[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Proposed Rules]
[Pages 75872-75877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30844]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 5 and 9

[Docket No. 00-30]
RIN 1557-AB79


Fiduciary Activities of National Banks

AGENCY: Office of the Comptroller of the Currency.

ACTION: Notice of proposed rulemaking; advance notice of proposed 
rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency (OCC), through a 
Notice of Proposed Rulemaking (NPRM), is proposing to amend its 
regulations to codify OCC interpretations on national bank multi-state 
trust operations. The purpose of these changes is to provide enhanced 
guidance to national banks engaging in fiduciary activities. The OCC 
also is inviting comment, through an advance notice of proposed 
rulemaking (ANPR), on whether uniform standards of care generally 
applicable to national bank trustees' administration of private trusts 
and investment of private trust property should be established. The 
purpose of the ANPR is to determine the extent to which national banks 
that engage in fiduciary activities in more than one state experience 
problems in their administration as a result of complying with more 
than one state's laws and, if problems exist, to invite comment on ways 
in which the OCC could address these problems.

DATES: Comments must be received by February 5, 2001.

ADDRESSES: Send your comments to: Office of the Comptroller of the 
Currency, Public Information Room, 250 E Street, SW, Mail Stop 1-5, 
Washington, DC 20219, Attention: Docket No. 00-30. Comments will be 
available for public inspection and photocopying at the same location. 
In addition, you may send comments by fax to (202) 874-5274, or by 
electronic mail to [email protected].

FOR FURTHER INFORMATION CONTACT: For questions concerning the NPRM, 
contact Lisa Lintecum, Director, or Joel Miller, Senior Advisor, Asset 
Management, (202) 874-4447; Richard Cleva, Senior Counsel, Bank 
Activities and Structure, (202) 874-5300; Michele Meyer, Senior 
Attorney, Legislative and Regulatory Activities Division, (202) 874-
5090; or William Dehnke, Assistant Director, Securities and Corporate 
Practices Division, (202) 874-5210.

SUPPLEMENTARY INFORMATION: This rulemaking consists of two parts. 
First, the OCC, through an NPRM, proposes to codify recent OCC 
interpretations in which we analyzed the extent to which a national 
bank may, in states other than its home state, (a) have trust offices 
or trust representative offices, (b) engage in fiduciary activities, 
and (c) market its fiduciary services to customers. Second, we invite 
comments, through an ANPR, on whether the OCC should propose to add a 
new section to part 9 that would establish national standards for the 
conduct of fiduciary activities by national banks. These ideas are 
explained more fully below.

NPRM: Codification of OCC Interpretations

    The OCC has issued three interpretive letters \1\ addressing multi-
state fiduciary activities. In IL 695, we concluded that a national 
bank with its main office in one state may act in a fiduciary capacity 
in any other state that permits its own in-state fiduciaries to act in 
that capacity, including at trust offices in other states. In IL 866 
and IL 872, we further clarified that a national bank that acts in a 
fiduciary capacity in one state may market its fiduciary services to 
customers in other states, solicit business from them, and act as 
fiduciary for customers located in other states. The proposal codifies 
these interpretations, which affect several sections in part 9, as 
explained in the following discussion.
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    \1\ OCC Interpretive Letter No. 872 (Oct. 28, 1999) (IL 872); 
OCC Interpretive Letter No. 866 (Oct. 8, 1999) (IL 866); and OCC 
Interpretive Letter No. 695 (Dec. 8, 1995), reprinted in [1995-1996 
Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81.010 (IL 695).
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Definitions (Revised Sec. 9.2)

