NationsBank asks to finance leases, develop condominiums

April 03, 1997|By KNIGHT-RIDDER NEWS SERVICE

CHARLOTTE, N.C. -- NationsBank is the first bank to request new powers under an expanded regulation of the Office of the Comptroller of the Currency.

The Charlotte bank's two applications last week will be the first test of a revised OCC rule that allows banks, on a case-by-case basis, to do things that previously were forbidden.

Some bankers have speculated that the comptroller's office, which regulates national banks, eventually could approve applications by banks to underwrite insurance and securities.

NationsBank's requests are more modest. The bank wants to finance real estate leases, which it does now under its holding company, and develop about 45 condominiums.

The Federal Reserve, which regulates bank holding companies, has been disgruntled at the new OCC rule, which was adopted in November. Observers say the Fed is concerned that holding companies will become obsolete if nontraditional powers are given directly to banks.

Case by case

Some critics worry about the risk that banks could assume by moving into nontraditional arenas. But the OCC requires banks to capitalize those activities separately under operating subsidiaries.

The OCC's ruling on NationsBank's applications will not translate automatically into similar powers for other banks.

"This is not a signal to other banks that you can do the same thing," said Ed Alwood, a spokesman at the comptroller's office in Washington.

"This is a case-by-case application. It is not a blanket go-ahead," Alwood said.

A 30-day comment period on NationsBank's applications begins tomorrow.

Pub Date: 4/03/97

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