Could Maryland law block a foreign bank like Allied Irish Banks from taking control of a Maryland bank holding company?

Plain-English summary

The Maryland Bank Commissioner asked the Attorney General whether Maryland law prohibited a proposed transaction in which Allied Irish Banks Limited, an Irish bank, would acquire a controlling interest (eventually 50 to 60 percent) in First Maryland Bancorp, the parent holding company of First National Bank of Maryland. Maryland law, in FI §12-204, flatly prohibited a foreign bank from becoming a bank holding company, and Allied Irish would unquestionably become one through this transaction. The Attorney General nonetheless concluded that Maryland could not constitutionally enforce that prohibition against this transaction. First, on the federal-law threshold question, the opinion found that Allied Irish's decision to designate Maryland as its "home state" under the International Banking Act meant the transaction was not blocked by the federal Bank Holding Company Act's general bar on interstate bank acquisitions. Second, and centrally, the opinion concluded that applying Maryland's absolute ban on foreign banks becoming bank holding companies would violate the Commerce Clause, following the U.S. Supreme Court's decision in Lewis v. BT Investment Managers, Inc., which struck down a similar Florida statute discriminating against out-of-state bank holding companies because the state could not show a legitimate local interest that justified the burden on interstate commerce, particularly since the acquired banks (as national banking associations) were not even subject to State Bank Commissioner supervision in the first place.

Currency note

This opinion was issued in 1983. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could Maryland actually block a foreign bank from acquiring a Maryland bank holding company in 1983, given a state statute that flatly prohibited it?
No, according to this opinion. Even though FI §12-204 unambiguously prohibited a foreign bank from becoming a bank holding company, the Attorney General concluded the statute could not constitutionally be enforced against Allied Irish's proposed acquisition because doing so would violate the Commerce Clause.

Why did a U.S. Supreme Court case about Florida banking law matter to a Maryland transaction?
The Supreme Court's 1980 decision in Lewis v. BT Investment Managers, Inc. struck down a Florida statute that similarly discriminated against out-of-state bank holding companies, holding that Florida could not justify the burden on interstate commerce with generic interests like limiting economic concentration or maximizing local control. The Maryland opinion found no meaningful way to distinguish Maryland's statute from the one the Supreme Court had already invalidated.

Did the fact that the banks involved were national banks, not state-chartered banks, matter to the outcome?
Yes. The opinion specifically noted that all the banks being acquired were national banking associations already outside the State Bank Commissioner's regulatory supervision, which made it especially hard to identify any legitimate state interest served by blocking foreign ownership while allowing the identical transaction involving a domestic acquirer.

Did the opinion resolve every Maryland statute that might apply to the deal?
No. While the opinion concluded the core anti-foreign-bank-holding-company prohibitions could not constitutionally apply, it flagged unresolved ambiguity about a separate approval requirement, FI §3-314, for stock acquisitions affecting control of a "bank holding company in this State," noting the term might not even reach a holding company (like First Maryland) whose subsidiary bank was a national association outside the Commissioner's jurisdiction.

Background and statutory framework

Allied Irish Banks Limited, an Irish-chartered bank with U.S. branches in New York and Chicago but no U.S. bank ownership interests, proposed to acquire roughly 43 percent of First Maryland Bancorp's common stock in 1983, growing to 50 to 60 percent over four years. First Maryland was the sole owner of First National Bank of Maryland, a nationally chartered bank. Before the transaction, Allied Irish would redesignate its "home state" from New York to Maryland under the International Banking Act of 1978 and Federal Reserve Regulation K.

The opinion first resolved a federal threshold question: the Bank Holding Company Act's §3(d) generally bars a bank holding company from acquiring a bank outside the state where its own banking operations are principally conducted, unless the target state's law specifically authorizes it, and the International Banking Act extends that bar to foreign banks acquiring banks outside their "home state." Because Allied Irish would designate Maryland as its home state before the acquisition, §3(d) did not apply to block the deal at the federal level.

