§ 97 — Power to purchase securities and stocks

New York § 97

• Jurisdiction: New York
• Law BNK: Banking
• Art. 3: Banks and Trust Companies

Text

§ 97. Power to purchase securities and stocks. Subject to the\nrestrictions and limitations contained in this chapter, a bank or trust\ncompany may invest in and have and exercise all rights of ownership with\nrespect to:\n 1. Bonds, notes, debentures and other obligations for payment of\nmoney, which are not in default as to either principal or interest when\nacquired.\n 2. Stocks of any city, county, town or village of this state which are\nnot in default as to either principal or interest when acquired.\n 3. Stock of a federal reserve bank in the amount necessary to qualify\nfor membership in such reserve bank.\n 4. Stock of each of the following to an amount not in excess of ten\nper centum of the capital stock, surplus fund and undivided profits of\nsuch bank or trust company:\n (a) Any safe deposit company which does business on premises owned or\nleased by the bank or trust company or the vaults of which are connected\nwith or adjacent to an office of such bank or trust company; provided\nthat the purchase and holding of such stock is first duly authorized by\nresolution of the board of directors of the bank or trust company and by\nwritten approval of the superintendent, stating the number and amount of\nthe shares which may be so purchased and held, excepting that the bank\nor trust company may, without the written approval of the\nsuperintendent, acquire the stock owned by a former director of the safe\ndeposit company at the time that he ceased to be a director. The bank or\ntrust company may not pay, without the prior written approval of the\nsuperintendent, more for such stock than the cost thereof to the\ndirector.\n (b) Any investment company qualified to exercise the powers specified\nin subdivision two of section five hundred eight of this chapter;\n (c) The Bank for International Settlements.\n 4-a. Subject to such restrictions as the superintendent of financial\nservices may prescribe, stock or other equity investments in subsidiary\ncorporations, partnerships, unincorporated associations, limited\nliability companies, or other entities engaged in, or to be organized to\nengage in the following activities:\n (a) To acquire and lease personal property under the same terms and\nconditions as provided in subdivision twelve of section ninety-six of\nthis article;\n (b) To purchase accounts receivable as provided in subdivision one of\nsection ninety-six of this article;\n (c) To be a corporation organized pursuant to the provisions of\nsection twenty-five (a) of an act of congress entitled the "Federal\nReserve Act";\n (d) To own or operate real or personal property acquired through\nforeclosure or in settlement or reduction of debts due it;\n (e) To own or operate real or personal property for use as bank\npremises; or\n (f) To transact any other business in which the bank or trust company\nmay engage directly.\n 4-b. Common or preferred stock of any corporation created or existing\nunder the laws of the United States or of any state, district or\nterritory thereof, or of the commonwealth of Puerto Rico, provided that:\n(a) such common or preferred stock is registered on a national\nsecurities exchange, as provided in an act of congress of the United\nStates entitled the "Securities Exchange Act of 1934", approved June\nsixth, nineteen hundred thirty-four, as amended, or such other exchange\nor market system as the superintendent shall approve by regulation; (b)\nthe aggregate amount of all investments in common and preferred stock as\npermitted by this subdivision shall at no time exceed two percent of the\nassets or twenty percent of the capital, surplus and undivided profits\nof the bank or trust company, whichever is less, provided however that\nthe superintendent may, upon the request of a bank or trust company,\napprove an increase in such aggregate amount to a maximum of five\npercent of the assets or one hundred percent of the capital, surplus and\nundivided profits of such bank or trust company, whichever is less,\nsubject to any limitations or conditions prescribed by the\nsuperintendent; (c) the aggregate amount of all investments in the\ncommon and preferred stock of any one issuer pursuant to this\nsubdivision, together with the aggregate amount of all investments in\nthe bonds, debentures, notes or other obligations of such issuer made\npursuant to paragraph (i) of subdivision one of section one hundred\nthree of this chapter, shall at no time exceed one percent of the assets\nor fifteen percent of the capital, surplus and undivided profits of the\nbank or trust company, whichever is less; and (d) no bank or trust\ncompany shall at any time hold pursuant to this subdivision more than\ntwo percent of the total issued and outstanding shares of stock of any\none issuer.\n 4-c. Subject to such restrictions as the superintendent of financial\nservices may prescribe, stock or other equity interest in one or more\nsmall business investment companies, as authorized pursuant to the\nprovisions of an act of congress entitled "Small Business Investment Act\nof 1958," as amended, or in any entity established to invest solely in\nsuch small business investment companies, except that in no event shall\nthe total amount of such investments exceed five percent of the capital\nstock, surplus fund and undivided profits of such bank or trust company.\n 5. So much of the capital stock of, or any other equity interest in,\nany other corporations, partnerships, unincorporated associations,\nlimited liability companies, or other entities as may be specifically\nauthorized by the laws of this state or by the superintendent, or\nregulations promulgated by the superintendent.\n The superintendent is authorized to adopt such rules and regulations\nas shall permit banks and trust companies to make a loan which provides\nfor receipt of shares of stock of or any other equity interest in, or a\nshare of the profits, income or earnings of, a borrower in consideration\nfor making the loan.\n A bank or trust company may acquire stock or any other equity interest\nin settlement or reduction of a loan, or advance of credit or in\nexchange for an investment previously made in good faith and in the\nordinary course of business, where such acquisition of stock or any\nother equity interest is necessary in order to minimize or avoid loss in\nconnection with any such loan, advance of credit or investment\npreviously made in good faith. A trust company may acquire stock or any\nother equity interest from any estate, trust or fund with respect to\nwhich such trust company is acting in a fiduciary capacity, if a claim\nis asserted or may be asserted against it with respect to the purchase\nor retention of such stock or equity interest for such estate, trust or\nfund, (a) where such acquisition by the trust company has been\nauthorized or directed by a court, or (b) where such trust company has\nbeen advised by its counsel in writing that it has incurred a contingent\nor potential liability with respect to the purchase or retention of such\nstock or equity interest and such trust company desires to relieve\nitself from such liability. Stocks or any other equity interest acquired\npursuant to the provisions of this paragraph may be held for such period\nas the board of directors deems advisable.\n A bank or trust company may continue to hold any bonds or other\nsecurities or stock which it holds in accordance with the provisions of\nlaw at the time this act takes effect.\n No bank or trust company shall purchase, acquire, or hold any stock\nof, or any other equity interest in, any corporation or any other\nentity, except as provided in this section.\n