74-7

74-7

January 16, 1974

Re: Section 1562 of the Financial Code

Dear Mr. ________:

This letter is meant to confirm our telephone conversation of January 9, 1974.

You recently directed an inquiry to this Department relative to ________ responsibility under Section 1562 of the Financial Code. ________ is a subsidiary of ________, a bank holding company. ________ is also a subsidiary of ________. You requested our opinion as to whether ________ would have to pledge securities in order to secure deposits which it had made with ________.

Our reading of Section 1562 would indicate that ________ is not required to pledge the securities. The statute would seem to require the pledge in two situations: First, if the deposit was left with the same corporation or association as the corporation or association making the deposits; the second, if the corporation or association holding the deposit held or owned a majority of the capital stock of the trust company or bank making the deposit. Since ________ is not the same corporation or association as ________ and ________ does not own a majority of the capital stock of ________, we are compelled to find that the statute does not apply.

If you have any further questions in regard to this matter, please do not hesitate to contact us.

Very truly yours,

DONALD E. PEARSON
Superintendent of Banks

By

JOHN F. STUART
Counsel

JFS:ap