Turning to Maryland law, FI §12-204 flatly prohibited any "foreign bank or affiliated corporation" from becoming a "bank holding company." The opinion concluded this prohibition could not constitutionally be enforced here, applying the U.S. Supreme Court's 1980 decision in Lewis v. BT Investment Managers, Inc., which struck down a Florida statute barring out-of-state bank holding companies from owning investment advisory businesses in the state. Under BT Investment's Commerce Clause analysis, a state law that discriminates against out-of-state or foreign commercial actors survives only if the burden on interstate commerce is justified by a legitimate local interest and is not clearly excessive relative to that interest. The Supreme Court had already rejected the standard justifications states offered for such discrimination (limiting economic concentration, protecting local residents from fraud, and maximizing local financial control), and the Maryland opinion found no basis to distinguish Maryland's law, especially since the banks involved were national banking associations outside the Bank Commissioner's own regulatory reach to begin with. The opinion also concluded that neither §3(d) nor §7 of the Bank Holding Company Act gave Maryland independent constitutional authority to discriminate against foreign bank holding companies, reversing the broader reading a prior 1979 opinion had given the Act before BT Investment was decided. A related statute, FI §12-207 (barring a "foreign banking corporation" from conducting a general banking business in the state), was found equally unenforceable to the extent it indirectly reached the same result. Finally, the opinion flagged, without resolving, unresolved ambiguity about whether a separate stock-acquisition approval statute, FI §3-314, even applied to a holding company whose only subsidiary was a national bank outside the Commissioner's supervisory authority.

Citations

Statutes:

• FI §12-204 (Maryland's prohibition on foreign banks becoming bank holding companies), §12-201(e) (definition of "foreign bank"), §12-201(c)(2) (definition of "bank holding company")
• FI §12-207 (prohibition on foreign banking corporations conducting a general banking business), §12-201(f) (definition of "foreign banking corporation")
• §3-314 of the Financial Institutions Article and §3-314(a)(3)(i) (approval requirement for certain stock acquisitions)
• Chapter 143, Laws of Maryland 1983 (out-of-state bank holding company acquisitions of post-1983-chartered banks)
• Chapter 294, Laws of Maryland 1979 (amendment conforming stock-acquisition requirements to federal law)
• Article 11, §31A(b) of the Maryland Code (1976 Repl. Vol.) (predecessor to FI §12-204)
• Section 5(c) and Section 5(a)(5) of the International Banking Act of 1978, 12 U.S.C. §3103(c) and §3103(a)(5); 12 C.F.R. §211.22 (Regulation K)
• Federal Bank Holding Company Act of 1956, 12 U.S.C. §1841 et seq., including Section 3(d) (12 U.S.C. §1842(d)) and Section 7 (12 U.S.C. §1846)
• National Bank Act, 12 U.S.C. §21 et seq.
• Article 1, §8, cl. 3 of the United States Constitution (Commerce Clause)

Cases:

• Lewis v. BT Investment Managers, Inc., 447 U.S. 27 (1980)
• H. P. Hood & Sons v. DuMond, 336 U.S. 525 (1949)
• Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 523 (1935)
• Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366, 370 (1976)
• Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)
• Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)
• Japan Line Ltd. v. County of Los Angeles, 441 U.S. 445, 446 (1979)
• Reeves, Inc. v. Stake, 447 U.S. 429, 437 n.9 (1980)
• Slate v. Zitomer, 275 Md. 534, 544-45 (1975)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1983/Volume68_1983.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Banking Institutions, Constitutional Law, Commerce Clause, International Banking Act, Bank Holding Company Act, Maryland Law May not Constitutionally Prohibit Acquisition of National Banking Associations by Foreign Bank Designating Maryland as its "Home State".

July 14, 1983

The Honorable Margie Muller
Bank Commissioner

You have requested our opinion concerning a proposed acquisition by Allied Irish Banks Limited ("Allied Irish") of a controlling interest in First Maryland Bancorp ("First Maryland"). Specifically, you have asked if the proposed acquisition is prohibited by Maryland law.

For the reasons given below, we have concluded that Maryland law may not be applied, consistently with the Commerce Clause of the United States Constitution, to prohibit or regulate this transaction.

I
Factual Background

Allied Irish is incorporated in the Republic of Ireland and holds a license, granted by the Central Bank of Ireland, that enables Allied Irish to carry on a banking business in Ireland. In addition to branches in Ireland and Britain, Allied Irish has two branches in the United States (New York and Chicago). At present Allied Irish does not own any shares of any bank or bank holding company in the United States. Pursuant to Section 5(c) of the International Banking Act of 1978 (12 U.S.C. §3103(c)) and Regulation K adopted under that Act (12 C.F.R. §211.22), Allied Irish has selected New York as its "home state". Before the proposed transaction, however, Allied Irish will change its "home state" to Maryland under §211.22(c) of Regulation K.

