## Facts

- Wells Fargo Asia Limited (WFAL), a Singapore bank, placed two nonnegotiable six-month $1,000,000 U.S.-dollar time deposits with Citibank’s Manila branch in June 1983 at 10% interest, maturing in December 1983.
- The deposits were arranged through the Eurodollar interbank market; funds moved through New York correspondent banks using CHIPS.
- Written confirmations stated repayment would occur in New York through New York correspondent channels.
- In October 1983, the Philippine central bank issued a decree restricting repayment of principal on certain foreign-currency obligations to foreign banks without prior approval.
- Citibank/Manila failed to repay at maturity, asserting the decree barred payment from Philippine assets.
- Citibank later obtained approval to remit and paid $934,000 of principal, but refused to remit the remaining balance and related amounts.
- WFAL sued in the Southern District of New York seeking the unpaid balance from Citibank as an entity, including assets outside the Philippines.
- After a Supreme Court remand directing a choice-of-law analysis and application of the correct substantive law, the Second Circuit reconsidered the case.

## Issues

1. Which jurisdiction’s law governs the dispute over the Manila-branch deposits and the effect of the Philippine remittance restriction.
2. Under the applicable law, whether Citibank’s head office is liable from the bank’s general assets for the Manila branch’s nonpayment despite the Philippine decree.

## Decision

- The Second Circuit applied New York choice-of-law principles and held New York law governed.
- The court held Citibank liable for the unpaid deposit amounts notwithstanding the Philippine remittance restriction.
- The court affirmed the judgment for WFAL, permitting recovery from Citibank’s assets outside the Philippines.

## Legal Principles

- Under New York’s interests/contacts analysis, New York law may govern dollar-denominated foreign-branch deposits when key relationships include New York settlement channels and a New York-headquartered bank.
- Under New York banking law, a bank and its branches are a single legal entity; absent an explicit limitation, the bank’s general assets stand behind branch obligations.
- A foreign government’s restriction on remittances (short of confiscation or expropriation) does not, by itself, discharge the bank’s obligation under New York law.
- An agreement specifying a place of repayment does not, without more, restrict a creditor’s ability to satisfy the debt from the bank’s assets elsewhere.
- General federal policy concerns about sovereign risk do not displace state law absent a clear federal rule preempting or altering the applicable state-law liability standard.

## Conclusion

The court held that New York law governed and that Citibank remained liable as a single entity for its Manila branch’s unpaid U.S.-dollar deposits; the Philippine remittance restriction did not eliminate the obligation or confine WFAL’s recovery to Manila-branch assets absent a clear agreement to that effect.


Wells Fargo Asia Ltd. v. Citibank, N.A., 936 F.2d 723 (2d Cir. 1991)