89-3

89-3

July 6, 1989

Re: Delayed Funds Availability — California Regulations

Dear Ms. ________ :

This follows our telephone conversation of May 23, 1989, and your letter of May 24, 1989.

As I understand your concern, you seek confirmation that foreign (other nation) bank agency offices licensed by the Superintendent of Banks are not subject to the California regulations regarding delayed funds availability (“Delayed Funds Regulations”). (See 10 C.C.R., Section 10.190400, et seq.)

Depositary banks are subject to the Delayed Funds Regulations via Section 10.190402. Section 10.190401(d) of the Delayed Funds Regulations in pertinent part defines a “depositary bank” as:

“. . . any of the following to which a check is transferred even though it is also the payor bank:

* * *

(3) Any California branch office of a foreign (other nation) bank.”

Section 1700(b) of the Financial Code defines “branch office” of a foreign (other nation) bank as “a limited branch office, a retail branch office, or a wholesale branch office.” Other than the three types of branch offices listed in Section 1700(b), Section 1701 of the Financial Code lists the recognized classes and ranks of offices of foreign (other nation) banks as: (1) “Representative office” (as defined by Financial Code Section 1700(r)); (2) “nondepositary agency” (as defined by Financial Code Section 1700(o)); and, (3) “depositary agency” (as defined by Financial Code Section 1700(e)). Provided that your clients have received licenses from the Superintendent to conduct business either as representative offices, nondepositary agencies, or depositary agencies, they are not subject to the Delayed Funds Regulations.

In clarification of your inquiry as to whether the State Banking Department will amend its regulations to parallel recent amendments to Regulation CC of the Federal Reserve Board (12 C.F.R 229), I can only state that no such amendments are presently being considered; however, I can provide no assurance that such amendments will not be promulgated sometime in the future.

If you have any further questions, please do not hesitate to call me.

Very truly yours,

JAMES E. GILLERAN
Superintendent of Banks

By

KENNETH SAYRE-PETERSON
Counsel

KSP:idk

May 24, 1989

Kenneth Sayre-Peterson, Esq.
State Banking Department
111 Pine Street, Suite 1100
San Francisco, California 94111-5613

Delayed Funds Availability Regulations

Dear Mr. Sayre-Peterson:

This letter confirms our telephone conversation of May 23, 1989 concerning the applicability of the Delayed Funds Availability Regulations (Cal. Admin. Code Title 10, Section 10.190400 et seq.), as amended by the emergency amendments of the State Banking Department adopted in October, 1988 (the “Regulations”), to foreign bank agencies, as such entities are defined in California Financial Code Section 1700. You have confirmed that the Regulations do not apply to foreign bank agencies. Further, we sought clarification as to whether, in view of the amendment to Regulation CC adopted by the Federal Reserve Board in April this year extending coverage of Regulation CC to foreign bank agencies, a corresponding amendment to the Regulations is in progress or will be forthcoming. You have advised us that the Superintendent of Banks has no plans to further amend the Regulations to parallel the April amendment to Regulation CC. On the basis of the foregoing, we have advised our foreign bank agency clients that the Regulations are, and will continue to be, not applicable to their banking operations.

If this letter does not accord with your understanding of our telephone conversation, please notify me immediately.

Very truly yours,