The Office of the Comptroller of the Currency, which regulates the nation's 4,700 nationally chartered banks, has told banks to consider the adverse impact that branch closings and cuts in services can have on communities and has urged them to adopt written procedures for making a decision on whether to close a branch.
John F. Downey, the chief national bank examiner for the comptroller's office, said the procedures should force a bank to consider the profitability of the branch, actions that it could take to make a branch profitable, the availability of other financial institutions in the neighborhood or community and how to notify customers in advance.
In an attempt to control spiraling costs, many banks are closing the traditional brick-and-mortar branches that had formed the core of their efforts to attract business from individuals and small businesses.
But the branch networks were established when the federal government imposed ceilings on the interest banks could pay depositors and before the advent of 24-hour automatic teller machines and other electronic banking innovations. The only way banks could compete for deposits then was on the basis of convenience: offices and office hours.
Downey, in a letter to the banks, said that closing a branch or reducing service may "have adverse effects on the community and its residents," particularly in low- and moderate-income communities. "A branch closing may also affect local economic development and inconvenience businesses and residents, particularly those with limited mobility."
He reminded the banks that one of the factors the comptroller's office considers when judging whether a bank meets the needs of its community is "the bank's record of opening and closing offices and providing services at such offices." He said the agency is primarily interested in whether a bank has an objective set of policies and procedures that it follows when deciding whether to close a branch or reduce service. WATCH THOSE BRIBES . . .
The comptroller's office also has told banks that they should consider incorporating the nation's new bribery laws into their codes of ethics. The Crime Control Act of 1984 elevated bank bribery to a felony and extended the bank bribery statutes to cover not only payoffs granted to receive a loan but other transactions, such as contracts.
The law cites any payoff to a bank official in excess of $100 as a felony. A smaller bribe remains a misdemeanor.
H. Joe Selby, senior deputy comptroller for supervision, said the bribery statutes are not meant to cover small gifts "when it is clear from the circumstances that the customer is not trying to exert any influence over the bank official in connection with a transaction and the gratuity or favor is, in fact, unsolicited."
Selby said banks should add provisions to their internal ethics guidelines that tell employes they can never ask for or accept a gratuity or a quid pro quo in connection with a transaction. Banks, he said, should also set a maximum value on a gift an employe can accept from a business customer, provided the gift is unrelated to a business deal. NEW FACES . . .
Billy C. Mullican has been named associate director for administrative and corporate applications of the Federal Deposit Insurance Corp., which regulates state-chartered banks that are not members of the Federal Reserve System. Judith A. Walter has been named deputy comptroller of the currency for national operations.