    The second sentence in current Sec. 9.2(g) provides that the extent 
of fiduciary powers is the same for out-of-state national banks as in-
state national banks. This sentence is unnecessary in light of proposed 
new Sec. 9.7, which sets forth the rules concerning multi-state 
fiduciary operations, and the proposal removes it.
    Proposed Secs. 9.2(j) and (k) define ``trust office'' and ``trust 
representative office,'' respectively. These terms are used in proposed 
new Sec. 9.7. A ``trust office'' is defined as an office of a national 
bank, other than a main office or a branch, at which the bank acts in a 
fiduciary capacity. A trust representative office is an office of a 
national bank, other than a main office, branch, or trust office, at 
which the bank performs activities ancillary to its fiduciary business, 
but does not act in a fiduciary capacity. These ancillary activities 
might include, for instance, advertising, marketing, and soliciting for 
fiduciary business; contacting existing or potential customers, 
answering questions, and providing information about matters related to 
their accounts; acting as a liaison between the trust office and the 
customer (e.g., forwarding requests for distribution or changes in 
investment objectives, or forwarding forms and funds received from the 
customer); or simply inspecting or maintaining custody of fiduciary 
assets.
    Neither a trust office nor trust representative office is a branch 
for purposes of the McFadden Act, 12

[[Page 75873]]

U.S.C. 36, which governs the location of national bank branches. In 
order to be considered a branch under the McFadden Act, a bank facility 
must perform at least one of the core banking functions of receiving 
deposits, paying checks, or lending money. 12 U.S.C. 36(j). The 
locational limitations of 12 U.S.C. 36 are not intended to reach all 
activities in which national banks are authorized to engage, but only 
core banking functions. See Clarke v. Securities Industry Association, 
479 U.S. 388 (1987) (considering securities brokerage powers). Proposed 
Secs. 9.2(j) and (k) therefore state that a trust office or a trust 
representative office is not a branch unless it is also an office at 
which deposits are received, or checks paid, or money lent.

Approval Requirements (Revised Sec. 9.3)

    Current Sec. 9.3(a) provides that ``a national bank may not 
exercise fiduciary powers unless it obtains prior approval from the OCC 
to the extent required under 12 CFR 5.26.'' Section 5.26(e)(5) 
currently provides that a national bank that has obtained the OCC's 
approval to exercise fiduciary powers does not need to obtain further 
approval to ``commence fiduciary activities'' in a state in addition to 
the state(s) described in the application for which it received OCC 
approval to exercise fiduciary powers. Instead, the bank is required 
only to provide written notice to the OCC within ten days after 
commencing expanded fiduciary activities.
    As discussed in greater detail in the next section, proposed new 
Sec. 9.7 codifies recent OCC interpretations clarifying national banks' 
authority to engage in multi-state fiduciary operations. Among other 
things, those interpretations, and new Sec. 9.7, distinguish between 
acting in a fiduciary capacity and conducting other activities 
ancillary to the bank's fiduciary business. The proposal adds a new 
paragraph (b) to Sec. 9.3 to clarify that a bank that has received OCC 
approval to exercise fiduciary powers does not need prior OCC approval 
each time it seeks to act in a fiduciary capacity in a new state or to 
conduct, in a new state, activities that are ancillary to its fiduciary 
business. Instead, paragraph (b) directs the bank to follow the notice 
procedures in Sec. 5.26(e)(5). Current paragraph (b), which addresses 
the procedures for organizing a limited purpose trust bank, is 
redesignated as paragraph (c).

Multi-State Fiduciary Operations (New Sec. 9.7)

