Banking Interpretations

NYSBL 674-a

October 7, 2004

Re: Applicability of Section 674-a of the Banking Law to ATM's.

Dear [                      ]:

Your September 28, 2004 letter to Sara Kelsey, Deputy Superintendent and Counsel, New York State Banking Department ("Department"), regarding Section 674-a of the Banking Law has been referred to me for response.

Banking Law §674-a prohibits a banking organization,[1] bank holding company,[2] national banking association, federal savings and loan association or foreign banking organization (collectively "banking organization") from entering into an agreement with the owner of real property located in New York containing a restrictive covenant that would prevent the owner of the real property from leasing, selling or otherwise disposing of any such interest to another banking organization.

You inquire as to whether the prohibition against restrictive covenants in leases extends to the following:  1) a leased automated teller machine ("ATM") location; 2) a licensed ATM location; 3) a freestanding ATM location; or 4) a financial services company offering banking services.

To the extent that any of the four (4) scenarios described above involve an ATM operated by one of the entities enumerated in Banking Law §674-a, then the prohibition contained therein is applicable.

I trust this is responsive to your inquiry.

Very truly yours,

Alvin A. Narin
Assistant Counsel

[1]  The term "Banking organizations" is defined in Banking Law §2(11).

[2]  The term "Bank holding company" is defined in Banking Law §141(3).