2023 New York Laws › BNK - Banking › Article 3 - Banks and Trust Companies › 97 - Power to Purchase Securities and Stocks.

§ 97.  Power  to  purchase  securities  and  stocks.  Subject  to  the
restrictions and limitations contained in this chapter, a bank or  trust
company may invest in and have and exercise all rights of ownership with
respect to:
1.  Bonds,  notes,  debentures  and  other  obligations for payment of
money, which are not in default as to either principal or interest  when
acquired.
2. Stocks of any city, county, town or village of this state which are
not in default as to either principal or interest when acquired.
3.  Stock of a federal reserve bank in the amount necessary to qualify
for membership in such reserve bank.
4. Stock of each of the following to an amount not in  excess  of  ten
per  centum  of the capital stock, surplus fund and undivided profits of
such bank or trust company:
(a) Any safe deposit company which does business on premises owned  or
leased by the bank or trust company or the vaults of which are connected
with  or  adjacent  to an office of such bank or trust company; provided
that the purchase and holding of such stock is first duly authorized  by
resolution of the board of directors of the bank or trust company and by
written approval of the superintendent, stating the number and amount of
the  shares  which may be so purchased and held, excepting that the bank
or  trust  company  may,   without   the   written   approval   of   the
superintendent, acquire the stock owned by a former director of the safe
deposit company at the time that he ceased to be a director. The bank or
trust  company  may  not  pay, without the prior written approval of the
superintendent, more for  such  stock  than  the  cost  thereof  to  the
director.
(b)  Any investment company qualified to exercise the powers specified
in subdivision two of section five hundred eight of this chapter;
(c) The Bank for International Settlements.
4-a. Subject to such restrictions as the superintendent  of  financial
services  may prescribe, stock or other equity investments in subsidiary
corporations,   partnerships,   unincorporated   associations,   limited
liability companies, or other entities engaged in, or to be organized to
engage in the following activities:
(a)  To  acquire  and lease personal property under the same terms and
conditions as provided in subdivision twelve of  section  ninety-six  of
this article;
(b)  To purchase accounts receivable as provided in subdivision one of
section ninety-six of this article;
(c) To be a  corporation  organized  pursuant  to  the  provisions  of
section  twenty-five  (a)  of  an  act of congress entitled the "Federal
Reserve Act";
(d) To own or operate  real  or  personal  property  acquired  through
foreclosure or in settlement or reduction of debts due it;
(e)  To  own  or  operate  real  or  personal property for use as bank
premises; or
(f) To transact any other business in which the bank or trust  company
may engage directly.
4-b.  Common or preferred stock of any corporation created or existing
under the laws of the  United  States  or  of  any  state,  district  or
territory thereof, or of the commonwealth of Puerto Rico, provided that:
(a)  such  common  or  preferred  stock  is  registered  on  a  national
securities exchange, as provided in an act of  congress  of  the  United
States  entitled  the  "Securities  Exchange Act of 1934", approved June
sixth, nineteen hundred thirty-four, as amended, or such other  exchange
or  market system as the superintendent shall approve by regulation; (b)
the aggregate amount of all investments in common and preferred stock as

permitted by this subdivision shall at no time exceed two percent of the
assets or twenty percent of the capital, surplus and  undivided  profits
of  the  bank or trust company, whichever is less, provided however that
the  superintendent  may,  upon  the request of a bank or trust company,
approve an increase in such  aggregate  amount  to  a  maximum  of  five
percent of the assets or one hundred percent of the capital, surplus and
undivided  profits  of  such  bank  or trust company, whichever is less,
subject  to  any   limitations   or   conditions   prescribed   by   the
superintendent;  (c)  the  aggregate  amount  of  all investments in the
common  and  preferred  stock  of  any  one  issuer  pursuant  to   this
subdivision,  together  with  the aggregate amount of all investments in
the bonds, debentures, notes or other obligations of  such  issuer  made
pursuant  to  paragraph  (i)  of  subdivision one of section one hundred
three of this chapter, shall at no time exceed one percent of the assets
or fifteen percent of the capital, surplus and undivided profits of  the
bank  or  trust  company,  whichever  is  less; and (d) no bank or trust
company shall at any time hold pursuant to this  subdivision  more  than
two  percent  of the total issued and outstanding shares of stock of any
one issuer.
4-c. Subject to such restrictions as the superintendent  of  financial
services  may  prescribe,  stock or other equity interest in one or more
small business investment  companies,  as  authorized  pursuant  to  the
provisions of an act of congress entitled "Small Business Investment Act
of  1958,"  as amended, or in any entity established to invest solely in
such small business investment companies, except that in no event  shall
the  total amount of such investments exceed five percent of the capital
stock, surplus fund and undivided profits of such bank or trust company.
5. So much of the capital stock of, or any other equity  interest  in,
any   other  corporations,  partnerships,  unincorporated  associations,
limited liability companies, or other entities as  may  be  specifically
authorized  by  the  laws  of  this  state  or by the superintendent, or
regulations promulgated by the superintendent.
The superintendent is authorized to adopt such rules  and  regulations
as  shall permit banks and trust companies to make a loan which provides
for receipt of shares of stock of or any other equity interest in, or  a
share of the profits, income or earnings of, a borrower in consideration
for making the loan.
A bank or trust company may acquire stock or any other equity interest
in  settlement  or  reduction  of  a  loan,  or  advance of credit or in
exchange for an investment previously made in  good  faith  and  in  the
ordinary  course  of  business,  where  such acquisition of stock or any
other equity interest is necessary in order to minimize or avoid loss in
connection  with  any  such  loan,  advance  of  credit  or   investment
previously  made in good faith. A trust company may acquire stock or any
other equity interest from any estate, trust or  fund  with  respect  to
which  such  trust company is acting in a fiduciary capacity, if a claim
is asserted or may be asserted against it with respect to  the  purchase
or  retention of such stock or equity interest for such estate, trust or
fund,  (a)  where  such  acquisition  by  the  trust  company  has  been
authorized  or  directed by a court, or (b) where such trust company has
been advised by its counsel in writing that it has incurred a contingent
or potential liability with respect to the purchase or retention of such
stock or equity interest and  such  trust  company  desires  to  relieve
itself from such liability. Stocks or any other equity interest acquired
pursuant to the provisions of this paragraph may be held for such period
as the board of directors deems advisable.
A  bank  or  trust  company  may  continue  to hold any bonds or other
securities or stock which it holds in accordance with the provisions  of
law at the time this act takes effect.
No  bank  or  trust company shall purchase, acquire, or hold any stock
of, or any other equity  interest  in,  any  corporation  or  any  other
entity, except as provided in this section.