    The statutory authority for national banks to exercise fiduciary 
power is contained in 12 U.S.C. Secs. 92a(a) and (b). Under section 
92a(a), the Comptroller may permit national banks, when not in 
contravention of State or local law, to exercise eight expressly 
identified fiduciary powers and to act in any other fiduciary capacity 
in which State banks, trust companies, or other corporations that come 
into competition with national banks are permitted to act under the 
laws of the State in which the national bank is located. Under section 
92a(b), whenever state law permits state institutions that compete with 
national banks to exercise any of the fiduciary powers listed in 
section 92a(a), a national bank's exercise of those powers is deemed 
not to be in contravention of State or local law under section 92a.
    Sections 92a(a) and (b) do not expressly address the extent to 
which a national bank may conduct a multi-state fiduciary business. The 
OCC, however, has issued several interpretive letters that address 
multi-state fiduciary activities. In IL 695, we concluded that a 
national bank with its main office in one state may have trust offices 
in another state. We also concluded that the bank may engage in (a) any 
of the eight fiduciary capacities listed in 12 U.S.C. 92a(a), unless 
the state prohibits its own state banks, trust companies, and other 
corporations that compete with national banks in that state from acting 
in that capacity; and (b) any other fiduciary capacity the state 
permits for its own state banks, trust companies, or other corporations 
that compete with national banks in that state. This conclusion applies 
even in a state that has laws prohibiting or restricting out-of-state 
fiduciaries from providing fiduciary services or having trust offices 
within their state. As explained in the interpretive letter, section 
92a(b) makes it clear that, if a state permits its own state 
institutions to exercise certain fiduciary powers, then national banks 
are authorized to exercise those fiduciary powers in that state.
    Proposed Sec. 9.7(a) codifies this interpretation. Pursuant to that 
section, a national bank may act in any of the eight fiduciary 
capacities listed in the statute in any state in which a national bank 
``is located,'' which we have interpreted for purposes of section 92a 
as the state in which a national bank acts in a fiduciary capacity. It 
may also act in any other fiduciary capacity that the state permits for 
its own state institutions, ``when not in contravention of State or 
local law.'' Thus, a national bank may act in any of the eight 
capacities listed in the statute unless the state affirmatively 
prohibits that activity for national banks and for its own 
institutions. If state law is silent on any of these eight capacities, 
it is permitted for a national bank by virtue of the direct grant of 
authority in section 92a(a). Further, if a state permits its own state 
institutions to exercise additional fiduciary powers, then national 
banks are authorized to exercise those fiduciary powers in that state. 
The state may not limit them, because the terms of section 92a(b) 
expressly deem the fiduciary powers that a state permits to its own 
institutions not to be in contravention of state law. Thus, under 
proposed Sec. 9.7(a)(2), a national bank acting in a fiduciary capacity 
in a particular state may act in each of the eight fiduciary capacities 
listed in section 92a(a) (unless the state expressly prohibits the 
capacity for its own state institutions) and in any other fiduciary 
capacities permitted for state banks, trust companies, or other 
corporations that compete with national banks.
    In IL 866 and IL 872, the OCC clarified that a national bank that 
acts in a fiduciary capacity in a given state under the authority of 
section 92a is authorized to market its services to customers in other 
states, to solicit business from them, and to act as fiduciary for 
customers located in other states.\2\ A state may not prohibit or 
restrict out-of-state national banks from marketing to, or performing 
fiduciary functions for, customers in that state. Therefore, proposed 
Sec. 9.7(b) provides that a national bank may market its fiduciary 
services to, and act as fiduciary for, customers located in any state 
and provides that the bank may use a trust representative office for 
these purposes. Proposed Sec. 9.7(c) expressly authorizes a national 
bank with fiduciary powers to establish a trust office or trust 
representative office in any state. IL 866 and IL 872 also addressed 
where a national bank is deemed to be ``acting in a fiduciary 
capacity'' for purposes of section 92a. As explained in those letters, 
in order to determine in which state a bank ``acts in

[[Page 75874]]

