Subsidiary Bank Bylaws

• Subsidiary banks operate by their own standards and bylaws.bank image by Pefkos from Fotolia.com
  
  Subsidiary bank bylaws set rules for business operations. Subsidiary banking partners may be domestic or foreign and operate daily functions separate from partnering banks. According to the Corporate Governance Guidelines or the PNC Financial Group, subsidiary firms also need to establish and maintain independent executive committees independent of other firms.
  
  

Independent Authority

• Subsidiary bank bylaws should include a chain of command independent of partnering firms, according to the Ethiopian Economics Association. A subsidiary should establish a chief executive officer as the company leader. The CEO will direct and oversee all business operations of the bank. Other leadership roles may include a treasurer, president and vice president. A secretary also should be appointed to record business meeting details and administer company updates and reports. Other leadership positions can be established, and all must be affirmed with the formation of the executive committee. Additionally, subsidiary banks hire all necessary staff on their own authority.
  
  

Profit Sharing Program

• Banks may enter into profit sharing programs with subsidiary firms. According to OTP Bank of Holland, subsidiary bank bylaws should acknowledge the possibility of such agreements and appoint a financial director or executive committee to review contractual agreements with the partnering bank. Agreements often list profit sharing percentages and how those percentages will be distributed with the subsidiary. An incentive report also should be requested from the partnering bank and filed by subsidiary executive committee members.
  
  

Conference Activity

• Banks and subsidiary partners are wise to conference on a regular basis. Subsidiary banks should note how partnership and internal conferencing will commence. Partnership banking committees should meet to discuss relevant business on at least an annual or semiannual basis. Topics of discussion should cover one major issue at a time, and transaction operations should be analyzed. Subsidiary bylaws, according to the EEA, should note if internal executive committees require a certain number of participants to consent on agreements to move forward with votes.