New York Gov. Mario Cuomo has signed legislation that greatly increases the state's ability to monitor foreign banks and handle their liquidations.

"This new law and other recently promulgated foreign bank regulations greatly enhance the department's ability to supervise foreign banking institutions," New York's state superintendent of banks, Derrick D. Cephas, said in a statement last week.

Extensive Studies

The new law comes after nearly two years of studies by the department.

It parallels similar, but more general legislation approved by Congress in response to pressure to tighten control over foreign banks after banking scandals involving the U.S. offices of Luxembourg-based Bank of Credit and Commerce International and Italy's Banca Nazionale del Lavoro.

The law empowers the department to examine transactions by employees in the state on behalf of any office of the foreign parent bank, expands the grounds for revoking or suspending foreign bank licenses, and requires foreign bank offices in New York to provide prompt notification of any changes in control.

Other Provisions

The law also:

* Requires foreign banks to pledge funds that can be used to cover any expenses involved in a liquidation

* Subjects New York offices of foreign banks to state restrictions on the amount that can be lent to any one borrower.

* Sets tough specifications and certain restrictions on the types of claims the banking department will accept from creditors of a foreign bank.

* Simplifies liquidation procedures and enhances the banking department's ability to gain control over assets of a foreign bank in the event of a liquidation.

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