First Maryland is a registered bank holding company under the Federal Bank Holding Company Act of 1956, as amended (12 U.S.C. §1841 et seq.). It is the parent and sole owner of First National Bank of Maryland, a national banking association chartered under the National Bank Act (12 U.S.C. §21, et seq.) with its principal office in this State. First Maryland owns no other banks with an office in Maryland.

Under the terms of the proposal, Allied Irish will acquire approximately 43% of the common stock of First Maryland in 1983. During the succeeding four years, Allied Irish will increase its interest to between 50% and 60%. The investment will be made through a combination of purchases of common stock from existing stockholders of First Maryland and the issuance of new shares of common stock by First Maryland. (In the alternative, Allied Irish and First Maryland have proposed a transaction whereby Allied Irish will acquire 24.9% of the voting common stock, plus additional non-voting common stock, which would result in Allied Irish owning over 50% but not more than 60% of First Maryland's outstanding common stock of all classes. This alternative is favored by neither Allied Irish nor First Maryland.)

II
Federal Law

The interplay between the International Banking Act and the Bank Holding Company Act presents a threshold issue that must be resolved before any State law prohibitions become relevant. Under the International Banking Act, a foreign bank such as Allied Irish is prohibited from acquiring any interest in a bank located outside of its "home state" if the acquisition would be prohibited under §3(d) of the Bank Holding Company Act. (Section 5(a)(5) of the International Banking Act provides, in pertinent part, "[N]o foreign bank may directly or indirectly acquire any voting shares of, interest in, or substantially all of the assets of a bank located outside of its home State if such acquisition would be prohibited under [§3(d) of the Bank Holding Company Act] if the foreign bank were a bank holding company the operations of whose banking subsidiaries were principally conducted in the foreign bank's home State." 12 U.S.C. 3103(a)(5).)

Section 3(d) of the Bank Holding Company Act (as codified at 12 U.S.C. §1842(d)) provides, in pertinent part: "Notwithstanding any other provision of this section, no application . . . shall be approved under this section which will permit any bank holding company or any subsidiary thereof to acquire, directly or indirectly, any voting shares of, interest in, or all or substantially all of the assets of any additional bank located outside of the State in which the operations of such bank holding company's banking subsidiaries were principally conducted . . . unless the acquisition of such shares or assets of a State bank by an out-of-State bank holding company is specifically authorized by the statute laws of the State in which such bank is located, by language to that effect and not merely by implication."

If §3(d) is applicable to the proposed transaction, then this acquisition is prohibited under federal law unless the laws of Maryland specifically authorize such an acquisition "by language to that effect and not merely by implication". Since Maryland law contains no such statute, the Allied Irish transaction would be prohibited without further consideration of Maryland law.

Section 3(d), however, is not applicable to the proposed acquisition. Before the acquisition of the First Maryland stock, Allied Irish will designate Maryland as its "home state" and, by so doing, will not be an out-of-state bank holding company under §3(d). (We have been informally advised that this is also the position taken by the Federal Reserve Board. Cf. 68 Fed. Res. Bull. 114 (February, 1982) (approval by the Federal Reserve Board of the application of Banco de Colombia, S.A. and Banco de Colombia, S.A. Panama, to become bank holding companies by acquiring indirectly Eagle National Bank of Miami, Florida).)

III
State Law Prohibitions

A. §12-204 of The Financial Institutions Article

1. Introduction

Section 12-204 of the Financial Institutions Article ("FI" Article) flatly prohibits a foreign bank from becoming a bank holding company: "A foreign bank or affiliated corporation may not become a bank holding company." (Chapter 143, Laws of Maryland 1983, provides for the acquisition by out-of-State bank holding companies of State and federal banks in Maryland chartered after July 1, 1983. [See FI Title 5, Subtitle 9.])

Unquestionably, under Maryland law Allied Irish is a "foreign bank" and, through the proposed transaction, will become a "bank holding company." ("Foreign bank" is defined as "any bank or trust company other than: (1) [a] State banking institution that has its principal banking office in this State; and (2) [a] national banking association that has its principal banking office in this State." FI §12-201(e). "Bank holding company" is defined, in relevant part, as a "corporation that owns of record or beneficially 25 percent or more of the outstanding voting shares of . . . [a] national banking association that has its principal banking office in this State." FI §12-201(c)(2).) Accordingly, if this section is constitutionally permissible, the proposed acquisition would be prohibited.

