New York State now permits banks to establish de novo interstate branches for the first time as a result of recently adopted legislation. This means that banks in New York can establish branches in other states and banks in other states can establish branches in New York provided that the other states’ laws have reciprocal authority.
Prior to this legislation, which became effective on July 22, 2008, New York banks seeking to enter new states and out-of-state banks seeking to enter New York could do so only by acquiring an existing bank or a branch of an existing bank. This limitation was seen as a competitive disadvantage to banks in New York.
According to a statement issued by the New York State Banking Superintendent, this new law "will allow out-of-state banks without a presence in New York to branch more easily into [New York], while offering the same opportunity to New York banks to expand into many other states."
Because most other surrounding states (e.g., Connecticut, Massachusetts, Pennsylvania and Vermont) have long had reciprocal interstate branching laws in place, this interstate branching authority is available immediately and likely will result in significant new interstate branching activity. According to the New York State Banking Superintendent's statement, "New Jersey expects to pass such a law later this year."