AL 99-5
Subject: Year 2000 and Systems Integration Considerations in
          Corporate Application Decisions
Date: May 4, 1999

TO:  Chief Executive Officers of All National Banks and Federal
     Branches and Agencies, Department and Division Heads, and
     All Examining Personnel

REFERENCE

This advisory letter supersedes Advisory Letter 98-1 dated
January 20, 1998.

PURPOSE

The purpose of this advisory is to alert bankers and examiners to
the following:

     The OCC is clarifying how it will evaluate Year 2000
     preparedness in connection with corporate applications for
     significant expansion of existing operations or entry into
     the national banking system;

     Corporate applications for significant expansionary activity
     must address Year 2000 preparedness and systems integration
     issues;

     The OCC may approve conditionally or deny an application for
     expansionary activity if those activities could jeopardize
     the bank's ability to achieve Year 2000 readiness; and

     Banks with less than satisfactory Year 2000 ratings may be
     subject to supplemental filing requirements (SFR).

POLICY

It is the OCC's policy to assess the impact of a corporate
transaction on the overall safety and soundness of an applicant
bank.  Year 2000 preparedness and systems integration factors are
important considerations in determining the overall condition of
an institution.  Therefore, the OCC considers these factors in
reviewing corporate filings.

The OCC has determined that many types of corporate applications
have the potential to divert resources from Year 2000
preparedness and create systems integration concerns.  These
applications include significant expansionary activities, as well
as de novo charters, conversions, and the establishment of
federal branches and agencies.  Examples of potentially 


significant expansionary activities are: the establishment or
purchase of multiple branches; the establishment of
technologically reliant operating subsidiaries, such as a data
processing or electronic authentication centers; and business
combinations.

YEAR 2000 APPLICATION CONSIDERATIONS

Through a series of advisories, the OCC has provided guidance and
key milestones with which banks may assess their progress in
becoming Year 2000 ready.  A corporate filing that contains
potentially significant systems integration or Year 2000
implications should include a discussion of the bank's current
level of compliance with this guidance and how its proposed
activity will effect its ongoing efforts.  In the case of a
conversion application, the OCC also will consult with the
institution's current regulator as to its current state of
preparedness.

If an application raises significant supervisory or policy
concerns, the OCC may deny or conditionally approve the activity. 
With regard to Year 2000 concerns, the OCC will deny or
conditionally approve an application where the proposed activity
or transaction may have a material adverse effect on Year 2000
remediation efforts of a national bank.  Specific conditions,
enforceable under 12 U.S.C. 1818, could include requirements and
time frames for specific remedial actions, such as requiring
separate computer systems, as well as specific measures for
assessment and evaluation of the bank's Year 2000 status or
system integration progress.

BANKS SUBJECT TO SUPPLEMENTARY FILING REQUIREMENTS

Banks with less than satisfactory Year 2000 performance may
expect increased OCC scrutiny of corporate activities.   The OCC
will assess the applicant bank's plans to remedy any Year 2000
deficiencies or system integration concerns, and its financial
and managerial ability to do so.  As appropriate, formal and
informal OCC enforcement documents addressing Year 2000
deficiencies may impose supplemental filing requirements (SFR)
for certain corporate transactions.  The SFR will restrict a
bank's ability to use the no-notice, no-application or 
after-the-fact provisions of 12 CFR Part 5.  In most cases, a
bank subject to an SFR will be required to file a standard
application.

CONTACTS

Questions related to Year 2000 considerations in corporate
applications should be directed to Crystal Maddox at (202) 874-5060.  
For further information on overall Year 2000 issues,
contact Mark O'Dell, director for Year 2000 Supervision Policy at
(202) 874-2340.





________________________________
Julie L. Williams
Chief Counsel