After the most deliberate consideration, however, we have concluded that Maryland law may not constitutionally be applied to prohibit the transaction presented by your inquiry. Our conclusion is compelled by the recent decision of the Supreme Court in Lewis v. BT Investment Managers, Inc., 447 U.S. 27 (1980). (Our conclusion is consistent with a similar resolution reached by the Office of the Attorney General in Florida. The Comptroller of Florida requested an opinion concerning whether a foreign (non-U.S.) bank could acquire ownership or control of a national bank located in Florida. After reviewing the relevant Florida statute (containing an absolute prohibition of such an acquisition), the Attorney General stated: "I am unable to conclude that §658.29(1), F.S. (1980 Supp.), does in fact effectively prohibit the acquisition of ownership or control of a national bank located in Florida by a foreign (non-U.S.) bank. This office is constrained to accept §658.29(1), F.S. (1980 Supp.), as presumptively valid, but the validity of the statute is unquestionably in jeopardy due to the previously cited authorities." Opinion of the Attorney General of Florida (July 6, 1981).)

2. The Commerce Clause

In BT Investment, the Supreme Court reviewed a Florida statute that prohibited out-of-state banks, trusts, and bank holding companies from owning any business within the state that provided investment advisory services. The Florida statute thus raised serious issues under the Commerce Clause of the United States Constitution, to be resolved against a backdrop of familiar principles.

Under the Commerce Clause, Congress has the power "[t]o regulate Commerce with foreign Nations, and among the several States". Article 1, §8, cl. 3 of the United States Constitution. (Since Allied Irish is not simply out-of-State but also out-of-country, the proposed transaction has aspects of both interstate and international commerce. The Supreme Court has recently held that, "[w]hen construing Congress' power to 'regulate commerce with foreign Nations', a more extensive constitutional inquiry is required". Japan Line Ltd. v. County of Los Angeles, 441 U.S. 445, 446 (1979). Indeed, "Commerce Clause scrutiny may well be more rigorous when a restraint on foreign commerce is alleged". Reeves, Inc. v. Stake, 447 U.S. 429, 437 n.9 (1980). In view of our resolution of the interstate commerce aspects of this transaction, we find it unnecessary to undertake a "more extensive inquiry".) The Supreme Court has stated repeatedly that "the State may not promote its own economic advantage by curtailment or burdening of interstate commerce". H. P. Hood & Sons v. DuMond, 336 U.S. 525, 532 (1949). The underpinnings of this constitutional doctrine were colloquially stated by Justice Cardozo in Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 523 (1935), and quoted in H.P. Hood & Sons, Inc., 336 U.S. at 532, as follows: "The Constitution . . . 'was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.'"

Recently, the Supreme Court again "emphasiz[ed] that '[t]he very purpose of the Commerce Clause was to create an area of free trade among the several States.'" Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366, 370 (1976) (quoting McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330 (1944)). At least since Cooley v. Board of Wardens, 53 U.S. (12 How.) 299 (1852), the Court has considered it "clear that 'the Commerce Clause was not merely an authorization to Congress to enact laws for the protection and encouragement of commerce among the States, but by its own force created an area of trade free from interference by the States .... [T]he Commerce Clause even without implementing legislation by Congress is a limitation upon the power of the States.'" Great Atlantic & Pacific Tea Co., Inc., 424 U.S. at 370-71 (quoting Freeman v. Hewit, 329 U.S. 249, 252 (1946)).

Although a variety of formulations for the Commerce Clause's limitations upon the States have been used over the years, the Court has consistently distinguished between outright protectionism and less direct burdens on the free flow of trade. BT Investment, 447 U.S. at 36. Where simple "economic protectionism is effected by state legislation", "a virtually per se rule of invalidity has been erected." BT Investment, 447 U.S. at 36 (quoting Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)). In contrast, legislation that affects equally both interstate and local business may be upheld if it is narrowly drawn. Id. As the Court explained: "'Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits ... .'" BT Investment, 447 U.S. at 36-37 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)).

