Magazine article American Banker

NBD, Citing Cost, to Flee OCC for a State Charter

Magazine article American Banker

NBD, Citing Cost, to Flee OCC for a State Charter

Article excerpt

Highlighting a groundswell of discontent with regulatory costs, NBD Bank is planning to switch from a national to a state charter.

The $30 billion-asset bank, based in Detroit, is one of the largest banks to flee the jurisdiction of the Comptroller of the Currency. Some 118 banks have made this move in the last two years, nearly three times the number in the previous two years.

The lead unit of NBD Bancorp said Wednesday it had applied to the Michigan Financial Institutions Bureau. The bank said the state regulator would provide more consistent regulation, and would do so at a lower price than the Comptroller's office.

"The primary consideration was really the cost advantage," said Verne G. Istock, chairman and chief executive of NBD Bancorp. "Our national charter in Michigan goes back 64 years and you don't like to walk away from history. But the financial consequences are significant."

The conversion, he added, should be completed by yearend.

As a national bank, NBD Bank is subject to supervision by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corp. As a state-chartered bank, it would be regulated by the state, the Fed, and the FDIC.

The move is like to anger Comptroller of the Currency Eugene A. Ludwig, who has criticized state regulators for waging campaigns to win banks over to their charters. Michigan regulators even produced a video touting its bank charter, but shelved it to avoid any appearance that it was encouraging banks to charter shop. …

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