To: Deputy Fredsall
From: Assistant Counsel Christine M. Tomczak
Date: December 7, 2005
Subject: [ ] New York Representative Office
Does the Banking Department require the submission of any document from [
]("the Bank") regarding the restructuring of their New
York representative office from simply a foreign office of the Bank to a separate
corporate subsidiary of the parent bank?
The Legal Division concludes that nothing is required to be given to the Banking
Department and that the restructuring of the New York representative office into a
separate corporate subsidiary is not prohibited by the Banking Law or Regulations.
By an October 26, 2005 letter, the Bank informed the Department that it intended
to reorganize the internal operations of their US representative offices. The Bank
has one representative office in Boston and one in New York. Each of the
representative offices would continue to operate under the name of the Bank. In
each case, however, a separately incorporated U.S. subsidiary (likely to be a New
York business corporation in the case of the New York office and a Massachusetts
business corporation in the case of the Boston office) would employ the
representative office staff, lease the representative office space and otherwise
assume all of the representative office operating expenses. The subsidiaries would
provide all of the contemplated representative office services to the bank on an
arms-length basis and would be paid a service fee by the bank.
There is nothing in Banking Law Article V-B or Supervisory Policies FB 1 and FB 2
that prohibits the representative office of a foreign bank from being structured as a
corporate subsidiary of the parent bank. The parent bank, [
], would be responsible for this representative office in the same
manner as if it were an unincorporated office of the bank. Additionally, this office
would be subject to the same provisions of the law and regulations regarding the
conduct of representative offices of foreign banks in the US.
Subject to the foregoing, the Legal Division concludes that the restructuring of the
New York representative office into a separate corporate subsidiary is not
prohibited by the Banking Law or Regulations.