WASHINGTON - The Office of the Comptroller of the Currency wants national trust banks to customize capital and liquidity standards to better reflect the risks posed by asset management activities.
National trust banks, which have more than doubled in number, to 110, since 1995, are subject to the same capital rules as other banks, but the Comptroller's Office noted that "these ratios may not be optimal measures as off-balance-sheet asset management activities are not captured in capital ratio calculations." According to a Sept. 29 bulletin sent to examiners and national bank executives, "these ratios should be supplemented by further analysis."
The bulletin outlines seven internal issues that the OCC says trust banks should consider when analyzing their level of capital and liquidity. For instance, it suggests these institutions study revenues to see how stable they are, where they come from, and what direction they are moving. The agency said trust banks should also consider how external factors - including competition, economic conditions, technology enhancements, legislative changes, and court decisions - may affect capital and liquidity.
Trust banks cited in the bulletin are those with a narrow focus, unstable earnings, rapid growth, or thin liquidity or capital cushions.