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If the Shoe Fits, Wear It – Bank Third Party Vendors as Institution-Affiliated Parties

May 26, 2017

Authors

Jerry Blanchard

If the Shoe Fits, Wear It – Bank Third Party Vendors as Institution-Affiliated Parties

May 26, 2017

by: Jerry Blanchard

When negotiating bank third party vendor contracts it is not unusual to ask the vendor to acknowledge in the contract that bank regulators might exercise some sort of supervision over the vendor. Vendors will oftentimes push back on that point, claiming that since they are not a bank the FDIC has no jurisdiction over their affairs. We typically respond that “if the shoe fits, wear it.”

The fit arises because of the definition of “institution-affiliated party” (“IAP”). The definition was added under

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Reviewing Third Party Vendor Service Contracts

November 14, 2016

Authors

Jerry Blanchard

Reviewing Third Party Vendor Service Contracts

November 14, 2016

by: Jerry Blanchard

OLYMPUS DIGITAL CAMERAManaging third party vendor relationships has always been an important function in banks. More recently it has become a hot topic for state and federal financial bank regulators.

As a result, we have compiled our Seven Part Guide on reviewing third party vendor service contracts into one article.  A checklist for reviewing third party vendor contracts is included in the article, and also available separately.

The analysis covers typical elements that should be found in any third party vendor contract, including provisions on the nature

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Part 7 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

October 12, 2016

Authors

Jerry Blanchard

Part 7 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

October 12, 2016

by: Jerry Blanchard

This is part 7 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Indemnification. Indemnification provisions in a third party services contract can be hotly contested. There is no question that banks should include indemnification clauses that specify the extent to which the bank will be protected from claims arising out of the failure of the vendor to perform, including failure of the vendor to obtain any necessary intellectual property licenses. Not surprisingly, they can be one of the most difficult provisions to reach an

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Part 6 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

October 4, 2016

Authors

Jerry Blanchard

Part 6 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

October 4, 2016

by: Jerry Blanchard

This is part 6 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Ownership of Trademarks, Copyrights, Patents and Other Trade secrets, Source Code escrow Agreements. Typically, each party should own its pre-existing materials and derivative works thereof and materials developed by the parties or their contractors individually and outside of the contract, and each party should provide the other with licenses to its materials necessary to receive or provide the services during the term.  The contract should include intellectual property provisions that clearly define

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Part 5 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 29, 2016

Authors

Jerry Blanchard

Part 5 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 29, 2016

by: Jerry Blanchard

This is part 5 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Vendor Notice Requirements

Business -Strategic Changes. There are several categories of events the bank will want to be notified about.  The first involves things like significant strategic business changes, such as mergers, acquisitions, joint ventures, divestitures, or other business activities that could affect the activities involved. In certain instances the bank may want the ability to terminate the contract if the vendor merges with another company or if there is

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Part 4 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 20, 2016

Authors

Jerry Blanchard

Part 4 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 20, 2016

by: Jerry Blanchard

This is part 4 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Services level. Services levels should be defined. For example, are the service to be made available 24/7 365 days a year or are they only needed during normal business hours. When the services involve some type of software or online technology, what is the minimum amount of   “uptime” required? Depending on the services involved, uptime might be 99.9%, for example.  vendors will understandably push back on that figure and might suggest 98%.

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Part 3 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 13, 2016

Authors

Jerry Blanchard

Part 3 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 13, 2016

by: Jerry Blanchard

This is part 3 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Location of where the work to is to be performed

Domestic locations. Where is the vendor actually performing the work? Will they need physical access to the bank premises or equipment?  Will they be on-site during or after business hours? The contract should reference security policies governing access to the bank’s systems, data (including customer data), facilities, and equipment.  The vendor should be obligated to comply with the security policies

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Part 2 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 6, 2016

Authors

Jerry Blanchard

Part 2 of Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

September 6, 2016

by: Jerry Blanchard

This is part 2 of a Seven Part Guide to reviewing vendor contracts. Part 1 can be found here, and other parts can be found here.

Recitals.

Some contracts will contain several “WHEREAS” clauses at the inception of the document followed by a recitation of various facts about the parties and what they are trying to accomplish by entering into the contract. From a pure legal standpoint, “WHEREAS” clauses are not required but many parties like to include them to properly set the stage for what is to come afterwards. If they are included, the bank needs

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Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

August 30, 2016

Authors

Jerry Blanchard

Reviewing Third Party Vendor Service Contracts, a Seven Part Guide

August 30, 2016

by: Jerry Blanchard

Introduction

Managing third party vendor relationships has always been an important function in banks. More recently it has become a hot topic for state and federal financial bank regulators. The increasing complexity of what vendors are doing for banks and the related attention to cybersecurity threats all contribute to the greater scrutiny. The 2016 white paper by the OCC, “Supporting Responsible Innovation in the Federal Banking system: An OCC Perspective,” is just one of several guidance documents issued by the federal financial regulators over the past five years that focus to a large extent on third parties

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