In the wake of the U.S. Supreme Court's decision two weeks ago allowing national banks to sell annuities, state banks want to make sure they can get in on the action.

A number of state banking associations working to remove the last barriers to selling annuities. They are doing so in the belief that sales of the product should be open to both large institutions and small state banks with no prior annuity experience.

"The reticence in the past has been from the legal barriers thrown up by the departments of insurance," said J. Thomas Cardwell, general counsel to the Florida Bankers Association. "But now that the ground rules have been made clear, it's just a business decision, and I think you"ll find a whole lot more interest."

The Supreme Court's decision, which capped a four-year legal struggle between NationsBank Corp. and Variable Annuity Life Insurance Co. (commonly known as Valic), applies only to national banks, which means that in some states the rules concerning state banks have yet to be clarified.

In Arkansas, for example, the Arkansas Bankers Association is preparing a bill that would codify the right of state-chartered banks to sell annuities. Though the state has a so-called wild card statute, which means equal regulations for national and state banks, bankers there want the law clarified.

"The more competitive the market, the more attractive are annuities," said Daniel G. Bailey, executive director of the state bankers association, at a legislative luncheon last week to discuss the issue. "If you see deposits leaving a bank, then you have (annuities) available to retain your funds."

In all, two-thirds of the states now allow state banks to sell annuities. Laws in the other states vary, but many have "wild card" statutes that should allow state banks to sell annuities.

Perhaps the stickiest issue that remains is the question of who licenses annuity sales. While most small banks will used licensed agents, those who sell them directly might have to deal with the state insurance regulator.

The Louisiana Department of Insurance, which has been fighting with that state's banking department for several years over annuity sales, said last week that it would handle licensing, as well as approving annuity products.

The state insurance commissioner said he would ask the Louisiana Attorney General for an opinion on the Valic case as it pertains to state law.

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