Letter 12: Purchase of Sale of Securities Subject to Resale or Repurchase Agreement

The purchase or sale of securities by a Wisconsin state bank, under a written agreement to resell or repurchase at the end of a stated period, is not a loan or borrowing within the meaning of Sections 221.29 and 221.33, Wisconsin Statutes, respectively. It should be noted however that while these transactions are no longer subject to the loan limitations of Section 221.29, they remain subject to the investment limitations of that section.

The above interpretation is not intended to change the present record keeping and reporting requirements in regard to these transactions. They will continue to be carried as segregated items on the bank's books and will be reported separately in the space provided on reports of condition.

It should also be noted that securities purchased under resale agreement continue to be ineligible for reserve purposes under Section 221.27, Wisconsin Statutes, by the purchasing bank.

Bkg. Ltr. #12, November 28, 1972, Commissioner Mildenberg