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OCC Bulletin 2004-2 | January 5, 2004

Banks/Thrifts Providing Financial Support to Funds Advised by the Banking Organization or its Affiliates: Interagency Guidance


Chief Executive Officers of All National Banks, Department and Division Heads, and All Examining Personnel

The guidance attached to this bulletin continues to apply to federal savings associations.

The attached "Interagency Policy on Banks/Thrifts Providing Financial Support to Funds Advised by the Banking Organization or its Affiliates" is being issued jointly by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision on January 5, 2004. The purpose of the guidance is to alert banking organizations and examiners of the safety and soundness implications of, and the legal impediments to, a bank providing financial support to investment funds advised by the bank, its subsidiaries or affiliates.

A banking organization's investment advisory services can pose material risks to the bank and can harm investors, if the associated risks are not effectively controlled. Risks posed by recent market developments warrant the issuance of this guidance. Banks are under no statutory requirement to provide financial support to the funds they advise, however, circumstances may motivate banks to do so to preserve their reputation or to limit liability. The federal banking regulatory agencies are concerned about situations in which emergency liquidity needs may prompt banks to support their advised funds in ways that raise prudential and legal concerns.

For further guidance on asset management issues, contact Asset Management at (202) 649-6360.

Kathryn E. Dick
Deputy Comptroller for Risk Evaluation

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