DEPARTMENT OF STATE

Office of the State Banking Commissioner

Statutory Authority: 5 Delaware Code,

Section 121(b) (5 Del.C. §121(b))

5 DE Admin. Code §904

ORDER

904 Exceptions to Tying Restrictions

IT IS HEREBY ORDERED the 4th day of November, 2005 that new Regulation 904 is adopted as a regulation of the State Bank Commissioner. A copy of new Regulation 904 is attached hereto and incorporated herein by reference. The effective date of new Regulation of 904 is December 11, 2005. This new regulation is adopted by the State Bank Commissioner in accordance with Title 5 of the Delaware Code.

New Regulation 904 is adopted pursuant to the requirements of Chapter 11 and 101 of Title 29 of the Delaware Code, as follows:

1. Notice of the proposed new Regulation 904 and its text was published in the October 1, 2005 issue of the Delaware Register of Regulations. The notice was also published in the News Journal on September 23, 2005, and in the Delaware State News on September 22, 2005. In addition, the notice was also mailed to all persons who had made timely written requests to the Office of the State Bank Commissioner for advance notice of its regulation making proceedings. The notice, among other things, summarized the proposed new regulation, invited interested persons to submit written comments to the Office of the State Bank Commissioner on or before November 4, 2005 and stated that the proposed new regulation was available for inspection at the Office of the State Bank Commissioner, that copies were available upon request and that a public hearing would be held on November 4, 2005 at 10:00 a.m. in the Office of the State Bank Commissioner in Dover, DE.

2. One written comment concerning the proposed new regulation was received prior to the November 4, 2005 public hearing. In a letter received on October 26, 2005, Discover Bank stated that it strongly supported the adoption of the regulation and requested clarification of the term “certain products specified by the bank” in §2.1 of the proposed regulation. The suggested interpretation of that term is correct, and under that language, a bank is permitted to specify products of the bank itself or an affiliate of the bank. This conforms to a proposed interpretation by the Federal Reserve Board of its equivalent regulation.

3. A public hearing was held on November 4, 2005 at 10:00 a.m. concerning the proposed new Regulation 904. The State Bank Commissioner, the Deputy Commissioner for Supervisory Affairs and a court reporter attended the hearing. No other persons attended the hearing. The State Bank Commissioner and the Deputy Commissioner for Supervisory Affairs summarized the proposed regulation for the record. No other comments were made or received at the hearing.

4. After review and consideration, the State Bank Commissioner hereby adopts new Regulation 904 as proposed.

November 4, 2005

Robert A. Glen

State Bank Commissioner

904 Exceptions to Tying Restrictions

[5 Del.C. §929]

Effective Date: [December 11, 2005]

1.0 Purpose.

This Regulation authorizes certain conduct as exceptions to the anti-tying restrictions of Section 929 of the State Banking Code (5 Del.C. §929), pursuant to Section 929(f). These exceptions are in addition to those elsewhere in Section 929.

2.0 Exceptions to statute.

Subject to the limitations of paragraph 3.0 of this Regulation, a bank may:

2.1 Safe harbor for combined-balance discounts. Vary the consideration for any product or package of products based on a customer's maintaining a combined minimum balance in certain products specified by the bank (eligible products), if:

2.1.1 The bank offers deposits, and all such deposits are eligible products; and

2.1.2 Balances in deposits count at least as much as nondeposit products toward the minimum balance.

2.2 Safe harbor for foreign transactions. Engage in any transaction with a customer if that customer is:

2.2.1 A corporation, business, or other person (other than an individual) that:

2.2.1.1 Is incorporated, chartered, or otherwise organized outside the United States; and

2.2.1.2 Has its principal place of business outside the United States; or

2.2.2 An individual who is a citizen of a foreign country and is not resident in the United States.

3.0 Limitations on exceptions.

Any exception authorized pursuant to this Regulation shall terminate upon a finding by the Commissioner that the arrangement is resulting in anti-competitive practices. The eligibility of a bank to operate under any exception authorized pursuant to this Regulation shall terminate upon a finding by the Commissioner that its exercise of this authority is resulting in anti-competitive practices.

9 DE Reg. 1004(12/01/05)(Final)