81-5

San Francisco, California

July 17, 1981

Re: Financial Code Section 750(a)

Dear Mr. ________:

This is in reply to your letter of July 14, 1981, concerning the subleasing of premises currently utilized by ________ as their ________.

It has been the general policy of this Department to permit banks to sublease property which is no longer being utilized for banking purposes, without requiring that the leasehold interest be sold, as contemplated by Financial Code Section 751, so long as the bank does not incur out-of-pocket expenses by so doing. Usually this has not presented a problem as leased property can ordinarily be subleased for an amount sufficient to cover the payments required under the master lease.

However, should that not prove to be the case in this particular instance we would expect the bank to take whatever steps it legally can to prevent the dissipation of bank assets, particularly in view of the long term nature of the master lease.

I trust that this letter has answered the substance of your inquiry. Should there be any particular problem with your situation in this matter, please feel free to contact me at (415) 557-3213.

Very truly yours,

RICHARD M. DOMINGUEZ Superintendent of Banks

By

J. A. BROLLIER Deputy Superintendent of Banks

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