Relates to branches, trust offices and interstate branching transactions; repealer

Summary of provisions

Section 1 of the bill would amend subdivision 4 of BL § 28-b, which deals with community reinvestment act requirements, to clarify that the management of a foreign branch subject to BL §28-b (i.e. an FDIC-insured branch) shall establish a committee to function as the board of directors for purposes of that section. Section 2 of the bill would amend BL § 28-c relating to branch closings to introduce flexibility with respect to the information required to be provided by banking institutions pursuant to that section. Subdivision 2 of BL 28-c would change a reference to the maximum advance notice of closing that may be provided by a banking institution from 120 days to 180 days. This would conform the time period with the Department's implementing regulation. Subdivision 3 of BL § 28-c would add language to give the Superintendent authority to waive or modify certain information, primarily of a statistical and comparative nature, required in a report of planned branch closing to be submitted by a banking institution. For example, the required analyses of deposits and loans often create an unnecessary burden on an institution when such information would not be useful or relevant to the Superintendent's determination.

Section 3 of the bill would amend subdivision five of BL § 105 to clarify that a bank or trust company may, if permitted by law, maintain branches or trust offices it has acquired as a result of a merger or acquisition transaction.

Section 4 of the bill would amend BL § 105-b to clarify that New York bust companies may have trust offices in foreign countries.

Section 5 of the bill would amend subdivision 2 of BL § 202-a to delete a reference to Puerto Rico. This would eliminate uncertainty as to whether banks chartered under the laws of Puerto Rico are governed by the foreign bank provisions of Banking Law Article 5 as opposed to the domestic out-of-state bank provisions of Article 5-C (i.e., BL 222-227-c). The amendment is complementary to the clarification made

in BL § 222(7) regarding the definition of "state" and is intended to clarify that banks chartered in Puerto Rico are considered domestic out-of-state banks, consistently with how they are treated for Federal Deposit Insurance Act purposes.

Section 6 of the bill would amend BL § 222 of the BL to add new definitions for the terms "out-of-state federal savings association," "out-of-state trust company," "branch," and "trust office," for purposes of the article. BL § 222 would also be amended to modify the definitions of the terms "out-of-state bank," "out-of-state state bank," "appropriate state supervisor," and "banking institution" to broaden these terms, where applicable, to include out-of-state state-chartered trust companies as well as federal institutions within the definitions. Interstate transactions may involve both banks and trust companies, whether state- or federally-chartered, resulting in the maintenance of either interstate branches or trust offices. BL 222(7) would also be amended to modify the definition of "state" to include Puerto Rico. This would bring the definition into conformity with the definition of "state" under the Federal Deposit Insurance Act.

Section 7 of the bill would amend both the heading and the text of BL § 223-a to accurately describe that section as permitting the establishment of either branches or trust offices in New York by out-of-state banks (not necessarily constituting initial entry into New York) by means of an acquisition transaction.

Section 8 of the bill would repeal BL § 223-a. That section, which prohibited branching into New York as a result of the acquisition of a New York chartered bank less than five years old that was directly or indirectly established by the acquiring institution, is no longer necessary as a result of de novo nationwide interstate branching permitted by the Dodd Frank Act. BL §223-a was intended to prohibit acquisition transactions designed to accomplish previously unauthorized de novo interstate branching.

Section 9 of the bill would amend both the heading and the text of BL §223-b, which was added in 2008 to authorize de novo branching into New York on a reciprocal basis by out-of-state banks (i.e.. if the home state of the branching bank would permit de novo entry by New York banks). The language in BL §223-b requiring reciprocity should be deleted as it is no longer consistent with federal law, as a result of the Dodd Frank Act. The heading of the section would be amended to eliminate the reference to "initial entry" as that section would permit an out-of-state bank to establish not only an initial branch, but also additional branches, in New York, without requiring an acquisition transaction. This section would also be renumbered.

Section 10 of the bill would repeal BL § 223-c of the BL, which deals with the application requirements for establishment of a de novo branch by an out-of-state bank. It would be combined with BL § 224, which deals with separate application requirements for additional branches by out-of-state banks.

Section 11 of the bill would amend both the heading and the text of BL §224. The heading would be amended to describe the scope of both subdivisions of that section. Subdivision 1 would clarify the

application (or notice) requirements for branches and trust offices established by out-of-state state banks and out-of-state state-chartered trust companies not resulting from an acquisition transaction. Subdivision 2 would address the authority of out-of-state state banks to maintain existing branches and trust offices they have acquired pursuant to the terms of a merger or acquisition agreement.

Section 12 would add a new BL §224-a to set forth application and approval requirements for the relocation of either a New York branch or trust office by an out-of-state state bank or out-of-state state-chartered trust company.

