Source: http://www.dfs.ny.gov/legal/regulations/adoptions/banking/322amd2.htm
Timestamp: 2016-02-07 15:06:46
Document Index: 442462017

Matched Legal Cases: ['art 322', '§ 322', 'art 51', '§ 322', 'art 61', 'art 61', '§ 322', '§ 322']

Final Amendment to Superintendent's Regulation Part 322
Additions are underlined; [deletions are bracketed].
PLEDGE OF ASSETS AND MAINTENANCE OF ASSETS BY LICENSED FOREIGN BANKING CORPORATIONS IN NEW YORK Section 322.1 is amended to read as follows: § 322.1 Deposit of assets; amount of assets to be deposited.
(a) Upon opening a branch or branches or agency or agencies in this State and at all times thereafter, except in the instance where the deposit accounts at a branch or branches of a foreign banking corporation are insured by the Federal Deposit Insurance Corporation, each foreign banking corporation shall keep assets on deposit in accordance with Part 51 of this Title (“assets”), in an amount, based upon the lower of principal amount or fair (market) value, equal to the greater of: (1) [five] one percent of average total liabilities for the previous month of such branch or branches or agency or agencies, [excluding] including liabilities of an international banking facility maintained by such branch or branches or agency or agencies, [and] but excluding amounts due and other liabilities to other offices, agencies, branches and affiliates as defined in section 322.6 of this Part, of such foreign banking corporation; or [(2) one percent of total liabilities of such branch or branches or agency or agencies, excluding amounts due and other liabilities to other offices, agencies, branches and affiliates as defined in section 322.6 of this Part, of such foreign banking corporation; or] [(3)](2) $[1] 2 million. (b) A foreign banking corporation opening its initial branch or agency shall deposit assets based upon the branch’s or agency’s projection of total liabilities at the end of its first year of operation. (c) For purposes of [subdivisions (a) and (b) of this] section 322.1(a)(1) of this Part, liabilities arising from [repurchase agreements] “qualified financial contracts” as that term is defined in section 618-a.2(e) of the Banking Law, may be excluded from the calculation of total liabilities to the extent such liabilities are secured by collateral within the meaning of section 618-a.2(d) of the Banking Law, unless a branch or agency has been notified otherwise by the superintendent. (d) For purposes of section 322.1(a)(1) of this Part, except as otherwise provided in this Part, calculation of liabilities shall be in accordance with the instructions in the FFIEC 002 Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (“Call Report”). (e) For purposes of section 322.1(a)(1) of this Part, the asset pledge calculation shall be on the same basis on which quarterly averages are calculated for Call Report purposes (currently, the average of liabilities subject to asset pledge as of the close of business on each Wednesday during the previous month). The pledged assets, as well as the asset pledge report required under section 322.5(c) of this Part, shall be due on the fifth business day immediately following the end of the monthly period for which the calculation is made. (f) For a well-rated foreign banking corporation as defined in section 322.7 of this Part, the maximum amount required to be deposited pursuant to section 322.1(a)(1) of this Part shall be capped at one hundred million dollars ($100,000,000). Section 322.2 is amended to read as follows: § 322.2 Assets that may be deposited; conditions and limitations. [In addition to the assets described in section 202-b(1) of the Banking Law, the following assets are eligible for deposit for purposes of this Part: (a) commercial paper payable dollars in the United States provided such paper is accorded the highest rating of a rating service designated by the Banking Board pursuant to section 61.1 of this Title. In the event that an issue of commercial paper is rated by more than one designated rating service, it must have the highest rating of each; (b) negotiable certificates of deposit that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation; (c) bankers’ acceptances that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation; (d) reserves held at a Federal Reserve Bank; and (e) such other assets as determined by the superintendent upon written application. If the superintendent determines that an asset which otherwise qualifies under subdivisions (a) through (c) of this section shall be valued for purposes of this Part at less than the amount otherwise provided in this section, the superintendent shall so notify the foreign banking corporation which shall thereafter value such asset for purposes of this Part as directed by the superintendent.] (a) The following categories of assets are eligible for pledge, to the extent they are included on the superintendent’s Asset Pledge List (“APL”). The APL will be made available to the public by the Banking Department and posted on the Banking Department’s website. (1) Specified Assets. Obligations specified in Banking Law section 202-b(1) (the “Specified Assets”). (2) Permitted Assets. Assets permitted as eligible for pledge (the “Permitted Assets”) shall include: (i) commercial paper, provided such paper is accorded the highest rating of a rating service designated by the Banking Board pursuant to section 61.1 of this Title. In the event that an issue of commercial paper is rated by more than one designated rating service, it must have the highest rating of each; (ii) negotiable certificates of deposit issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation; and (iii) bankers’ acceptances issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation. (3) Additional Assets. Additional Assets that may be included on the superintendent’s APL (the “Additional Assets”). Under special circumstances, the superintendent may approve otherwise ineligible assets upon written application by the foreign banking corporation. (b) Unless the superintendent specifically permits otherwise, the following conditions and limitations shall apply to the asset pledge: (1) All assets must be payable in the United States in United States dollars. (2) Additional Assets may not comprise more than fifty percent of the foreign banking corporation’s total asset pledge requirement. (3) For all foreign banking corporations, except as provided in subsection (4) below, Additional Assets must be accorded the highest rating