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Banking Interpretations

NYSBL 97(4-a) and General Regulations of the Banking Board Part 14

Rosanne Notaro 7/24/2006


[ ]

I have had a chance to go over your chart of subsidiary investments with Sara and we are in agreement
with your conclusions about the required notices under Part 14.

Specifically:

1. For the investments in subsidiary foreign banks made by [ ] we agree that we can view these as
operations subsidiaries that require a notice under Part 14.3, provided, as you indicated to me in our
phone call, that these foreign banks will only engage in activities that would be permissible for [ ] to
engage in in the U.S. If this is not the case, or if the facts change at a later time such that this is no longer
the case, then the Department's characterization of such bank subs as operations subs would probably
change, and [ ] would need to find a different basis for ownership of these subs and provide or obtain
any additional required notices to or approvals from the Department. These points should be made in the
Part 14 notices that are filed (i.e. that the activities of the banks will be limited to activities permissible to
[ ] and [ ] acknowledges that separate approval may be required if the banks should engage in
different activities than those described).

2. For the investment by [ ] in [ ]IFC, we agree that this would require notice pursuant to Part 14.3.

3. For establishment of or investment in subsidiaries by [ ]IFC, we are in agreement that our policy has
been not to require Part 14 notices from [ ]IFC since we are aware that Edge Act corps will be making
additional investments from time to time, an also the FRB oversees Edge Act corps and their
subsidiaries (Note: this only applies if the investment in such subs does not involve additional investment
of funds [ ]

4. Finally, although this issue was not raised by the chart you submitted in connection with the [ ]
transaction, I also discussed with Sara our position regarding the establishment of indirect subs of [ ]
other than those that are under an Edge Act corp. Our practice here is different than our position
regarding establishment of subs by Edge Act corps. The Department would expect a Part 14 notice for
the establishment or acquisition of a subsidiary by an already existing operating subsidiary (e.g. second or third tier sub of the bank), even if it did not involve additional funds being invested by the bank itself. In
other words, if the bank funded a sub, which in turn funded another sub of its own, we'd expect a Part 14
notice for the establishment of the second sub. (note: there could be some exceptions, for example, if
the Part 14 notice for the 1st tier op sup specifically contemplated that additional subs would be formed by the first tier sub).

I hope this is helpful. Please give me a call if you wish to discuss or have additional questions.

Regards,

Rosanne Notaro