Rutgers Law

New Jersey Statutes, Title: 17, CORPORATIONS AND INSTITUTIONS FOR FINANCE AND INSURANCE

    Chapter 9a:

      Section: 17:9a-450: Definitions of adjusted liabilities and eligible assets relative to foreign banks

           69. a. In this section:

(1) "Adjusted liabilities," when used with respect to a foreign bank, means the liabilities of the bank's business in this State, excluding: (a) accrued expenses; (b) any liability to an office, whether in or outside of this State, or subsidiary of the bank; and (c) such other liabilities as the commissioner may by regulation or order exclude.

(2) "Applicable minimum," when used with respect to eligible assets deposited or to be deposited with an approved depository by a foreign bank, means the amount as the commissioner may from time to time by regulation or order determine to be necessary for the establishment of sound financial condition, for the protection of the interests of creditors of the bank's business in this State, or for the protection of the public interest.

However, in the case of a foreign bank which is licensed to establish an agency or a branch office, the applicable minimum shall in no event be less than the greater of (a) 5 percent of the adjusted liabilities of the bank or (b) $1,000,000.

(3) "Approved depository," when used with respect to a foreign bank, means a bank organized under the laws of this State or a national bank headquartered in this State which has been selected by such foreign bank and approved by the commissioner for the purpose of acting as the approved depository of the foreign bank and which has filed with the commissioner, in the form as the commissioner may by regulation or order prescribe, an agreement to comply with all applicable provisions of this section and of any regulation or order issued under this section.

(4) "Eligible assets" when used with respect to a foreign bank, means any of the following:

(a) Cash.

(b) Any investment security which by regulation is eligible for investment by a commercial bank organized under the Banking Act.

(c) Any negotiable certificate of deposit which: (i) has a maturity of not more than one year, (ii) is payable in the United States, and (iii) is issued by a bank organized under the laws of a state of the United States, by a national bank, or by a branch office of a foreign bank which is located in the United States.

(d) Any commercial paper which is payable in the United States and which is rated P-1 or its equivalent by a nationally recognized rating service; provided, however, that any conflict in rating shall be resolved in favor of the lower rating.

(e) Any banker's acceptance which is payable in the United States and which is eligible for discount with a Federal Reserve bank.

(f) Any other asset which the commissioner by regulation or order determines to be eligible.

Notwithstanding the foregoing provisions of this paragraph, "eligible asset," when used with respect to a foreign bank, does not include any instrument the issuer of which: (i) is, or is affiliated with, the foreign bank; (ii) is domiciled in, or controlled by a bank or other person domiciled in, the same foreign nation as the foreign bank; or (iii) is, or is controlled by, the foreign nation. For purposes of the foregoing provision, to be "affiliated" means to control, to be controlled by, or to be under common control with.

b. For purposes of this section:

(1) The amount of adjusted liabilities of a foreign bank's business in this State shall be computed for the period, in the manner, and on the basis as the commissioner may by regulation or order prescribe.

(2) Any eligible asset shall be valued at the lesser of market or par.

c. (1) Before any foreign bank is licensed to transact business in this State, the bank shall deposit, and each foreign bank which is licensed to transact business in this State shall maintain on deposit, with an approved depository, eligible assets having a value in an amount not less than the applicable minimum.

(2) Whenever a foreign bank which is licensed to transact business in this State ceases to be so licensed, the bank shall thereafter establish on deposit, with an approved depository, eligible assets having a value in an amount not less than the applicable minimum for the period of time the commissioner may determine to be necessary for the protection of creditors of the bank's business in this State or for the protection of the public interest.

d. (1) No foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section shall withdraw any of those eligible assets except with the prior approval of the commissioner.

(2) No approved depository which holds eligible assets on deposit from a foreign bank pursuant to this section shall release any of those eligible assets except with the prior approval of the commissioner or as otherwise provided in subsection h. of this section.

e. Any foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section shall be entitled to receive any income paid on such eligible assets, unless the commissioner shall have suspended or revoked its license to transact business in this State or taken possession of its property and business in this State.

f. (1) Whenever a foreign bank deposits eligible assets with, or withdraws eligible assets from, an approved depository pursuant to this section, the bank shall do so in accordance with the procedures and requirements the commissioner may by regulation or order prescribe.

(2) Whenever an approved depository receives, holds, or releases eligible assets pursuant to this section, the approved depository shall do so in accordance with the procedures and requirements the commissioner may by regulation or order prescribe and shall file with the commissioner reports as and when the commissioner may by regulation or order require.

g. Whenever a foreign bank establishes eligible assets on deposit with an approved depository pursuant to this section:

(1) The eligible assets shall be deemed to be pledged to the commissioner for the benefit of the creditors of the bank's business in this State; and, notwithstanding any provision of the Uniform Commercial Code, N.J.S.12A:1-101 et seq., to the contrary, the commissioner, for the benefit of the creditors, shall be deemed to have a security interest in those eligible assets.

(2) The eligible assets shall be free from any lien, charge, right of setoff, credit, or preference in connection with any claim of the approved depository against the bank.

h. (1) If the commissioner takes possession of the property and business of a foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section, the approved depository shall, upon order of the commissioner, release those eligible assets to the commissioner, as liquidator of the property and business of the bank.

(2) If a foreign bank which establishes eligible assets on deposit with an approved depository pursuant to this section fails to pay any judgment creditor of its business in this State and the commissioner has not taken possession of the property and business of the bank, the approved depository shall release the eligible assets to the commissioner, and the commissioner shall make the disposition of the eligible assets, as a court of competent jurisdiction of this State or of the United States may order for the benefit of that judgment creditor. For purposes of this paragraph, "judgment creditor of its business in this State" means a person to whom the bank is required to pay money under a judgment which: (a) arose out of the bank's business in this State; (b) has been entered by a court of competent jurisdiction of this State or of the United States; (c) has become final, in that all possibility of direct attack on that judgment by way of appeal, motion for new trial, motion to vacate, or petition for extraordinary writ has been exhausted; and (d) has remained unpaid for a period of not less than 60 days after becoming final.

L.1996,c.17,s.69.



This section added to the Rutgers Database: 2013-06-10 16:36:30.

Older versions of 17:9a-450 (if available):

Court decisions that cite this statute: CLICK HERE.