The Office of the Comptroller of the Currency is planning to overhaul its 25-year-old system of basing a national bank's examination fee on its asset size.
The agency is mulling new factors - including a bank's health, the products and services it offers, corporate structure, and revenue sources - to consider in setting fees. The OCC said it also might blend these components.
"A lot of things that affect the cost of supervision are not captured in the current fee schedule," said Judith A. Walter, senior deputy comptroller for administration. "Our objective is to match as closely as possible the cost of supervising banks with the revenues we collect from them."
The OCC, which first broached this topic last December, intends to issue the plan for public comment in January, Ms. Walter said. It intends to adopt changes by June 30, she added.
The move is one of many the OCC has made in recent years to keep the national bank charter competitive with state alternatives. National bank exam fees have been shaved an average of 4.5% over the last two years. In addition, the agency has announced plans to cut expenses by trimming 500 employees by the end of 1998.
A number of states, including Massachusetts, already base exam fees on the risk a bank poses.
The Comptroller's Office is heading in the same direction. Possibilities being kicked around include:
*Retaining the current system of asset-based fees but adding a surcharge for banks with poor Camel ratings.
*Charging banks more if they engage in complex off-balance-sheet activities, which require closer supervision.
*Reducing fees paid by bank affiliates that aren't the lead institution in a holding company.
*Basing assessments on revenue, particularly fee income which is not factored into asset-based assessments.
"Such a schedule would take into account the increased supervision costs related to fee income, which is generally related to nonasset-based activities," according to an agency document.
James D. McLaughlin, the American Bankers Association's director of regulatory and trust affairs, was wary of the proposal. Some of the proposed changes, he said, may make bank fees too subjective.
"Whenever you start basing this on risk, you have to be careful," he said. "One man's risk is another man's income. The goal here should be fairness and objectivity."
But Karen Thomas, director of regulatory affairs at the Independent Bankers Association of America, said small institutions would save money if the OCC based its fees on bank activities.
"Smaller banks tend to stick to more traditional bank activities and present less of a risk to the system," she said.
Currently, more than 94% of the OCC's revenue comes from exam fees. The rest comes from application fees and interest income.