a fiduciary capacity'' for section 92a purposes, one looks to the state 
in which the bank performs key fiduciary functions. These key 
activities include executing the documents that create the fiduciary 
relationship, accepting the fiduciary appointment, and making decisions 
regarding the investment or distribution of fiduciary assets. Proposed 
Sec. 9.7(d) codifies this position and further provides that if these 
key fiduciary activities take place in more than one state, then the 
state in which the bank acts in a fiduciary capacity for section 92a 
purposes will be the state that the bank and customer designate from 
among those states. We invite comment on ways to simplify the 
determination of where a bank with multi-state operations is acting in 
a fiduciary capacity.
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    \2\ This approach is consistent with that taken by the Office of 
Thrift Supervision, as summarized in its letter dated August 8, 
1996, from Carolyn J. Buck, Chief Counsel, reprinted in [1995-1996 
Transfer Binder] Fed. Banking L. Rep. (CCH) Sec. 83-102 (in which 
the OST concluded (1) that, for trust pruposes, a savings 
associaiton will not be deemed located in a state where its only 
trust-related activities are marketing its trust services and 
performing incidental duties pursuant to its appointment as 
testamentary trustee holding read estate (2) federal law would 
prreempt state laws that prohibit or restrict an out-of-state 
federal shift engaging in the state.
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    The state in which the bank acts in a fiduciary capacity for an 
account, in turn, determines--with respect to that account--which state 
laws apply in the provisions of section 92a that refer to state law.\3\ 
Thus, if a national bank acts in a fiduciary capacity in State A for a 
customer located in State B, the bank looks to the laws of State A in 
applying the provisions of section 92a that refer to state law. These 
include not only state laws affecting permissible fiduciary capacities 
(referred to in sections 92a(a) and (b)) but also state laws used in 
setting operational requirements for national banks as corporate 
fiduciaries (referred to in sections 92a(f), (g) & (i)) and those that 
grant state banking authorities limited access to OCC examination 
reports relating to national bank trust departments (referred to in 
section 92a(c)). Therefore, proposed Sec. 9.7(e) clarifies that the 
references in section 92a to state law mean the law of the state in 
which the bank acts in a fiduciary capacity. The laws of other states 
where the bank is not acting in a fiduciary capacity, including states 
in which the bank's customers may reside or in which trust assets may 
be located, are not made applicable to national banks by section 92a.
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    \3\ This is to be contrasted with the laws governing the trust 
itself, which are determined by the trust instrument and, in some 
instances, by choice-of-law rules. For example, if a national bank 
is acting in a fiduciary capacity in State A and is a trustee for a 
trust for which the trust instrument says the laws of State B 
govern, then the laws governing the administration of the trust (for 
example, the standard of care to be applied) will be those of State 
B.
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Deposit of Securities With State Authorities (Revised Sec. 9.14)

    Under section 92a(f) of the statute and current Sec. 9.14 of our 
regulations, a national bank must comply with state laws that require 
corporations that act in a fiduciary capacity to deposit securities 
with state authorities for the protection of private or court trusts. 
The proposal makes a technical amendment to Sec. 9.14 to conform to the 
terminology used in proposed Sec. 9.7. Instead of saying that a bank 
``administers trust assets'' in paragraph (b) of that section, the 
proposed language states that a bank ``acts in a fiduciary capacity.'' 
No substantive change is intended by this amendment.
    The proposal also adds a second sentence to Sec. 9.14(b) to clarify 
how a bank, which conducts fiduciary operations on a multi-state basis 
pursuant to proposed Sec. 9.7, should compute the amount of deposit 
required by a state law that requires a deposit of securities on a 
basis other than assets (such as an amount equal to a percentage of 
capital). In such a state, the bank may compute the amount of deposit 
required on a pro-rated basis, according to the proportion of fiduciary 
assets for which the bank is acting in a fiduciary capacity at offices 
located in that state.

Fiduciary Powers (Revised Sec. 5.26)

    Consistent with the proposed changes discussed above, the proposal 
also would amend 12 CFR 5.26(e) to clarify that a national bank that 
plans to act in a fiduciary capacity in a state in addition to the 
state described in the application for fiduciary powers that the OCC 
has approved need only give after-the-fact notice of having commenced 
acting in a fiduciary capacity in a new state. The proposal revises 
current Sec. 5.26(e)(5) so that it reflects the distinction between 
acting in a fiduciary capacity and conducting activities ancillary to 
the bank's fiduciary business. The ten-day, after the fact notice 
requirement would apply only to acting in a fiduciary capacity.

