TO: Economist Kupfer
U.S. Financial Services Division
FROM: Assistant Counsel Kane
RE: [ ] - Sponsorship Agreement with the [ ]
DATE: July 10, 2003
[ ] has filed an application with the Banking Department seeking approval to establish a limited purpose branch which the [ ] will operate during the months of July and August at the [ ] training camp located at [ ] in [ ]. In connection with the establishment of the limited purpose branch, the [ ] has entered into a Sponsorship Agreement with the [ ] football team, whereby the [ ] will receive exclusive rights under the Financial Institution Category of the Agreement regarding the establishment of an "Expo Tent" from which the [ ] will open accounts promoting the [ ] checking package, but not process any cash transactions. The Sponsorship Agreement provides that "no Expo tent shall be allowed for any other entity in the Financial Institution Category." You have asked whether the foregoing provision or any other provision of the Sponsorship Agreement violates Banking Law Section 674-a.
Anticompetitive agreements between banks and real property owners (emphasis added ) are governed by Banking Law Section 674-a. Section 674-a provides that "every undertaking, whether written or oral, express or implied, constituting or contained in a contract heretofore or hereafter entered into, directly or indirectly, between a banking organization, bank holding company, national banking association, federal savings and loan association or foreign banking corporation and "the owner of an interest in real property located in the State, which bars such owner from leasing, selling or otherwise disposing of any interest in real property to any other banking organization, bank holding company, national banking association, federal savings and loan association or foreign banking corporation shall be null and void."
The Legal Division concludes that Banking Law Section 674-a is not implicated under the contemplated proposal in that the Sponsorship Agreement is between the [ ] and the [ ], not [ ], which is the owner of the real property from which the [ ] will operate the Expo Tent.