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Banking Interpretations

NYBL 225

December 21, 2010

Nirja Savill, Esq.
Principal Attorney
Connecticut Department of Banking
260 Constitutional Plaza
Hartford, CT 06103

Dear Ms. Savill:

We understand that, in connection with the Connecticut Department of Banking's ("DOB's") review of an application before it for a New York­based national bank, First Niagara Bank, N.A. to acquire by merger a Connecticut state-chartered capital stock savings bank, NewAlliance Bank, the DOB is requesting from the New York State Banking Department ("NYSBD") an opinion confirming that New York State law would permit a similar acquisition by a Connecticut-based bank on terms no more restrictive than those in Connecticut's law (Conn. Gen. Statutes 36a-412).

We confirm that this is the case. In fact, it seems that Connecticut's application and/or approval requirements for such a transaction are in fact far more restrictive than those in New York. New York's Interstate Branching Act (codified in Article V-C of the New York Banking Law (NYBL 222 et. seq)) authorizes an out-of-state bank (which includes both an out-of-state state bank and an out-of-state national bank) to maintain one or more branches in New York by means of an acquisition transaction (NYBL 223). An "acquisition transaction," in turn, is defined in NYBL 222(7) as any merger, consolidation, or purchase of assets and assumption of liabilities of all or part of a banking institution. A banking institution includes, among other types of institutions, a New York state­chartered savings bank.

Further, there are no "application" or "approval" requirements per se for such a transaction under New York law. NYBL 225(2) provides that in the case of an acquisition transaction authorized by Article V-C other than one in which the New York bank is the receiving corporation, the out-of­state bank shall file with the Superintendent of Banks a copy of any application filed with the appropriate state supervisor and appropriate federal banking agency. Accordingly, there is merely an informational filing requirement with the NYSBD. This contrasts with Conn Gen. Statutes 36a­412(a)(1), which would appear to subject a New York bank that was acquiring a Connecticut bank to "the filing requirements and any limitations imposed by the laws of [Connecticut] with respect to mergers, consolidations and acquisitions between banks." In addition, the Connecticut law requires affirmative approval of such a merger by the Connecticut Banking Commissioner. Further, the law requires the Commissioner to make such considerations, determinations and findings as would be required for other mergers between banks, and to consider whether such merger can reasonably be expected to produce benefits to the public and whether such benefits clearly outweigh possible adverse effects.

Connecticut law also would appear to prohibit an out-of-state bank from merging with a Connecticut bank that had been operating for less than five years into itself. It would also prohibit an out-of-state bank from merging with a Connecticut bank if upon consummation of the merger, the out-of-state bank and its affiliated depository institutions would control 30 percent or more of the total amount of deposits of insured depository institutions in the State of Connecticut. New York law does not contain either such restriction.

Accordingly, I believe it is clear that New York law would permit, under conditions no more restrictive than those of Connecticut, a Connecticut bank to merge or consolidate with a bank whose home state is New York.

Please do not hesitate to call me should you have any additional questions.

Rosanne Notaro
Deputy General Counsel

cc:       C. Andrew Gerlach, Esq.
            Sullivan & Cromwell, LLP, counsel to First Niagara Bank

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