In BT Investment, the Court declined to rule the Florida statute unconstitutional under the "per se" test of Philadelphia v. New Jersey, preferring instead to resolve the issue under the test in Pike v. Bruce Church, Inc., which focuses on the "incidental burdens" necessitated by legitimate local concerns: "We need not decide whether this difference is sufficient to render the Florida legislation per se invalid, for we are convinced that the disparate treatment of out-of-state bank holding companies cannot be justified as an incidental burden necessitated by legitimate local concerns." BT Investment, 447 U.S. at 42. The "local concerns" identified and rejected as justifying the burden placed on out-of-state bank holding companies were as follows: (1) an interest in discouraging undue economic concentration in the arena of high finance; (2) an interest in regulating financial practices, presumably to protect local residents from fraud; and (3) an interest in maximizing local control over locally based financial activities. BT Investment, 447 U.S. at 43.

We find this constitutional analysis dispositive in concluding that the Maryland statute, if applied to prohibit the proposed transaction, would violate the Commerce Clause. As was true of the Florida statute in BT Investment, it is beyond dispute that FI §12-204 imposes at least an "incidental burden" on commerce: it absolutely prohibits an out-of-state bank from becoming a bank holding company. Aside from the local concerns formulated, and specifically rejected, in BT Investment, we are at a loss to identify any sufficient local concern in the Allied Irish transaction that, constitutionally, can justify its prohibition.

In this regard, we deem it significant that all the banks to be acquired through the proposed transaction are national banking associations. As such, those banks are free from regulatory supervision by the State Bank Commissioner. The untenable constitutional posture of the Maryland statute, as applied in this situation, is thus highlighted by the fact that, for example, the statute would not prohibit a national banking association with its principal office in Maryland, but free from State supervision, from becoming a bank holding company, while it would prohibit the identical transaction for another bank, Allied Irish, having its principal office in Maryland, but also free from State supervision. We are unaware of any "legitimate local concerns" that would justify this distinction.

Accordingly, we conclude that FI §12-204, if it were applied to prohibit the Allied Irish transaction, could not survive the "incidental burden" analysis set forth in BT Investment.

3. The Bank Holding Company Act

Under traditional principles of constitutional law Congress may, in regulating the flow of interstate commerce, exercise this power indirectly by conferring upon the States an ability to restrict the flow of interstate commerce that they would not otherwise enjoy. See H. P. Hood and Sons, Inc. v. DuMond, 336 U.S. 525 (1949). In BT Investment, it was contended that Congress had conferred such authority upon the States in §3(d) and §7 of the Bank Holding Company Act. (Section 7 provides, in part: "The enactment ... of this [Act] shall not be construed as preventing any state from exercising such powers and jurisdiction which it now has or may hereafter have with respect to banks, bank holding companies and subsidiaries thereof." 12 U.S.C. §1846.)

Previously, when we considered the issue of federal preemption in relation to the predecessor of FI §12-204 [Article 11, §31A(b) of the Maryland Code (1976 Repl. Vol.)], but without benefit of the BT Investment decision, we concluded that the Bank Holding Company Act intended a broad reservation of States' rights in controlling interstate activities of bank holding companies. 64 Opinions of the Attorney General 56, 63 (1979). The Court's ruling in BT Investment, one year after our 1979 Opinion, clearly establishes, however, that the Bank Holding Company Act does not generally confer upon the States the authority to restrict the flow of interstate commerce as it relates to interstate activities of bank holding companies. Section 3(d) was interpreted by the Court not as authorizing State restrictions but simply as allowing the States to override a general federal prohibition against interstate expansion: "Preliminarily, it is doubtful that §3(d) authorizes state restrictions of any nature on bank holding company activities. The language of the statute establishes a general federal prohibition on the acquisition or expansion of banking subsidiaries across state lines. The only authority granted to the States is the authority to create exceptions to this general prohibition, that is, to permit expansion of banking across state lines where it otherwise would be federally prohibited." BT Investment, 447 U.S. at 47 (emphasis in original).

Section 7 was given a similarly narrow interpretation. The Court rejected the contention that §7 was intended to extend to the States new powers to regulate banking that they would not have possessed absent the federal legislation. Such an interpretation was contrary to the legislative history examined by the Court: "Far from creating a new state power to discriminate between foreign and local bank holding companies, the legislative history evinces an interest to forestall such a broad interpretation. We therefore conclude that §7 applies only to state legislation that operates within the boundaries marked by the Commerce Clause." BT Investment, 447 U.S. at 49.