of a rating service designated by the Banking Board pursuant to Part 61.1 of this Title. In the event that an asset is rated by more than one designated rating service, it must have the highest rating of each. (4) For a well-rated foreign banking corporation, as defined in section 322.7 of this Part, Additional Assets may include assets that have been accorded an investment grade rating of a rating service designated by the Banking Board pursuant to Part 61.1 of this Title. In the event that an asset is rated by more than one designated rating service, it must have received at least an investment grade rating from each. (5) No foreign banking corporation may pledge any obligations issued or guaranteed by an entity located or domiciled in, or any governmental entity of, the home country of such foreign banking corporation (“same-country obligor”), provided that a foreign banking corporation may continue to pledge same-country certificates of deposit (“CDs”) during the one-year period following the date of enactment of this provision in an aggregate dollar amount not to exceed the aggregate dollar amount of same-country CDs it had pledged on the date of enactment. (6) With respect to any asset, the superintendent may determine that, for purposes of this Part, such asset shall be valued at other than face value, or shall be held in such form or subject to such conditions as the superintendent may prescribe. The superintendent may expressly disallow one or more otherwise eligible assets, either for all institutions or for specific institutions. All assets shall be subject to any additional conditions or limitations as determined by the superintendent with respect to such assets. Section 322.5 is amended to read as follows: § 322.5 Record of assets and liabilities (a) Except as provided in section 322.5(c) of this Part, every foreign banking corporation licensed to maintain one or more agencies or branches in this State shall maintain a record[, at the close of each business day,] of the liabilities of the foreign banking corporation appearing in the books, accounts and records of its agency, agencies, branch or branches in this State as liabilities of such agency, agencies, branch or branches as of the close of business on each Wednesday as determined in accordance with section 202-b(2) of the Banking Law and section 322.4 of this Part (liabilities requiring cover) and the assets as determined in accordance with section section 202-b(2) of the Banking Law and section 322.3 of this Part (eligible assets). [The daily record shall include a computation of the daily ratio of eligible assets to liabilities requiring cover.] The [daily] record shall be written in ink or maintained in other permanent legible form and be retained until the conclusion of the next examination of the agency or branch by the Banking Department. A foreign banking corporation authorized to maintain more than one agency or branch in this state shall maintain the [daily] record on a consolidated basis. In the event that such corporation is authorized to maintain both insured and uninsured branches, a separate [daily] record may be maintained for each such category. No specific format for the [daily] record is prescribed. It shall, however, contain such information in sufficient detail as will permit ready verification of its accuracy. (b) Each foreign banking corporation licensed to maintain one or more branches or agencies in this State shall maintain, in addition to the [daily] record required to be maintained by subdivision (a) of this section, an [daily] itemized record of assets deposited for the account of the Superintendent of Banks pursuant to section 202-b(1) of the Banking Law and section 322.1 of this Part. The record shall include the value of assets deposited, at principal or fair (market) value, whichever is lower[, and the ratio of the aggregate of such values to liabilities requiring cover].
(c) Each foreign banking corporation licensed to maintain one or more branches or agencies in this State shall, in a form and at an interval to be prescribed by the superintendent, prepare a report showing the assets deposited pursuant to section 202-b(1) of the Banking Law and section 322.1 of this Part and, except for those well-rated foreign banking corporations eligible for and having on deposit eligible assets at least in the amount of the cap provided in section 322.1(f) of this Part, the calculation of the pledge required under section 322.1 of this Part. ([c]d) The records required to be maintained by subdivisions (a) and (b) and the report required by subdivision (c) of this section shall be authenticated by the signature of a duly authorized officer of the agency or branch.
A new section 322.7 shall be added as follows: § 322.7 Definition of well-rated foreign banking corporation. (a) For purposes of this Part, “well-rated foreign banking corporation” means a foreign banking corporation designated as such by the superintendent. Such an institution must be considered by the superintendent generally to be well-capitalized and well-managed. The superintendent will consider the following factors, among others, in making such determination: (1) Whether the parent foreign bank on a consolidated basis maintains a well-capitalized position (currently, tier 1 and total risk-based capital ratios of 6 and 10 percent, respectively, as calculated in accordance with standards set by the Basel Committee on Banking Supervision); (2) The Strength of Support Assessment (“SOSA”) rating issued by the federal banking agencies); (3) The composite rating for the foreign banking corporation’s New York office or offices (such rating should be no lower than a “2”); and (4) Whether there are any formal supervisory, regulatory, or enforcement actions outstanding against the New York office or offices. (b) A well-rated foreign banking corporation shall promptly inform the superintendent if it becomes aware of the existence of any fact that could cause its loss of status as “well-rated”. The superintendent will also notify the foreign banking corporation of its loss of status as a well-rated institution when such determination is made. Upon a foreign banking corporation being informed by the superintendent that it is no longer deemed “well-rated” for purposes of this Part, the foreign banking corporation shall have 30 days to comply with the requirements of this Part applicable to those institutions not designated as “well-rated”, unless otherwise directed by the superintendent.