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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions


Depository Institution May Enter Into Reciprocal Agreement With Another Depository Institution to Provide Equipment Backup in Event of Emergency

FDIC-92-59

August 14, 1992

Valerie J. Best, Counsel

Thank you for your letter dated August 4, 1992. You wrote that your institution is considering the possibility of entering into a reciprocal agreement with another local financial institution, whereby in the event of a business disaster the stricken institution would be able to use the other's item processing equipment on an emergency basis. You note that this sort of arrangement appears to be sanctioned by the FFIEC in its 1992 EDP Examination Handbook, Section 7.7. You express concern as to the impact of Advisory Opinion 82--5, however. Consequently, you have asked if we have any objections to the arrangement outlined in your letter.

Based on the information provided, we do not have any objections to the arrangement you propose. The agreement at issue in Advisory Opinion 82--5 authorized the parties to use one another's physical structure, including lobby space, teller windows, vault space, and such other use consistent with branch banking. Such sharing of a brick and mortar facility is, in our view, quite different from an agreement to provide equipment backup in the event of computer installation failure. Consequently, we do not construe Advisory Opinion 82--5 as prohibiting a reciprocal agreement to provide equipment backup. Your understanding, as expressed in your August 4th letter, is correct.


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