The Office of the Comptroller of the Currency handed Great Western Financial Corp. long-awaited approval Friday to set up two national banks.
The OCC's go-ahead came on the heels of similar permission last month for Minneapolis-based TCF Financial Corp. But Great Western's approval came with many more detailed restrictions designed to keep the new banking operations distinct.
Five other companies have similar national bank charter applications pending at the OCC.
Great Western, a $43.7 billion-asset thrift company based in Chatsworth, Calif., grabbed headlines 17 months ago when it applied for a bank charter to avoid costly Savings Association Insurance Fund premiums.
Because Congress hasn't acted on a plan to eliminate the 23-cent differential between bank and thrift deposit insurance premiums, the charter applicants plan to open bank branches in their thrift locations, then use higher rates to tempt depositors to shift funds to the bank.
"This decision should refocus the attention of Congress on the urgent need to resolve the disparity in deposit insurance premiums paid by commercial banks and savings institutions," said Great Western president and chief executive John F. Maher. The company's thrift, Great Western Bank, holds about $29 billion in deposits.
The OCC approved placing the headquarters of Great Western's two new national banks in existing thrift offices in Lake Worth, Fla., and Beverly Hills.
The OCC ordered that "permanent, physical barriers" separate the bank and thrift facilities and that each institution have its own entrance.
In addition, no employee at the national banks' main offices who deals directly with the public may work for the thrift. These include tellers, product specialists, customer relations employees, and managers.
The separations between bank and thrift operations in each of Great Western's 417 offices in Florida and California will be less strict. These branches may share employees and need not be so physically separate as the main offices. But the bank and thrift must be conspicuously and separately identified with signs.
Each branch, like the two main offices, must have separate teller windows, deposit slips, withdrawal slips, and customer statements. In addition, at all locations the bank must get signed acknowledgments from its customers confirming that they understand the distinction between that institution and the thrift.
While national banks are permitted to share premises with other institutions, OCC Chief Counsel Julie L. Williams said the agency had imposed the restrictions to avoid customer confusion. The strict structural separation ordered for Great Western's two main bank offices was feasible because both would be in large buildings, according to a Great Western spokesman.
"If customers have a problem, they need to know which institution to talk to," Ms. Williams said in an interview Friday. "We wanted to make sure there wasn't any confusion."
In its July 18 order, OCC told TCF to keep its thrift and bank operations separate, but the agency did not specify the sort of separations imposed on Great Western.
These moves by the Comptroller's Office are pressing Congress to enact a rescue for the thrift fund. As thrifts shift deposits to their banks, SAIF's premium income will drop. This raises the possibility that the fund eventually will be unable to cover the $800 million in annual interest payments due on Financing Corp. bonds.