OCC’s Conditional OK for Five Trust Charters Signals a Quiet Shake-Up in Custody Banking

Fast facts: five conditional trust charters, and a small but important market is about to get bigger

The Office of the Comptroller of the Currency (OCC) has granted conditional approval to five applicants seeking national trust bank charters. The approvals are conditional — not final licenses — and come at a time when nationally chartered trust banks make up only a small slice of the U.S. banking landscape. If all five clear the OCC’s remaining conditions and convert their approvals into full charters, the pool of national trust banks will grow noticeably from its current, modest base.

Why this matters: trust banks run custody, fiduciary and administrative plumbing

Trust banks act as custodians for institutional assets, administer trusts and handle a range of fiduciary duties. That work sounds narrow, but it sits at the heart of the asset-management industry. When a trust bank gets a national charter, it gains certain pre‑emptive regulatory powers and a national scope that can make it easier to serve large institutional clients across state lines.

These five conditional approvals therefore matter for two reasons. First, they increase capacity: more chartered entities mean more options for large funds, family offices and fintechs that need custody, escrow, and fiduciary services. Second, they can change competitive dynamics. Trust and custody work is a stickier business than retail banking. A new nationally chartered entrant that pairs modern technology with a trust charter can win business by offering faster onboarding, better reporting, or lower fees.

How this could reshape the custody and fiduciary market

Right now custody is concentrated among a few big players that benefit from scale and deep client relationships. Banks such as the Bank of New York Mellon (BK), State Street (STT), and Northern Trust (NTRS) dominate custody services for institutional clients. New national trust charters introduce a credible challenge to that dominance, particularly if some applicants are fintechs or technology-first firms that can undercut incumbents on client experience.

For asset managers, including giants that manage bespoke or complex mandates, more chartered options mean more leverage in negotiating fees and service terms. BlackRock (BLK) and its peers may find it easier to shop for custody partners that match specific needs, from crypto custody to ESG reporting.

But the change is likely to be evolutionary rather than revolutionary. Custody is a trust-heavy, compliance-heavy business. Scale and regulatory track record still matter. Incumbents are large, well-capitalized and deeply embedded in clearing and settlement networks, so any meaningful share shift will take time.

How investors should think about winners and losers

For publicly traded incumbent custodians—BK, STT and NTRS—the immediate impact is mixed. These firms have margin, scale and client stickiness. In the near term they face more competition for new mandates, which could pressure fee growth modestly. Over the medium term, however, they can respond by tightening service levels, slashing fees on commoditized business, or accelerating product moves into higher-margin services.

Asset managers with custody needs, like BlackRock (BLK), could benefit from better pricing and more tailored services. Fintechs and crypto platforms such as Coinbase (COIN) have a potential upside if some charter recipients aim to serve digital-asset custody with a national trust footing; a national trust charter can make custody offerings more acceptable to institutional clients.

Technology vendors and service providers that sell custody platforms, reporting tools or compliance solutions stand to gain indirectly. If new entrants are technology-first, they will buy or license systems rather than build everything in-house, which is a tailwind for software and services firms that serve the custody ecosystem.

Typical OCC conditions: what applicants will need to show

When the OCC issues conditional approvals it typically requires applicants to meet standards on capitalization, governance, and compliance before they get a final charter. Expect conditions around initial capital and liquidity, a qualified board and executive team, robust anti‑money‑laundering controls, and detailed plans for risk management and third‑party oversight.

The OCC also wants clear business plans showing viable revenue paths and conservative stress testing. For applicants focused on crypto or other novel assets, expect extra scrutiny on custody controls, asset segregation, and operational resilience.

Next steps and timing: from conditional green light to full charter

Conditional approval is the middle of the process, not the finish line. Applicants must satisfy the OCC’s written conditions and demonstrate operational readiness. That typically takes several months and sometimes up to a year, depending on how complex the applicant’s plan is and how quickly it can onboard key staff and systems.

The OCC will monitor progress through formal submissions and onsite reviews. Triggers that could delay final approval include missed capitalization targets, weak compliance programs, unresolved third‑party vendor risks, or management turnover. The agency can rescind an approval if conditions are not met in a satisfactory way.

What reporters and market watchers should watch next

The OCC’s public release is the primary document to track for the exact conditions tied to each approval. Beyond that, watch for:

• SEC filings (8‑K, S‑1) from applicants if they are public or plan to be; these often disclose capital-raising and governance plans.
• Job postings and executive hires; critical roles such as chief risk officer or head of custody are telltale signs of operational progress.
• Announcements of partnerships with clearinghouses or technology vendors, which indicate readiness to serve clients.
• Trading moves: increased activity and price action in custody incumbents (BK, STT, NTRS), asset managers (BLK), and crypto platforms (COIN) can reveal investor views about competitive impact.

The OCC’s conditional approvals are an important nudge: they tell the market that regulators see plausible, supervised entrants to a small, historically stable sector. For investors, the news is a reminder that custody is no longer a static commodity market; it’s a niche where technology, regulatory choice and client demands can gradually reconfigure winners and losers.

Sources

• occ.gov