It is evident from the BT Investment decision, therefore, that the Bank Holding Company Act provides no independent constitutional authority for the States to discriminate against out-of-state bank holding companies. Indeed, it can be argued that Congress, in enacting §3(d), has specifically delineated the outside parameters of permissible State involvement in this particular area.

We therefore conclude that the Bank Holding Company Act does not permit FI §12-204 to do that which the Commerce Clause otherwise prohibits: discriminate against out-of-state entities such as Allied Irish.

B. §12-207 of the Financial Institutions Article

Section 12-207 of the Financial Institutions Article generally prohibits a foreign banking corporation from conducting a general banking business in this State. (FI §12-207(b) states: "A foreign banking corporation may not have any office or electronic terminal in this State: (1) To solicit deposits; or (2) To conduct: (i) A general banking business; (ii) A savings banking business; or (iii) A banking and trust business.") By definition, upon consummation of the proposed transaction, First Maryland would become a "foreign banking corporation" and, as such, subject to the prohibitions of FI §12-207. ("Foreign banking corporation" is defined to include "[a]ny corporation that . . . [i]s controlled by a foreign bank". FI §12-201(f).)

Nevertheless, to the extent that FI §12-207 prohibits indirectly what FI §12-204 prohibits directly, we must conclude, for the reasons stated above, that it may not constitutionally be applied to prohibit the proposed transaction.

C. §3-314 of the Financial Institutions Article

The final provision of Maryland law having potential impact on the Allied Irish transaction is §3-314 of the Financial Institutions Article, which prohibits any stock acquisition affecting the power to direct policy of a "bank holding company in this State" unless that acquisition is approved in advance by the Bank Commissioner. ("Stock acquisition" is defined as "[a]n acquisition of the outstanding voting stock of a commercial bank or bank holding company in this State, if the acquisition will affect the power to direct or to cause the direction of the management or policy of any banking institution or [any] bank holding company [within the meaning stated in the Bank Holding Company Act]". FI §3-314(a)(3)(i).) Since regulatory approval has not been denied, there is no immediate issue for us to resolve. We are, however, constrained to note that Maryland law is far from being clear on the applicability of this section to the proposed transaction.

In 65 Opinions of the Attorney General 40, 44 n.2 (1980), we expressed the following doubts about the application of FI §3-314 to national banking associations: "It is less clear, however, whether [FI §3-314] also was intended to apply to the control of . . . any national banking association that has its principal banking office in this State". (The Revisor's Note to FI §3-314 indicates that the purpose for enacting Chapter 294, Laws of Maryland 1979, which added the statutory reference to a bank holding company, "was to conform the requirements as to stock acquisitions to the federal law".) In that Opinion, we concluded that the term "bank holding company in this State" is limited to a bank holding company controlling one or more local banks. Our rationale equally supports a conclusion that this term does not apply to a holding company (First Maryland) controlling a national banking association (First National Bank of Maryland) that is outside the supervisory authority of the Bank Commissioner: "You indicate that the banks controlled by the holding company in question are all located in other jurisdictions. As a general matter, the statutory duties of the Bank Commissioner are necessarily concerned with banks chartered by his office, and out-of-state banks do not fall within his regulatory authority. Thus, the Bank Commissioner has no statutory authority over the individual out-of-state banks controlled by the bank holding company and, therefore, has no apparent reason to have an interest in the bank holding company". 65 Opinions of the Attorney General at 43.

Were we called upon to construe FI §3-314, and mindful of the close constitutional scrutiny given to state law in BT Investment, we would find the following rule of statutory construction particularly pertinent: "'[I]f a legislative act is susceptible of two reasonable interpretations, one of which would not involve a decision as to the constitutionality of the act while the other would, the construction which avoids the determination of constitutionality is to be preferred.'" Slate v. Zitomer, 275 Md. 534, 544-45 (1975) (quoting Md. St. Bd. of Barber Examiners v. Kuhn, 270 Md. 496, 505 (1973)).

IV
Conclusion

In summary, it is our opinion that Maryland law may not constitutionally be applied to prohibit the Allied Irish transaction. As explained above, such application would run afoul of the Commerce Clause, which necessarily stands as a constitutional "limitation upon the power of the States".

Stephen H. Sachs, Attorney General
Francis X. Pugh, Assistant Attorney General
Robert deV. Frierson, Assistant Attorney General
Avery Aisenstark, Chief Counsel, Opinions and Advice