(1) In lieu of a deposit being made with it in fact, the department in its discretion may permit or require that the deposit be made with and held by the trust department of a national bank organized and existing under the laws of the United States Government or a state bank or savings and loan organized and existing under the laws of this state, provided that the national or state bank or the savings and loan is approved by the department for this purpose and under custodial arrangements likewise approved by the department, which arrangements may include the use of the Federal Reserve book-entry system or depository trust clearing systems established to hold and transfer securities by computerized book-entry systems.
(2) All such custodial arrangements shall comply in substance with the requirements of this code as to like deposits with the department of other insurers; as to the amount, purposes, maintenance, replenishment, release, and withdrawal of such deposits or part thereof; as to the rights of the insurer therein; and in all other respects except as to actual custody.
(3) The form and terms of all such custodial agreements shall be as prescribed or approved by the department consistent with the applicable provisions of this code.
(4) The compensation and expenses of any such custodian shall be borne by the insurer.
(5) The department or office may at any time, in its discretion, terminate any such custodial arrangement and require the deposit represented thereby to be made with it directly as otherwise provided for under this code.