The Banking Department was asked whether § 237(7) of the Banking Law permits a savings bank to pool the Keogh retirement accounts for which it serves as trustee into a combined “Keogh Fund”. The assets of the Fund would consist of various passbook accounts and time deposits issued by the savings bank. The legislative history of § 237(7) indicates that the legislature did not intend to permit savings banks which accept Keogh deposits to exercise any investment discretion with respect thereto and that the duties of the savings bank were to be strictly ministerial. In 1965, the Governor vetoed a bill which would have permitted savings banks to act as trustees for Keogh Retirement Plans which lacked any limitation on the investment which could be made by the trustees of the Plans. Legislation empowering savings banks to act as trustees for these accounts was enacted in 1966. The departmental memorandum in support of the legislation indicated that the trustee's functions would consist merely of depositing the employer's annual contributions in a savings account and making such distributions from the account as were directed by the trust instrument.

Implementation of the savings bank's proposal would result in greater fiduciary responsibilities than contemplated by the Banking Law. The administrator of the Fund would determine the nature and maturities of the accounts in which the assets of the Fund were to be invested. In so doing, it would be exercising the very type of discretionary power that was denied to savings banks in 1965.

The 1966 legislation contemplated that a savings bank would be a trustee in name only. The limited fiduciary power granted thereby was intended to permit individuals eligible for a Keogh plan to place their pension contributions in thrift institutions. Although called a trustee, the savings bank was intended to serve solely as a custodian.

In light of the foregoing, the Department concluded that the savings bank did not have the statutory authority to pool the assets of the separate Keogh accounts into a combined fund for investment purposes.

DATED: August 31, 1976