Trust Updates Archive

20070508--TRN, BofA Fiduciary Capital -- More Focused, More Details

(July 26, 2007--Chicago, IL)
--National trust banks are required to annually assess the adequacy of their capital and quarterly their liquidity, according to OCC Banking Bulletin 2007-21, but banks lack access to comparative peer data on fiduciary income and expenses.

For those national trust banks that have not achieved "stable profitability" or are experiencing volatile growth or decline, more frequent analysis is required, say regulators.

"We wrestle with [determining] incremental capital requirements every day," says an FFIEC source. The lack of models for determining adequate levels of fiduciary capital, he adds, has "reawakened" OCC concerns.

According to Christine Thompson, a research analyst with Trust Performance Report, financial institutions lack the information necessary to assess the adequacy of their fiduciary capital.

"Though federal regulators collect fiduciary income and expense data by institutions, they consider the information, with the exception of gross income, confidential," she says. State regulators, she adds generally take the opposite position making income and expense data publicly available. For that reason, Trust Performance Report, a sister publication of TRN, is introducing a new publication--Fiduciary Income Report--in September, which, in addition to reporting on top income producers, will provide analysis of fiduciary income and expense data.

For more on this topic, see the current issue of Trust Regulatory News.

No statement in this issue is offered as or should be
construed as legal opinion or advice

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