differentiate between deposits on such basis as the bank may establish, subject to the approval of the Secretary.
(4) Pay rates of interest on deposits not higher than those established in the regulations of the “Puerto Rico Banking Law”, §§ 1 et seq. of this title, prescribed by the Secretary of the Treasury.
(b) To invest the deposits in such securities as the Secretary of the Treasury may authorize.
(c) To buy, withhold and receive in conveyance real property for the following purposes and not for any other:
First. — That necessary to install the offices for transaction of its business, and it may rent to others the space remaining in the same building whether furnished or not.
Second. — That transferred in payment of personal or mortgage debts previously contracted in the course of its operations.
Third. — That purchased or acquired at court sales, through decrees or mortgages in behalf of the bank, or purchased or acquired through insurance of amounts owed it.
Except where the Secretary grants in writing an extension in addition to the term herein set, the bank shall withhold, for a period of more than five (5) years, the possession of real property acquired as determined by the second and third paragraphs of this subsection; Provided, That after the lapse of five (5) years, or of the extension the Secretary has granted, if the bank has not disposed of said property, the Secretary of the Treasury may sell same at public auction and return to it the net proceeds of said sale, fixing as a minimum price for same, the official value of the assessment of the property to be thus sold; Provided, further, That without the approval of the Secretary of the Treasury, the bank may not:
(1) Invest in real property for the use of the bank or in stocks, bonds, debentures, or other obligations of any corporation owner of the premise occupied by the bank, or
(2) make loans to, or secured by stock of such corporation, if the totality of such investments and loans exceeds the sum of fifty percent (50%) of the bank’s paid-in capital and reserve fund.
The Labor Bank may also hold in lease offices and let them to others in the real property or properties it may acquire for the purpose of locating its business.
(d) To lend money.
(e) To borrow money temporarily from any source and in any form up to an amount not exceeding one hundred percent (100%) of the paid-in capital and reserve fund of the bank.
(f) To become a member of the Federal Deposit Insurance Corporation by meeting all the requirements contained in the law of said Corporation.
(g) It may be depository of the public funds of the Commonwealth of Puerto Rico.
(h) To issue capital debentures with the approval of the Secretary of the Treasury under the following conditions and restrictions:
(1) Every issuance of capital debentures shall require the previous approval of the Secretary of the Treasury.
(2) Capital debentures shall be subordinate in rights to obligations with the depositors, obligations under bank acceptance or any other current obligation.
(3) Capital debentures may be issued up to an amount not exceeding one hundred percent (100%) of the paid-in capital and fifty percent (50%) of the reserve fund of the bank.
(4) Capital debentures shall not be issued for a period of more than twenty (20) years, and shall not be convertible into bank stock.
(5) Capital debentures shall not be acquired by the bank neither shall they be accepted as surety of any kind.
(6) The Secretary of the Treasury may suspend the payment of the principal of and interest on capital debentures as they fall due when said payment reduces the sum of the capital stock, reserve fund and capital debentures and when in his judgment said payment may affect the financial solvency of the bank and jeopardize the interests of the depositors and the public in general.
(i) To invest a sum not to exceed ten percent (10%) of the capital stocks of any corporation engaged exclusively in the operation of the business of safe-deposit boxes and which maintains facilities in the same building used by the bank to carry out its businesses, or in an adjacent building. The sum to be invested in such shares shall be obtained through the issuance, by the bank, of capital liabilities.
To invest subject to the conditions that the Secretary of the Treasury 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 a competent authority to carry out business in Puerto Rico as a small business investment company under the provisions of the federal law applicable to these organizations. The Secretary of the Treasury may, when in his judgment he deems necessary or advisable, examine any small business investment company carrying out business in Puerto Rico if twenty-five percent (25%) or more of its voting stocks are directly or indirectly owned or controlled by one or more banks or foreign banks or if the election of twenty-five percent (25%) or more of its proprietor directors are controlled by one or more foreign banks.
And any other operation inherent to the nature of these institutions.
(j) The Bank may exercise the following fiduciary functions: to take, accept and comply with or execute all kinds of trusts lawfully entrusted to it, acting as trustee in all cases prescribed by law, receiving in trust deposits of money for any special and determined end or purpose, and in general to engage in all kinds of trust business with full power and faculties.
In order to perform these acts, the Bank shall previously file a surety of ten thousand dollars ($10,000) in bonds of the Government of the Commonwealth of Puerto Rico, the municipalities, public corporations, instrumentalities of the Commonwealth, or the federal government, with the Secretary, who shall issue to it, once the surety is filed, a license to act as trustee in all those trusts granted or entrusted to it.
The amount of the resources held in trust shall be added to the resources of the Bank for the computation of the examining charge.
The Secretary of the Treasury shall promulgate the regulations he may deem necessary to govern the fiduciary functions of the Bank.
(k) The Bank, for purposes of strengthening its capital structure and encouraging the regular savings of the workers and other persons of moderate income, may create a subsidiary corporation, with the approval of the Secretary of the Treasury, to buy and sell its stock when advisable to its interests.
The stock of this corporation shall be held by natural persons who are accredited members of labor unions recognized in Puerto Rico and of employees’ associations, persons of moderate income, labor unions recognized in Puerto Rico, welfare, pension and retirement funds of labor unions recognized in Puerto Rico. All shares shall be common but every stockholder shall have one vote irrespective of the number of shares he holds and may not exercise this right by proxy. The total amount he may invest in this corporation shall not exceed three percent (3%) of the paid-in capital and reserve fund of the Bank.
For purposes of this section the subsidiary company is that in which the Bank controls twenty-five percent (25%) or more of the voting stock; controls in any way the election of a majority of its directors; or has power to, directly or indirectly, exercise control or influence in the management and administrative policy.
The Bank may not grant any loan or extension of credit or buy securities under agreement of reacquisition by the subsidiary; invest in the capital stock, bonds, debentures or other obligations or accept other obligations as collateral security for advances made to any person, partnership, association or corporation, if (a) in the case of said subsidiary the total amount of said loans, extensions of credit, agreement of reacquisition, investments and advances against said collateral security exceeds five percent (5%) of the capital and reserve fund of the Bank.
Within the above limitations, each loan or extension of credit of whatever kind or nature made to the subsidiary shall be:
(1) Secured by collateral in the form of stock, bonds and other obligations having a market value at the time of granting the loan or extension of credit of at least twenty percent (20%) in excess of the amount of the loan or the extension of credit.
(2) The provisions of this section shall not apply to loans or extensions of credit secured by debentures of the Government of the United States or of the Commonwealth of Puerto Rico and subsidiaries thereof.
The Bank shall obtain from the subsidiary and submit to the Secretary during each year, reports on the latter’s financial conditions in the manner the Secretary may prescribe.
Whenever the Secretary deems it necessary, he may examine the subsidiary of the Bank for purposes of determining its financial conditions and its relations with the Bank and the effect its financial condition may have on the Bank. The expenses of examining the subsidiary of the Bank shall be charged to the Bank. In case of refusal to offer the information required during the course of an examination of the subsidiary, or of refusal to allow said examination, or to pay any charge, the Bank shall be subject to an administrative fine imposed by the Secretary of the Treasury of not less than five hundred dollars ($500) nor more than one thousand dollars ($1,000).
History —June 14, 1960, No. 86, p. 162, § 11; June 26, 1961, No. 115, p. 248, § 1; June 28, 1969, No. 117, p. 327, §§ 5, 6; July 1, 1975, No. 134, Part 1, p. 404, § 5.