72-1

72-1

San Francisco, California

July 26, 1972

Dear Mr. _____________:

This will acknowledge receipt of your letter of July 5, 1972 and confirm our telephone conversation of this date. Please accept my apologies for not having made a sooner response to your July 5 letter, but I was out of state and did not return until last week.

Although I have been acting as Superintendent of Banks for only a little over two years, it is my understanding that, historically, the use of the word “national” in the name of an agency of a bank organized in a foreign country was not considered to be contrary to the provisions of 18 U.S.C. 709. In this connection, it should be noted, particularly in this State, that agencies of foreign banks are unable to conduct a full banking business because they cannot take domestic deposits. Consequently, their contact with the general public is most limited and we see no possibility that the public is in any way misled into assuming that the agencies are, in fact, banks organized under the laws of the United States, and thus that deposits in such banks would be insured.

However, when a foreign bank has formed a distinct subsidiary under California law, we are in complete agreement that the California subsidiary may not use as part of its name the word “national”. As a recent example, when __________ wished to apply for a California subsidiary, we advised that the name of the California subsidiary must be different than the name of the parent because, among other reasons, we construed the use of the word as being contrary to Section 709.

By reason of the historical acceptance of this position by the Comptroller’s Office, both here and in other states, it never occurred to us that, by opening an agency in California under its own name, __________ would run the risk of being accused of statutory violation.

Because of your suggestion that there might be some apparent violation, we wish to investigate the matter further, particularly by consulting the New York State Banking Department. Pending such further investigation, we will not consider to stand in violation of law, nor do we at this state contemplate taking any supervisory action to compel that bank to do business under a fictitious name.

Sincerely yours,

DONALD E. PEARSON
Superintendent of Banks

DEP:ap

July 5, 1972

Mr. Donald E. Pearson
Superintendent of Banks for the State of California
235 Montgomery Street, Suite 750
San Francisco, California 94104

Dear Mr. Pearson:

This will have reference to recent telephone conversations between you and regarding the apparent violation of 18 U.S.C. 709 by _____________, which opened a branch office in San Francisco on July 3, 1972.

In those conversations, it was suggested that attorneys for ___________ review this question in an effort to resolve the matter. Also, you indicated that your attorney would research the statute and this office would be advised of his conclusion.

The _________________________ and __________________________, also operating in California, are using the word “national” in their title, in apparent violation of 18 U.S.C. 709. Corrective action appears warranted in each of these instances, and we shall appreciate an indication from you of what supervisory action you contemplate regarding these violations.

Very truly yours,