Banking Interpretations

NYSBL 105 and 240

December 22, 2005

[ ]

Dear [ ]:

I am writing in response to your inquiry regarding the [
] proposed, cash vault inventory activities in which you
seek an opinion as to whether [ ] would be required to establish a branch
office under Section 105 of New York's Banking Law in connection with
such activities.

[ ] wishes to enter in o an agreement with a courier service to
maintain a cash vault inventory for [ ] at a facility operated by the courier
service ("Service Facility"). The cash inventory will be used to satisfy orders
for cash made by [ ] customers. The inventories of cash will be made up
of cash delivered by [ ] to the Service Facility from the local Reserve Bank
or by a courier service engaged by [ ] to deliver cash from a [ ] vault.
Inventories of cash will also be made up of cash deposits picked up from the
customer's place of business by the courier service that maintains the
Service Facility. The cash inventory will replace the need for the courier
service to purchase cash from third party correspondent banks for sale to
[ ] customers, a service which the courier service currently provides
pursuant to contractual agreements that it has with [ ]) customers.

If [ ] maintains a cash vault inventory, a [ ] customer that
seeks to purchase cash will enter into an agreement with [ ] to make the
purchase. The customer will also enter into an agreement with the courier
service that maintains the Service Facility in order for the purchased cash to
be delivered to the customer's place of business.

[ ] will assume the risk of loss while the cash is in the vault at
the Service Facility, subject to indemnification by the Service Facility. The
customer or the courier service that delivers the purchased cash to the
customer's place of business will assume the risk of loss while the cash is in

It is [ ]'s position that [ ] should be permitted to engage in
the proposed activity without a branch license for the Service Facility where
the cash vault inventory will be maintained. In support of its position, [ ]
points out that the OCC has already conclude hat the maintenance of cash
vault inventory similar to that proposed by [ ], would be free from
branching restrictions if the inventory was held at an independent nonpublic
facility. (See attached OCC 1997 Interpretive Letter). [ ] urges the State
of New York Banking Department ("Banking Department") to follow this OCC
precedent in interpreting Section 105 of the New York Banking Law and
permit [ ] to provide the proposed cash vault services without having to
obtain a branch license for the Service Facility. [ ] points out that this
would preserve competitive equality between New York state-chartered
banking institutions and federally-chartered banking institutions.

The Banking Department has concluded that a branch license is
not required under Section 105 of the Banking Law in order for [ ] to
establish a cash vault inventory at the Service Facility, as described above.
In reaching this determination, the Banking Department recognizes that this
opinion differs from an earlier one of March 2003 where the question of the
branch license requirement was also posed for a similar cash vault inventory
to be maintained at an armored car service facility. In the March 2003
opinion, it was decided that a branch license was required for cash vault
inventory maintained at the courier service facility. The Department has
determined otherwise on this current set of facts. If you have any
questions, I can be reached at (212) 709-1650.

Christine R. Cardi
Assistant Counsel

cc: Deputy Superintendent Mike Lesser
Economist Steven Kupfer