ANPR: Uniform Standards Governing Fiduciary Activities

    Twelve U.S.C. 92a, which authorizes national banks to act as 
fiduciaries, also governs the exercise of their fiduciary powers in 
certain respects. For example, the statute requires national banks to 
segregate the assets they hold in a fiduciary capacity from the 
``general assets'' of the bank and to keep separate records of the 
transactions they engage in as fiduciary.\4\ The statute does not set 
out general standards of care that apply to national banks acting in a 
fiduciary capacity; however, it expressly authorizes the OCC to issue 
regulations to enforce compliance with section 92a and ``the proper 
exercise of the powers'' that the statute grants.\5\ Thus, the 
statutory scheme governing national bank fiduciary powers specifically 
permits the Comptroller to promulgate regulations necessary to the 
proper exercise of national bank fiduciary powers and to address any 
areas unique to national banks.\6\
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    \4\ 12 U.S.C. 92(a).
    \5\ 12 U.S.C. 92a(j). See also id. at 93a.
    Section 92a(j) states ``The Comptroller of the Currency is 
authorized and empowered to promulgate such regulations as he may 
deem necessary to enforce compliance with the provisions of this 
section and the proper exercise of the powers granted therein.'' 
(Emphasis added.)
    \6\ The view that fiduciary rules applicable to a national bank 
fiduciary may be affected by Federal law is supported by the 
legislative history of section 92a. When Congress enacted the 
precursor to section 92a in 1913, it authorized the Federal Reserve 
Board (which regulated national bank fiduciary activities until 
1962, when Congress transferred that authority to the OCC) to grant 
national banks that right to act in a fiduciary capacity ``under 
such rules and regulations as the board may prescribe.'' Pub. L. 63-
43 11(k), 30 Stat. 251 (1913).
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    Trustees are responsible for performing a core set of fundamental 
duties when exercising the powers permitted under section 92a. These 
include the duty to administer the trust according to its terms; the 
duty of loyalty; the duty to be impartial where there is more than one 
beneficiary of a trust; the duty to be prudent with trust assets; and 
so on. These duties are embodied in most state trust codes, but the 
precise formulation and the elements of the applicable standards vary 
from state to state, causing a national bank that conducts an 
interstate fiduciary business to continually monitor the differing 
state laws and to develop different plans for compliance in each state 
where it operates.
    One example of where state laws may differ is the investment 
management standard that applies to trustees. Trustees have always had 
the duty to manage trust assets prudently. In the first half of the 
twentieth century, most states enacted lists of specific types of 
investments that trustees were permitted to make, and trustees were 
required to assess the prudence of each individual investment in 
isolation. More recently, however, many states have applied a ``prudent 
investor'' rule, which focuses on the need to manage risk in the 
portfolio by balancing the role of a single asset or group of assets 
against that of the overall portfolio. Examples of other areas where 
the applicable standards might vary from one jurisdiction to another 
include the laws governing reasonableness of compensation of trustees; 
duties regarding trust accounting; the

[[Page 75875]]

