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Banking Interpretations

NYSBL 202-b
General Regulations Part 52

New York State Banking Department
Memorandum

To: Examiner Chin, FWBD
From: Megan Prendergast, Assistant Counsel
Date: February 11, 2008
Subject: [---] Request to More Original Loan Agreements to Harborside, New Jersey

Issue

Whether [---] may move its vault, containing all of its original loan agreements, to its Harborside, NJ location.

Background

[---] would like to move its vault containing all of its original loan agreements from its New York state licensed branch located at [---] New York, NY to its Harborside, NJ location. All documents have been imaged by [---] and are available electronically.

Recommendation/Conclusion

In order to adequately respond to this question, it is necessary to examine the loan agreements and determine whether the assets in question are maintained at the New York branch because of asset maintenance requirements. Pursuant to Banking Law Section 202-b(2) if a foreign branch licensed in New York has asset maintenance requirements, it must maintain evidence of indebtedness for those assets within the state. The purpose of placing a foreign branch, on asset maintenance pursuant to BL Section 202-b(2) is to assure that there are assets within New York to meet liabilities should the Superintendent need to take possession of the branch in question. The Superintendent may impose specific asset maintenance requirements in cases where he deems it necessary for the protection of the public interest and the interest of depositors and creditors. In such cases, the assets must be such that the Superintendent in liquidating the Branch may easily transfer such assets to a third party.

In this case, [---] does not have any asset maintenance requirements. Nonetheless, pursuant to General Regulations of the Banking Board Part 52.2, whether or not the foreign banking corporation is required to maintain a certain amount of assets, it is the policy of the Banking Board that the foreign banking corporation shall maintain at the branch evidence of indebtedness, or other documentation, for any asset which appears on the books of the branch. This language was not intended to create a higher standard for maintaining evidence of indebtedness within the state. Rather, the intent was that there would be no change to the Department's existing examination policy, under which a book-entry or other documentation is considered adequate evidence of certain assets. Accordingly, it follows that if the supervisory division feels that the electronic images stored at the New York location are adequate documentation, it would be acceptable to allow [---] to store the original loan agreements at the New Jersey location. The supervisory division should also receive adequate assurances from [---] that the original loan agreements will still be accessible to examiners after the originals are relocated to Harborside, New Jersey, should the examiners wish to see them.

Noted: MEG/RN

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