On July 21, 2008, New York State enacted a new law, P.L. 2008, ch. 316 (the “Interstate Amendment”), which will be of interest to banks wishing to branch into or out of the state of New York.  The Interstate Amendment, which took effect immediately, permits de novo interstate branching into the state of New York by banks located outside the state. 

What Does This Mean for Out-of-State Banks Looking to Enter New York and for New York Banks Looking to Enter Another State? 

Under the previous law, out-of-state banks, including out-of-state national banks, could enter New York only by acquiring an existing New York bank or bank branch and only if the law of the state in which the out-of-state bank is chartered or (if it is a national bank) has its main office (the bank’s “Home State”) was “reciprocal,” meaning that it permitted New York banks to acquire banks or bank branches in the out-of-state bank’s Home State.  As a result, New York banks were prevented from entering a state which required reciprocity without first acquiring a bank or a bank branch located in that state. 

Under the Interstate Amendment, the only requirement for de novo entry into New York is home state reciprocity.  Therefore, if an out-of-state bank now wishes to come into New York for the first time, it can do so by simply opening up a branch office in New York (after applying to, and obtaining the approval of, the Superintendent of Banking of New York), without having to acquire a New York bank or bank branch, so long as the law in the out-of-state bank’s Home State would permit a New York bank to branch de novo into that state.

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