Agreements Set for Supervision of Interstate Branching Banks

Federal regulators on Thursday agreed to designate one regional office to supervise each state-chartered bank with branches in multiple jurisdictions.

In addition, state regulators on Wednesday signed a similar agreement to divvy up supervision of banks with multistate operations. Under this pact, all of a bank's branches will be supervised by the home state banking department. A bank's home state is determined by the location of its headquarters.

Both agreements were signed at a Conference of State Bank Supervisors meeting this week in Chicago. The nationwide pacts, which follow several similar regional agreements, are an effort to keep the state charter competitive. Next summer, a 1994 federal branching law kicks in that will allow national banks to branch nearly anywhere and operate under one set of rules.

"It is vitally important for the state-chartered banks to have a choice between state and national charters," said CSBS president and chief executive Neil Milner in an interview. "Seamless exams and having one primary regulator helps maintain equality in the dual banking system."