Article 30 of the Banking Law--- Article 27 Banking activities

Article 30 of the Banking Law



5/25/15




Article 30 Large exposures -27 - ANNEX A 1. No bank shall grant credit to a person if as a result thereof: a. the aggregate outstanding principal amount of all of the bank’s credits to that person would exceed the equivalent of fifteen percent, or such lower percentage as specified by regulations issued by the CBI, of the bank’s unimpaired capital and reserves (large credit exposure), without obtaining prior approval of the CBI; b. the aggregate outstanding principal amount of all of the bank’s credits to that person would exceed the equivalent of 25 percent, or such lower percentage as specified by regulations issued by the CBI, of the bank’s unimpaired capital and reserves; or c. the aggregate outstanding principal amount of all large credit exposures of the bank pursuant to sub-paragraphs (a) and (B) would exceed the equivalent of 400 percent, or such lower percentage as specified by regulations issued by the CBI, of the bank’s unimpaired capital and reserves. 2. The limitations specified in paragraph (1) shall not apply to any principal amount of credit that is fully secured by readily marketable collateral in accordance with the standards prescribed for that purpose by regulation of the CBI, provided, however, that no bank shall grant such secured credit if, as a result thereof, the aggregate outstanding principal amount of all its secured credits to the person receiving such credit would exceed the equivalent of 20 percent of the bank’s unimpaired capital and reserves, or such lower percentage as specified by regulations issued by the CBI. 3. The provisions of paragraphs (1) and (2) shall not apply to: a. transactions with, or guaranteed by, the government; and b. transactions between banks with a maturity of one year or less. 4. For the purposes of applying this article or any regulations issued pursuant thereto, a person shall be deemed to include any other person with whom such person is connected, directly or indirectly, in such a way that the financial soundness of any of them may affect the financial soundness of the other or others, or the same factors may affect the financial soundness of some or all of them, or if as a result of the structure of their relationship the other person is in fact ultimately responsible for the credit outstanding.

[You must be registered and logged in to see this link.]

Article 27 Banking activities 1.




A bank may engage in the following activities subject to the terms and conditions of its banking license or permit: a. receiving money deposits (in the form of demand deposits, time deposits or other types of deposit) or other repayable funds, bearing interest or not; -25 - ANNEX A b. extending credits (whether secured or not by collateral or liens), including without limitation: consumer and mortgage credit; factoring, with or without recourse; financing of commercial transactions, including forfaiting (purchasing negotiable instruments at discount without recourse); and financial leasing services; c. buying and selling for its own account or for the account of customers (including underwriting and brokerage services) of any of the following: money market instruments (including checks, bills of exchange, promissory notes and certificates of deposit); foreign currencies and precious metals; exchange and interest rate instruments; stocks and other transferable securities; and forward contracts, swap agreements, futures, options, and other derivatives relating to currencies, stocks, bonds, precious metals or interest rates; d. entering into contingent commitments, including guarantees and letters of credit, for its own account and for the account of customers; e. providing clearing, settlement and transfer services for money, securities, payment orders and payment instruments (including checks, credit, debit and other payment cards, travelers’ checks; and bank drafts, wire transfers, and pre-authorized debits and credits); f. money brokering; g. safekeeping and administration of valuables, including securities; h. providing trust services; i. providing services as portfolio manager of securities or as financial adviser, agent or consultant; j. providing financial information and credit reference services; and k. anything that shall be incidental to the foregoing and such other activities, not prohibited by Article 28, as the CBI may by regulation authorize as banking activities. 2. The CBI may, in its discretion, and subject to such conditions as it may stipulate, require banks to conduct certain banking activities through separately capitalized subsidiaries that are wholly or majority-owned by the relevant bank. Article 28 Prohibited activities No bank shall engage in or participate as an agent, partner or co-owner in wholesale or retail trade, manufacturing, transportation, agriculture or fisheries, mining, building, re-insurance, insurance underwriting or other business activities except for activities that are authorized by -26 - ANNEX A Article 27. Notwithstanding the foregoing, and with the prior written approval of the CBI, a bank may temporarily carry on or participate in the carrying on of such activities to the extent necessary to obtain satisfaction of claims, provided that the CBI may require the bank to cease such activities by a date specified in the license or permit.

[You must be registered and logged in to see this link.]