87-4

November 18, 1987

Dear Mr. ________:

This is in response to your letter dated August 6, 1987 requesting an interpretation exempting 751.3 subsidiaries from Section 1221 of the Financial Code.

Although Section 751.3 provides that investments, loans and guarantees extended for the benefit of its subsidiary may be made up to 10% of the total assets of a bank, all extensions of credit (loans, guarantees, etc.) must comply with the loan limitations of Section 1221. Therefore Section 751.3 subsidiaries are not exempt from Section 1221 of the Financial Code and the Examiner’s treatment of the loans extended to your subsidiary in the June 30, 1987 Report of Examination appears correct.

Very truly yours,

HOWARD GOULD
Superintendent of Banks

By:

JOHN R. PAULUS
Deputy Superintendent of Banks,
Office of Policy

JRP/rg