Circular
Uniform Interagency Trust Rating System
March 17, 1998
Circular No. 11035

Proposed Changes - Comments Due April 20

To All State Member Banks, Bank Holding Companies, and Branches and Agencies of Foreign Banks, in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), are requesting comment on proposed enhancements to the Uniform Interagency Trust Rating System (UITRS). Changes that have occurred in the fiduciary industry and in supervisory policies and procedures since the UITRS was first adopted, in 1978, have prompted the agencies to propose the following changes:

  • Realign the UITRS rating definitions with the language and tone of the Uniform Financial Institutions Rating System's rating definitions (or CAMELS).
  • Increase the emphasis on the quality of risk management processes in each of the rating components, particularly the management component.
  • Change the composite rating definitions to parallel proposed changes in component rating descriptions.
  • Explicitly identify, within component descriptions, the applicable risks to be considered when assigning ratings to each of the components.
  • Consolidate the former Account Administration and Conflicts of Interest components into a new Compliance component, thereby reducing the number of rated components from six to five. The new Compliance component will also assess an institution's efforts to comply with applicable laws and regulations, the terms of governing instruments, and internal policies and procedures.
  • Change the evaluation and rating of the Earnings component. While earnings will continue to be evaluated at all institutions, a component rating will only be required to be assigned efforts for those institutions that must file Schedule E of FFIEC Form 001.
  • Permit a waiver for rating the Asset Management component for institutions whose fiduciary activities do not include activities involving the management of any trust account assets.

In addition, the FFIEC invites comments on whether the proposal -

  • captures the essential risk areas of the fiduciary services industry;
  • adequately assesses the quality of the board of directors' and management's oversight regarding its fiduciary responsibility;
  • and requires additions or deletions to the suggested components.

The FFIEC's proposal, as published in the Federal Register of February 17, is available as a pdf file (pdf - 58kb). Comments should be submitted to the FFIEC by April 20, 1998, as specified in the notice. Questions on these matters may be directed to the Federal Reserve Board, as specified in the notice, or, at this Bank, to Tamara Marcopulos, Supervising Examiner, Fiduciary Services.