ny-DFS-42-26-00007-P: Investments in Operating Subsidiaries and Other Entities

I.D. No. DFS-42-26-00007-P PURSUANT TO THE PROVISIONS OF THE State Administrative Pro- cedureAct, NOTICE is hereby given of the following proposed rule: Proposed Action: Repeal of Part 14; addition of new Part 14 to Title 3 NYCRR. Statutory authority: Financial Services Law, sections 202, 302; Banking Law, sections 10, 14, 96, 97 and 201-a Subject: Investments in Operating Subsidiaries and Other Entities. Purpose: To reduce the number of pre-approval applications and other no- tices that other regulated entities must file to make investments. Substance of proposed rule (Full text is posted at the following State website: https://www.dfs.ny.gov/industry_guidance/regulatory_activity/banking): The Department of Financial Services (“Department”) provides this de- scription of the subject, purpose, and substance of the new version of 3 NYS Register/October 21, 2026 NYCRR Part 14 proposed by the Department. The full text of the new rule is available at: https://www.dfs.ny.gov/industry_guidance/ regulatory_activity/banking under the caption “Proposed Regulations.” Section 97(4-a) of the New York Banking Law (“BL”) authorizes the Superintendent to adopt regulations to permit banks and trust companies to own or make investments in the stock and other equity of subsidiaries engaged in the transaction of any business in which a bank or trust company may engage directly (defined as “operating subsidiaries,” in the regulation) and to invest in corporations organized pursuant to section 25(a) of the Federal Reserve Act (“Edge Act subsidiaries”). Banks and trust companies may also make investments in the capital stock or other equity interests of other entities if specifically authorized by the Superin- tendent pursuant to BL section 97(5). Part 14 implements the Superinte- ndent’s authority to authorize investments in operating subsidiaries and Edge Act subsidiaries pursuant to BL section 97(4-a) and to establish the procedures to make applications to invest in the capital stock or other equity interests of other entities pursuant to BL section 97(5). The following is a summary of the most notable changes from the previ- ous regulation: a. The following entities are proposed to be excluded from the defini- tion of operating subsidiary for purposes of Part 14 and will not be subject to filings with the Department under Section 14.2 or 14.3 of Part 14. This approach aligns with BL section 97.4-a, current Part 14, and treatment of national banks’operating subsidiaries. i. A subsidiary in which the bank has acquired, in good faith, shares through foreclosure on collateral, by way of compromise of a doubtful claim, or to avoid a loss in connection with a debt previously contracted; ii.Atrust formed for purposes of securitizing assets held by the bank as part of its banking business and any affiliated entity formed to issue re- lated debt securities or hold the bank’s residual interest in the securitiza- tion trust; iii.Asubsidiary formed to hold investments in comm