Treats a branch or agency of a foreign banking corporation licensed under article 5 of the banking law as a banking institution for the purposes of provisions governing the purchase of assets and with regard to the transfer of fiduciary relationships.
TITLE OF BILL: An act to amend the banking law, in relation to certain provisions relating to foreign banking corporations
PURPOSE: To clarify and streamline the ability of foreign banking corporations to enter into merger and purchase transactions.
SUMMARY OF PROVISIONS: Section 1 of the bill would amend Section 60l-a of the Banking Law, which relates to the authority for banking institutions to purchase all, or a substantial part of, the assets of other banking institutions. The bill clarifies that this section applies to branches and agencies of foreign banking corporations. Section 2 of the bill would amend Section 604-a of the Banking Law to treat a branch or agency of a foreign banking corporation as a banking institution with regard to the transfer of fiduciary relationships.
JUSTIFICATION: The Banking Law currently contains provisions which authorize banking institutions to enter into purchase and assumption agreements with other institutions, and to transfer fiduciary relationships between institutions. This bill amends these laws to clarify and ensure that they apply to branches and agencies of foreign banking corporations.
The foreign banking community is a very important contributor to the economy of New York State and New York City, and to our reputation as the world's financial center. In fact, the vast majority of foreign banking corporations which have offices in the United States are subject to the regulatory jurisdiction of the New York State Banking Department. These regulated entities hold over 80% of the assets held by foreign bank offices located in the United States.
There has been some uncertainty about whether the existing laws regarding purchases and transfers apply to the branches and agencies of foreign banking corporations. This legislation will clarify and ensure that these institutions can enter into these types of transactions.
This will enhance the attractiveness of the New York license for foreign banking corporations seeking to operate in New York. Otherwise, these foreign banks would have to engage in additional lengthy and costly bureaucratic steps to undertake these types of routine business. This measure improves the regulatory process, thereby helping to keep these institutions in New York and keeping them in the state charter system.
FISCAL IMPLICATIONS: None.
STATE OF NEW YORK ________________________________________________________________________ 4193 2011-2012 Regular Sessions IN SENATE March 23, 2011 ___________Introduced by Sens. GRIFFO, FARLEY -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to certain provisions relating to foreign banking corporations THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 601-a of the banking law, as amended by chapter 152 of the laws of 1993, is amended to read as follows: 1. The following acquisitions are hereby authorized whether by purchase or otherwise, other than by merger, of all or a substantial part of the assets of: (a) One or more corporations organized under the laws of this state and subject to the provisions of article three, article eight or article twelve of this chapter by another corporation subject to the provisions of the same article. (b) One or more safe deposit companies by a bank or trust company. (c) One or more mutual savings banks by another mutual savings bank. (d) One or more mutual savings and loan associations by another mutual savings and loan association. (e) One or more stock-form savings banks by another stock-form savings bank. (f) One or more stock-form savings and loan associations by another stock-form savings and loan association. (g) One or more banking institutions by another banking institution to the extent permitted under regulations of the banking board. FOR PURPOSES OF THIS SUBDIVISION, A BRANCH OR AGENCY OF A FOREIGN BANKING CORPORATION LICENSED UNDER ARTICLE FIVE OF THIS CHAPTER SHALL BE CONSID- ERED A BANKING INSTITUTION. S 2. Section 604-a of the banking law, as added by chapter 743 of the laws of 1958, the section heading and subdivision 1 as amended by chap-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10443-01-1 S. 4193 2
ter 297 of the laws of 1993, subdivision 2 as amended by chapter 489 of the laws of 1963 and subdivision 3 as amended by chapter 115 of the laws of 1981, is amended to read as follows: S 604-a. Transfer of fiduciary relationships
[of a banking institu- tion]. 1. If any banking institution, including a bank or trust company, national banking association, savings bank, savings and loan associ- ation, federally chartered savings bank, federally chartered savings and loan association, BRANCH OR AGENCY OF A FOREIGN BANKING CORPORATION, located in this state, shall have transferred all or substantially all of its assets to another banking institution in a transaction subject to this chapter pursuant to a written agreement between the transferor and transferee [corporations]whereby the transferee [corporation]has assumed the deposit liabilities, if any, of the transferor [corporation]and has agreed to assume all fiduciary relationships of the transferor [corporation], the transferee [corporation]may file in the office of the superintendent a certificate in its name and under its [corporate]seal, signed by its president, secretary or cashier, setting forth a copy of such agreement and stating that the transferee [corporation]assumes all of the fiduciary relationships of the transferor [corpo- ration]pursuant to the provisions of this section; provided, however, that such certificate shall not be filed unless the approval of the superintendent shall have been endorsed thereon or annexed thereto before filing. 2. Upon the filing of such certificate in the office of the super- intendent, all of the property, rights, powers and franchises of the transferor [corporation]as fiduciary shall vest in the transferee [corporation]and the transferee [corporation]shall be deemed to have assumed all of the debts, liabilities, obligations and duties of the transferor [corporation]as fiduciary, and to have succeeded to all the fiduciary relationships of the transferor [corporation], as fully and with the same effect as is provided in sections one hundred thirty-six-c and six hundred two OF THIS CHAPTER in the case of a merger, and any reference to the transferor [corporation]as fiduciary in any capacity, contained in any contract, will or document, whether executed or taking effect before or after the filing of such certificate in the office of the superintendent, shall be considered a reference to the transferee [corporation]if not inconsistent with the other provisions of the contract, will or document. 3. For the purposes of this section the fiduciary relationships of the transferor shall include all relationships as agent, trustee, guardian, receiver, committee, conservator, executor, administrator, or other fiduciary in any capacity or for any purpose mentioned in section one hundred, and all relationships of the transferor as bailee or depositary of personal property. 4. This section shall not be deemed to authorize a transferee [corpo- ration]to assume any fiduciary relationship of a kind which it would not otherwise have power to undertake and perform. Nothing in this section shall be deemed to authorize any such transferee [corporation]to maintain as its own office any office previously maintained by the transferor [corporation], and authority, if any, to maintain any such office shall be governed by the applicable provisions of law other than this section. This section shall not be deemed to apply to contracts of the transferor for the leasing of safe deposit boxes or vaults. S 3. This act shall take effect immediately.