Section 13 of the bill would amend BL .225 by adding language in BL §225(1) to make clear that an out-of-state bank may engage in an acquisition transaction not only with a New York bank, but with a banking institution, as that term is defined in BL §222, which includes non-New York chartered banks, including federally-chartered banking institutions. Such transactions with non-New York-chartered banks constitute a legitimate means by which an out-of-state bank may acquire branches in New York. This language would bring the wording of BL §255 into conformity with the definition of "acquisition transaction" in BL § 222, which references the acquisition of all or part of a "banking institution". This change would permit the introductory phrase "Without limiting the transactions permissible under section two hundred twenty-three of this article" to be deleted. This language was added in 2008 in an attempt to clarify that, while BL §225 only referenced acquisition transactions involving New York banks, in fact, acquisition transactions involving non-New York chartered banks located in New York also were permitted. Subdivision 2 of BL § 225 would be amended by the addition and deletion of certain language for accuracy and clarity. The phrase "authorized by this article" would be deleted in the first sentence as it is an inaccurate reference to acquisition transactions in which the receiving corporation is a New York bank. Such transactions are actually authorized by BL §§ 600 and 601-a. The second sentence, referencing acquisition transactions in which the receiving corporation is an out-of-state bank or trust company, would be further clarified. Subdivision 3 of BL §225 would be clarified for accuracy by adding a reference to BL §§ 600 and 601-a. Also, a new paragraph (e) would be added to Subdivision 3 to clarify that a banking institution does not acquire or gain powers it otherwise does not have under its own charter, by virtue of a merger or purchase and assumption transaction with another institution. Subdivision 4 of §225 would be amended to add a reference to an out-of- state trust company.

Section 14 of the bill would amend both the heading and the text of BL §225-a to add references to out-of-state state-chartered trust companies.

Section 15 of the bill would amend BL §225-b to clarify those Banking Law provisions in Articles 5 and 5-B of the Banking Law that are applicable to out-of-state banks or out-of-state trust company branches or trust offices in New York.

Section 16 would amend BL §600 to clarify the authority of New York-chartered banking institutions to merge with either out-of-state banks or out-of-state trust companies. Language clarifying the

Superintendent's rulemaking authority to authorize additional types of mergers would be added to BL § 600(8).

Section 17 of the bill would amend BL § 601-a to clarify the authority of New York-chartered banking institutions to engage in an acquisition transaction with either out-of-state banks or out-of-state trust companies. It would also clarify that New York licensed branches and agencies of foreign banks are considered banking institutions subject to the requirements of §601-a if they participate in an acquisition transaction involving a bulk transfer of fiduciary relationships authorized under BL §604-a. Language clarifying the Superintendent's authority to authorize additional acquisition transactions, as well as to implement this provision through rulemaking, would also be added.

Section 18 of the bill would amend BL §604-a to clarify that New York licensed branches and agencies may engage in a transaction with another banking institution involving transfer of all or substantially all of the assets of the transferor institution, in which the transferee institution agrees to assume all of the fiduciary relationships of the transferor institution, and in which the transferee files a certificate for approval and endorsement by the superintendent, indicating that the transferee has succeeded to all the rights and obligations of the transferor with respect to such fiduciary relationships.

Section 19 would provide for an immediate effective date.

Existing law

BL § 28-b sets forth Community Reinvestment Act requirements applicable to banking institutions. BL § 28-c contains requirements that must be followed by banking organizations in connection with planned branch closings. BL § 105(5) addresses the ability of a bank or trust company to maintain branch offices as a result of a merger or acquisition transaction. BL § 105-b authorizes a New York trust company to establish or acquire and maintain a trust once within New York state or in another state, and provides the procedures for obtaining approval to do so. BL §202-a addresses the authority of foreign banking corporations to maintain branches and receive deposits in New York. Currently, foreign banking corporations are described in this section as including banking corporations organized under the laws of a foreign country or Puerto Rico. BL § 222 contains definitions for purposes of Article 5-C of the BL, which relates to interstate branching. BL § 223 authorizes an out-of-state bank to maintain one or more branches in New York as a result of an acquisition transaction. BL § 223-a prohibits an acquisition transaction which would result in an out-of-state bank maintaining a branch or branches in New York if the effect of such transaction would be to terminate the separate existence of a less-than five year old banking institution that was directly or indirectly chartered by the acquiring institution. Its purpose was to prevent an acquisition transaction designed to accomplish unauthorized de novo branching. BL § 223-b authorizes de novo branching into New York by out-of-state banks, on a reciprocal basis.

BL §223-c sets forth the application requirements for establishment of a de novo branch in New York by an out-of-state state bank. BL § 224 describes the processes by which an out-of-state bank may maintain additional branch offices in New York. BL §225 describes the application and approval procedures for interstate merger and acquisition transactions between New York banks and out-of-state banks. It also contains provisions describing the legal effect of a merger or other consolidation. BL § 225-a describes the power of the Superintendent to examine branches or trust offices of out-of-state banks. BL § 225-b sets forth the applicability of certain sections of Articles 5 and 5-B of the BL to branches of out-of-state banks that are established in New York under the authority in Article 5-C. BL § 600 enumerates authorized merger transactions between two New York banking institutions as well as between New York banking institutions and other banking institutions. BL § 601-a enumerates authorized acquisition transactions between two New York banking institutions as well as between New York banking institutions and other banking institutions. BL §604-a authorizes a bulk transfer of fiduciary relationships as part of a transaction between banking institutions in which the transferee corporation is assuming all or substantially all of the assets, as well as the deposit liabilities, if any, of the transferor corporation.

Prior legislative history

This is a new bill.

Justification

The changes made by this bill streamline the branching processes for banking institutions operating under the Banking Law. Changes are also made in a number of cases (e.g. Sections 8, 9, 10) to conform to changes made in federal law by the Dodd-Frank Act. These changes are necessary to insure that New York law remains consistent with federal law and state laws across the country.

Fiscal implications

There are no fiscal implications from this bill.

Effective date

Immediately.