1. STATE OF NEW YORK BANKING DEPARTMENT ONE STATE STREET NEW YORK, NY 10004-1417 Presentation To AIBA June 11, 2009

2. 2 Supervision & Examination of Banks and FBOs Risk-Focused Examination & Supervision  Employ a risk-focused examination  Examination concentrates on areas that pose the greatest risks to the institution Examination Cycle  12 or 18 Month cycle for most banks and 14 months for foreign branches or agencies  Continuous supervision for larger, more complex banks and NY offices of foreign banks

3. 3 Examination Ratings ROCA Ratings – for foreign branches  Risk Management, Operational Controls, Compliance, Asset Quality  Components rated on a scale of 1 to 5, with 1 being the strongest and 5 the weakest  Composite rating- also on a scale of 1 to 5

4. 4 Risk Factors We assess and rate risks in each area Institution Specific While ratings components may not change – emphasis and importance does Most important components –Management in a domestic institution –Risk in a foreign branch or agency

5. 5 Current Risks Liquidity has gained in importance given recent market turmoil Market risk in trading products Asset Quality also has gained due to market conditions Compliance especially BSA/AML and OFAC

6. 6 Foreign and Wholesale Banks Division  Supervises100 foreign branches or agencies with assets of $1.62 trillion dollars  40 foreign representative offices  8 Banks and Trust companies with assets of $372 billions  8 Article XII Investment Companies with assets of $93.3 billions  12 Limited Purpose Trust with assets of $5.6 billions

7. 7 ROCA Report Card Sample of 43 branches and agencies NYFRB and NYSBD Exams All Size FBOs, small and large, sample differs from 2008 Includes point-in time and continuous supervision

8. 8 ROCA Changes Composite 2005 to 2009

9. 9 Risk Management

10. 10 Operational Controls

11. 11 Compliance

12. 12 Asset Quality

13. 13 Contact Information David Fredsall david.fredsall@banking.state.ny.us Regina Stone regina.stone@banking.state.ny.us 212-709-1551 212-709-1500