termination, modification, or reform of a trust; records retention; and 
purchases by a bank, in its capacity as trustee, of shares of 
proprietary mutual funds.
    The lack of uniformity in applicable fiduciary standards may become 
more burdensome in light of the increase in national banks' interstate 
fiduciary operations following the enactment of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act of 1994 and in light of 
new technologies that greatly facilitate the marketing and delivery of 
fiduciary services to customers nationwide. National banks not only 
have trust customers and conduct fiduciary activities in many different 
states, but they also act as trustee for trusts governed by the laws of 
many different states.
    For these reasons, in addition to inviting comments on the proposed 
amendments to part 9 as discussed in the previous portion of this 
notice, the OCC invites comments on whether we should adopt uniform 
standards of care governing fiduciary activities of national banks. The 
OCC is not proposing specific standards at this point; rather, we seek 
the views of interested persons on the need for such standards and, if 
there is a need, on what the standards should contain.
    The OCC contemplates that any uniform standards would apply only to 
private trusts. As under current law, we envision that the uniform 
federal standard could be modified by the terms of the trust, but not 
by contrary or inconsistent state law.
    The OCC invites comments on whether uniform, national standards in 
the areas noted (or other areas) would promote the efficient exercise 
of a national bank's fiduciary powers, consistent with the fulfillment 
of its fiduciary obligations. Specifically, the OCC seeks comments on 
the following:
     Does compliance with multiple state laws that establish 
separate fiduciary standards of care present a significant burden? If 
so, please identify the principal sources of that burden.
     How would a bank's administration of trusts or estates 
differ if there were a federal law creating a uniform standard of care?
     If the OCC were to adopt uniform standards, should those 
standards be modeled after the Uniform Trust Act prepared by the 
National Conference of Commissioners on Uniform State Laws? If so, 
which sections should we adopt?
     What other sources should the OCC rely upon in developing 
uniform, nationwide standards of care?
     Do most states already have substantially similar laws 
governing trust administration and investment of trust assets? Is 
adoption of the model uniform laws by additional states likely?
     What effect have the OCC's recent opinions on the 
applicability of state law to interstate fiduciary activities had on 
national banks' interstate fiduciary business?
     How could a federal standard work when there are specific 
state statutes (such as those governing the investment by trustees in 
proprietary mutual funds) that make investment explicitly subject to 
state laws?
     How should the OCC resolve issues that arise about the 
meaning or applicability of any uniform standards it issues? What would 
be the effect of a uniform standard on the common law that has 
developed over time in connection with state fiduciary standards?
     If uniform standards are adopted, how should the OCC 
manage the transition from the existing regulatory structure? Should 
new standards be applied only to fiduciary relationships formed after a 
date certain?
     Could uniform standards impose unanticipated burdens on 
national banks? If so, what would those burdens be? What could the OCC 
do to reduce the burden?
     Even if a uniform national approach to fiduciary standards 
proves beneficial over time, a change in applicable fiduciary standards 
may create near-term uncertainty about what rules govern national 
banks' fiduciary activities. What could the OCC do to reduce 
uncertainty, and any accompanying litigation risk, that may result from 
our adoption of uniform standards?
     Should the OCC adopt a uniform federal choice of law rule 
for determining what law governs the fiduciary relationship in the 
absence of a provision in the trust instrument specifying the governing 
law? This would address questions of applicable law that are not 
resolved by operation of section 92a.
    This ANPR reflects our ongoing commitment to review and reevaluate 
our regulations periodically to ensure that they encourage national 
banks' efficiency and competitiveness, consistent with safety and 
soundness and fair treatment of bank customers. Based on the comments 
we receive, we may propose specific revisions to our rules for comment 
in a later rulemaking.

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise 
required under section 604 of the RFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities and publishes its certification 
and a short, explanatory statement in the Federal Register along with 
its rule.
    Pursuant to section 605(b) of the RFA, the OCC hereby certifies 
that this rulemaking will not have a significant economic impact on a 
substantial number of small entities. The NPRM codifies caselaw and OCC 
interpretations, but adds no new requirements. Similarly, the ANPR 
merely invites comments on whether uniform federal standards would be 
appropriate. Accordingly, a regulatory flexibility analysis is not 
needed.

Executive Order 12866

    The OCC has determined that this rulemaking is not a significant 
regulatory action under Executive Order 12866.

Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform act of 1995, 2 U.S.C. 
1532 (Unfunded Mandates Act), requires that the agency prepare a 
budgetary impact statement before promulgating any rule likely to 
result in a Federal mandate that may result in the expenditure by 
state, local, and tribal governments, in the aggregate or by the 
private sector, of $100 million or more in any one year. If a budgetary 
impact statement is required, section 205 of the Unfunded Mandates Act 
also requires the agency to identify and consider a reasonable number 
of regulatory alternatives before promulgating the rule. For the 
reasons outlined above, the OCC has determined that this rulemaking 
will not result in expenditures by state, local, and tribal 
governments, or by the private sector, of $100 million or more in any 
one year. Accordingly, the OCC has not prepared a budgetary impact 
statement or specifically addressed any regulatory alternatives.

