A new rule streamlining the requirements that govern national bank trust departments contains a potential landmine.

In a final rule issued Dec. 30, the Office of the Comptroller of the Currency included in its definition of fiduciary business any activity in which "the bank receives a fee for its investment advice."

Industry representatives are concerned that the rule, which revamps Part 9 of the OCC rulebook, could bring several bank services under cumbersome new requirements. Banks that engage in fiduciary activities are subject to special exams and additional bookkeeping and audit requirements.

In addition, trust customer protections are quite strict. For example, trust banks are faced with stringent conflict of interest restrictions and prudent investor rules.

"In the midst of this deregulatory package, you have a real potential for some increased regulatory burden in an area that no one expected to see any," said Charles M. Horn, a partner with the Washington law firm Mayer, Brown & Platt.

Investment advice is an important service banks offer their corporate customers. For example, many national banks earn fee income by giving investment advice to municipalities.

In addition, corporations often pay banks for merger and acquisition advice.

Both of these services could fall under the OCC's expanded definition of fiduciary activities, according to Sarah A. Miller, a senior government relations counsel at the American Bankers Association.

OCC Chief Counsel Julie L. Williams acknowledged that some national bank services could be covered by the new definition of fiduciary activities.

"If they are done through the bank, the Part 9 standard could apply," she said. But she declined to list exactly which services could fall under the definition.

Instead, Ms. Williams said, the OCC will issue specific guidance on a case-by-case basis.

"We expect to answer specific questions when they are asked," she said.

Ms. Williams argued that the bulk of investment advice sold by national banks is done through securities subsidiaries or affiliates, which are subject to Securities and Exchange Commission regulations. Therefore, most of these services would not be affected by Part 9.

Overall, the new rule will be a boon for national bank trust departments when it takes effect Jan. 29, Ms. Miller stressed.

The rule drops several restrictions on collective investment funds. The OCC also eased a requirement governing what national banks can do with a fiduciary's money while waiting to invest it.

The rule also codifies a December 1995 interpretive ruling in which the OCC mandated that a national bank in a particular state has the same powers as a state-chartered fiduciary.

But the OCC's expanded definition of fiduciary activities will, at the very least, cause the industry some lingering headaches.

"It sounds like the burden is going to be on us to raise the questions with the OCC regarding what exactly is covered by this rule," Ms. Miller said.

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