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F I S C A L I M P A C T R E P O R T

SPONSOR Park

DATE TYPED 02/19/05 HB 658

SHORT TITLE Foreign Feduciary Reciprocal Corporate Powers

SB

ANALYST McSherry

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

NFI

$13.9 Recurring General Fund

The bill relates to, and partially conflicts with Article 9 Section 58-9-1 through 58-9-13 NMSA

1978 Trust Companies.

SOURCES OF INFORMATION

LFC Files

Regulations and Licensing Department (RLD)

Department of Finance Administration (DFA)

Economic Development Department (EDD)

SUMMARY

Synopsis of Bill

House Bill 658 proposes to allow a foreign fiduciary to act in New Mexico as a trustee, executor,

administrator, guardian, or in any other fiduciary capacity, without the necessity of complying

with any law of this state relating to the qualifications of foreign banking corporations or regard-

ing to the qualifications of foreign fiduciaries to do business in the state provided the foreign fi-

duciary is licensed in another state, has a certificate of reciprocity issued from the financial insti-

tutions division of the Regulations and Licensing Department (RLD).

The bill provides that a foreign fiduciary would have to file with the financial institutions divi-

sion for an application for a certificate of reciprocity, appoint the division director as its attorney

to receive all legal process in New Mexico, and include a million dollar fiduciary bond for the

benefit of the director in order to obtain a certificate of reciprocity.

No physical presence would be allowed to be maintained by the fiduciary in New Mexico unless

a certificate of reciprocity is received, and a similar institution is permitted to open a similar of-

fice in the state of the foreign fiduciary.

House Bill 658 -- Page 2

Significant Issues

The Regulations and Licensing Department asserts that federally chartered institutions are al-

ready exempt from complying with state law in regards to acting as a fiduciary provided that the

institution is licensed by the federal government to act as a fiduciary.

According to the Department of Finance and Administration, the Financial Institutions Division

under Regulation and Licensing Department would not have any regulatory authority over the

proposed foreign fiduciaries and, as such, no examinations would be conducted and the safety of

the citizens of the State of New Mexico could be at risk. The Department also asserts that recip-

rocity is not allowed in many states.

PERFORMANCE IMPLICATIONS

RLD reports that if no additional FTE's were authorized the additional workload associated with

the proposed bill could affect the department’s ability to meet performance measures, specifi-

cally application turn around time. The Financial Institutions Division’s current performance

measure require application turn around in thirty days and the division processes over 4300 ap-

plications per year.

FISCAL IMPLICATIONS

It is anticipated by RLD that a .5 FTE (office clerk) would be necessary to review and process

the applications, and issue certificates of reciprocity with estimated costs approximately

$13,900.00. Estimate was determined with a clerk salary of $10,400.00 ($10.00 per hour) for

1040 hours and clerk benefits $3,432.00 (33% of salary).

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

DFA cites Section 58-9-13 NMSA, The Trust Company Act, which would create technical issues

conflicting with the proposed bill. According to RLD, the Act does not allow for reciprocity with

other states.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The Economic Development Department predicts that should HB658 not be passed, New Mex-

ico financial institutions and banks may not receivable equal, favorable treatment and ability to

act in a fiduciary capacity in other states.

RLD reports that there will be parity between instate and out of state businesses wishing to do

trust business in New Mexico.

EM/yr