Executive Order 13132

    Executive Order 13132 requires Federal agencies, including the OCC, 
to certify their compliance with that Order when they transmit to the 
Office of Management and Budget any draft final regulation that has 
Federalism implications. Under the Order, a regulation has Federalism 
implications if it has ``substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.'' In the case of a regulation that has Federalism

[[Page 75876]]

implications and that preempts State law, the Order imposes certain 
consultation requirements with State and local officials; requires 
publication in the preamble of a federalism summary impact statement; 
and requires the OCC to make available to the Director of the Office of 
Management and Budget any written communications submitted to us by 
State and local officials. By the terms of the Order, these 
requirements apply to the extent that they are practicable and 
permitted by law and, to that extent, must be satisfied before the OCC 
promulgates a final regulation.
    Certain provisions of this proposal and advance notice, including 
uniform federal standards if they were to be adopted, may have 
Federalism implications, as that term is used in the Order, or may be 
found by a Federal court to preempt state law. Therefore, before 
promulgating a final regulation based on this proposal, the OCC will, 
to the extent practicable and permitted by law, seek consultation with 
State and local officials, include a Federalism summary impact 
statement in the preamble to the final rule, and make available to the 
Director of OMB any written communications we receive from State or 
local officials.

List of Subjects in 12 CFR 
Parts 5 and 9

    Banks, banking, Insurance, National banks, Trusts and trustees.

Authority and Issuance

    For the reasons set forth in the preamble, part 5 and part 9 of 
chapter I of title 12 of the Code of Federal Regulations are proposed 
to be amended as follows:

PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES

    1. The authority citation for part 5 continues to read as follows:


    Authority: 12 U.S.C. 1 et seq., 93a; and section 5136A of the 
Revised Statutes (12 U.S.C. 24a).

Subpart B--Initial Activities

    2. Paragraph (e)(5) of Sec. 5.26 is revised to read as follows:


Sec. 5.26  Fiduciary powers.

* * * * *
    (e) * * *
    (5) Notice of fiduciary activities in additional states. No further 
application under this section is required when a national bank with 
existing OCC approval to exercise fiduciary powers plans to act in a 
fiduciary capacity, or to conduct activities ancillary to its fiduciary 
business, in a state in addition to the state described in the 
application for fiduciary powers that the OCC has approved. Instead, 
unless the bank provides notice through other means (such as a merger 
application), the bank shall provide written notice to the OCC no later 
than ten days after it begins to act in a fiduciary capacity in the new 
state. The written notice must identify the new state or states 
involved, identify the fiduciary activities to be conducted, and 
describe the extent to which the activities differ materially from the 
fiduciary activities that the bank was previously authorized to 
conduct.
* * * * *

PART 9--FIDUCIARY ACTIVITIES OF NATIONAL BANKS

    1. The authority citation for part 9 continues to read as follows:


    Authority: 12 U.S.C. 24(Seventh), 92a, and 93a; 15 U.S.C. 78q, 
78q-1, and 78w.

    2. Section 9.2 is revised by removing the second sentence in 
paragraph (g) and adding new paragraphs (j) and (k) as follows:


Sec. 9.2  Definitions.

* * * * *
    (j) Trust office means an office of a national bank, other than a 
main office or a branch, at which the bank acts in a fiduciary 
capacity. Pursuant to 12 U.S.C. 36(j), a trust office is not a 
``branch'' for purposes of 12 U.S.C. 36, unless it is also an office at 
which deposits are received, or checks paid, or money lent.
    (k) Trust representative office means an office of a national bank, 
other than a main office, branch, or trust office, at which the bank 
performs activities ancillary to its fiduciary business, but does not 
act in a fiduciary capacity. Examples of ancillary activities include 
advertising, marketing, and soliciting for fiduciary business; 
contacting existing or potential customers, answering questions, and 
providing information about matters related to their accounts; acting 
as a liaison between the trust office and the customer (e.g., 
forwarding requests for distribution or changes in investment 
objectives, or forwarding forms and funds received from the customer); 
or inspecting or maintaining custody of fiduciary assets. Pursuant to 
12 U.S.C. 36(j), a trust representative office is not a ``branch'' for 
purposes of 12 U.S.C. 36, unless it is also an office at which deposits 
are received, or checks paid, or money lent.
    3. Section 9.3 is amended by revising paragraph (b) and adding 
paragraph (c) to read as follows:


Sec. 9.3  Approval requirements.

