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Adopted Regulations
Summary of Changes to Part 14 of the General Regulations of the Banking Board

June 3, 1999 


RE: Final Amendments to Part 14 of the General Regulations of the Banking Board (investments in corporations by banks and trust companies).

At its June 3, 1999 meeting, the Banking Board adopted an amendment to Part 14 of the General Regulations of the Banking Board.

These proposed amendments to Part 14 of the General Regulations of the Banking Board ("GRBB") will permit New York state-chartered commercial banks and trust companies with specified capital, examination rating, and supervisory characteristics to provide the Department with notification within thirty days following the acquiring, establishing, making new investments in, or performing new activities in, certain operating subsidiaries, in lieu of the 30-day advance notice now required under Part 14. An operating subsidiary is defined as a subsidiary that is at least 50 percent owned by, and performs only those activities permissible for, its bank or trust company parent.

A second amendment to part 14 would prescribe an advance notice process, rather than advance approval by the Banking Board, for additional investments by any New York state-chartered bank or trust company in an operating subsidiary which already has been approved for that bank or trust company by the Banking Board.

These amendments are before the Banking Board for final adoption. The proposed rules were approved for publication and comment by the Banking Board at its meeting on February 4, 1999. The proposed rules were published as a Notice of Proposed Rule Making in the March 31, 1999 issue of the State Register. 

Amendment to Part 14.3(a)

Currently, pursuant to Part 14.3(a) of the GRBB, a New York state-chartered bank or trust company may acquire, establish, make new investments in, or perform new activities in, an operating subsidiary by providing the Superintendent with 30 days prior notice of the investment. Part 14.3(a) further provides that the Department may authorize a proposed operating subsidiary investment in less than 30 days through written notification to the bank or trust company. Part 14.3(b) permits state-chartered banks and trust companies to conduct certain limited activities in operating subsidiaries on an after-the-fact notice basis, with notice to be provided within 30 days after commencement of the business or activities.

In late 1996, the Office of the Comptroller of the Currency ("OCC") streamlined its application and review process with respect to operating subsidiaries. After review of the Department and OCC regulations, and after consultation with the Deputy Superintendents of the Domestic Commercial Banks Division and the Foreign Commercial Banks Division, the Legal Division recommended that Part 14 of the GRBB be amended. The Banking Board has proposed for comment amendments to Part 14, which are modeled in part upon the OCC’s rules.

First, the amendments would provide that a bank or trust company with specified capital, examination rating, and supervisory characteristics would be allowed to acquire, establish, make an initial investment in, or make an additional investment in an operating subsidiary engaged in certain enumerated, "plain vanilla" banking activities, subject only to a 30-day after-the-fact notice provision. The specific characteristics required for the bank or trust company would be that it:

This proposal is substantially similar to a streamlining provision adopted by the Comptroller.

Amendment to Part 14.4

A second amendment is proposed to section 14.4, which regulates the investment in or performance of new activities by any New York state-chartered bank or trust company in any other operating subsidiary for which the notice procedures of section 14.3 are not available.

Currently, Banking Board approval is required for with respect to such investment or activity. The amendment would permit a bank or trust company to make additional investments in a corporation for which it already has received Banking Board approval using the 30-day advance notice provisions of section 14.3(a). For example, banks and trust companies may invest in small business investment companies and each additional investment in such corporation, except for certain de minimus transactions, must receive Banking Board approval. If the Banking Board already has approved the concept of investment in a corporation under section 14.4, there is little need to go back to the Banking Board for each additional investment. This amendment will eliminate the Banking Board approval, but still will require 30 days advance notice for the Department to review such investments so that it could raise any supervisory concerns prior to the investment being made.

The Notice of Adoption will be published in the August 25, 1999 issue of the State Register.

Very truly yours,

John A. Joyce
Secretary of the Banking Board

Department of Financial Services


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