WASHINGTON -- Comptroller of the Currency Eugene A. Ludwig said that after the interstate banking law takes effect, his agency will focus on ensuring multistate bank managers are in tune with local market conditions.
The Office of the Comptroller of the Currency will also increasingly tailor its supervision to the risks present in the banks' operation as a whole, and will be watching closely how banks streamline their computer systems, Mr. Ludwig said.
Mr. Ludwig's remarks suggest that while the OCC may emphasize new areas in its supervision of banks as a result of the interstate law, it does not plan to impose stringent new regulations.
The national bank regulator told the Bankers Roundtable of his plans in a Friday speech. A text of Mr. Ludwig's remarks was released Wednesday.
Although some bankers have downplayed the effect of the interstate branching bill, which President Clinton is scheduled to sign today, the Comptroller said it is a landmark law.
"Someday we may see that the passage of federal interstate banking legislation was not simply the end of a decades-long policy debate, it was also the beginning of a modern banking system for America."
Nevertheless, the agency is concerned about three areas. First, the OCC "is constructing a supervisory methodology that will focus on the risk in a multistate bank operation as a whole," Mr. Ludwig said.
For the largest banks, the OCC already develops individual risk profiles. Mr. Ludwig said, "We expect to build on that method of supervision in the way we supervise multi-state branching operations."
"Streamlining will make management information systems and other reporting systems even more critical to operational success than they are now," Mr. Ludwig added.
The difficulties banks have had with computer systems after previous bank mergers have highlighted the need for directors and management to focus on the problem, he said.
Secondly, the agency will be on guard for increased operational risk in the industry as banks change their corporate structures in response to the new' law.
Thirdly, Mr. Ludwig said, "the elimination of artificial corporate structures -- subsidiary banks with separate charters, separate managements, and separate boards of directors -- will pose an important challenge for the resulting senior bank management team."