    (b) A national bank that has obtained the OCC's approval to 
exercise fiduciary powers is not required to obtain the OCC's prior 
approval to act in a fiduciary capacity in a new state or to conduct, 
in a new state, activities that are ancillary to its fiduciary 
business. Instead, the national bank must follow the notice procedures 
prescribed by 12 CFR 5.26(e).
    (c) A person seeking approval to organize a special-purpose 
national bank limited to fiduciary powers shall file an application 
with the OCC pursuant to 12 CFR 5.20.
    4. A new Sec. 9.7 is added to read as follows:


Sec. 9.7  Multi-state fiduciary operations.

    (a) Acting in a fiduciary capacity in more than one state. A 
national bank with fiduciary powers may act in a fiduciary capacity in 
different states. In each state in which a national bank acts in a 
fiduciary capacity, the bank may act in:
    (1) Any of the eight fiduciary capacities listed in 12 U.S.C. 
92a(a), unless the state prohibits its own state banks, trust 
companies, and other corporations that compete with national banks in 
that state from acting in that capacity; and
    (2) Any other fiduciary capacity the state permits for its own 
state banks, trust companies, or other corporations that compete with 
national banks in that state.
    (b) Serving customers in more than one state. While acting in a 
fiduciary capacity in one state, a national bank may market its 
fiduciary services to, and act as fiduciary for, customers located in 
any state. The bank may use a trust representative office for this 
purpose.
    (c) Offices in more than one state. A national bank with fiduciary 
powers may establish trust offices or trust representative offices in 
any state.
    (d) Acting in a fiduciary capacity. For each fiduciary 
relationship, a national bank acts in a fiduciary capacity in a state 
in which it accepts the fiduciary appointment, executes the documents 
that create the fiduciary relationship, or makes discretionary 
decisions regarding the investment or distribution of fiduciary assets. 
If these activities take place in more than one state, then the state 
in which the bank acts in a fiduciary capacity for section 92a purposes 
will be the state that the bank and customer designate from among those 
states.
    (e) Application of state law. (1) State laws used in section 92a. 
The state trust laws that apply to a national bank's fiduciary 
activities by operation of the

[[Page 75877]]

provisions of 12 U.S.C. 92a that refer to state law are the laws of the 
state in which the bank acts in a fiduciary capacity.
    (2) Other state laws. Section 92a specifically identifies which 
state laws regulating the operations of bank trust departments, trust 
companies, or other corporate fiduciaries are applicable to national 
banks. Other state laws regulating such operations are not applicable 
to national banks.
    5. Section 9.14(b) is revised to read as follows:


Sec. 9.14  Deposit of securities with state authorities

* * * * *
    (b) Acting in a fiduciary capacity in more than one state. If a 
national bank acts in a fiduciary capacity in more than one state, the 
bank may compute the amount of securities that are required to be 
deposited for each state on the basis of the amount of assets for which 
the bank is acting in a fiduciary capacity at offices located in that 
state. If state law requires a deposit of securities on a basis other 
than assets (e.g., a requirement to deposit a fixed amount or an amount 
equal to a percentage of capital), the bank may compute the amount of 
deposit required in that state on a pro-rated basis, according to the 
proportion of fiduciary assets for which the bank is acting in a 
fiduciary capacity at offices located in that state.

    Dated: October 31, 2000.
John D. Hawke, Jr.,
Comptroller of the Currency.
[FR Doc. 00-30844 Filed 12-4-00; 8:45 am]
BILLING CODE 4810-33-P