For: Immediate Release Contact: Kevin Mukri (202) 874-5770

Date: June 24, 1999

**Bank Trading Revenue Increases 77%**

**To Record \$3.6 Billion For 1st Quarter**

WASHINGTON \-- During the first quarter 1999, bank trading revenue
increased 77 percent to a record \$3.6 billion, as compared to \$2.0
billion for the fourth quarter 1998, the Office of the Comptroller of
the Currency (OCC) reported today in its *Bank Derivatives Report: First
Quarter 1999*. Recognizing that fourth quarter earnings are generally
lower than other quarters, bank trading revenues still grew an
impressive 33 percent from the \$2.7 billion reported for the first
quarter 1998. Mike Brosnan, OCC Deputy Comptroller for Risk Evaluation,
attributed the healthy revenue stream to "the combined effects of
continued strong customer activity along with the more favorable market
conditions compared to those experienced last fall.\"

The report is based on information provided by all U.S. commercial
banks. Trading revenue is from cash and off-balance sheet positions. The
revenue increase came primarily from interest rate and foreign exchange
products. Compared to the fourth quarter of 1998, revenue from interest
rate products rose from \$669 million to \$1.4 billion; foreign exchange
from \$1.2 billion to \$1.6 billion; equity from \$92 million to \$290
million; and commodity and other contracts from \$64 million to \$245
million.

\"In addition to favorable conditions in the interest rate markets,
events in the foreign exchange markets and commodity markets resulted in
particularly favorable returns to those banking firms trading in these
markets," said Mr. Brosnan.

The revenue increases came despite the first dip in the notional amount
of derivative contracts since the fourth quarter 1995. The notional
amount of aggregate derivative contracts declined slightly from \$33
trillion in the fourth quarter of 1998 to \$32.7 trillion at the end of
the first quarter of this year. Despite the decline, the notional amount
of credit derivatives rose by an estimated \$47 billion during the
quarter to a new record of \$191 billion**.**

**-**more-

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"Over time, we expect to see continuing growth in credit derivatives as
bank customers become more comfortable with their understanding of this
risk management product," said Mr. Brosnan. When credit derivative data
became available in the fourth quarter 1997, the notional amount was
\$55 billion.

Other highlights of the first quarter report include:

-   Interest rate contracts accounted for 77 percent of the notional
    amount of derivative contracts and foreign exchange contracts
    accounted for 20 percent. Equity, commodity and credit derivatives
    accounted for the remaining 3 percent.

-   Seven commercial banks continued to dominate the derivatives market,
    accounting for 93 percent of the total notional amount in the
    commercial banking system. The top 25 banks accounted for 99 percent
    of this business.

-   Over-the-counter contracts comprised 88 percent of the notional
    amounts for the first quarter compared to 12 percent that were
    exchange-traded.

-   The notional amounts of short-term contracts (remaining maturities
    of less than a year) decreased by \$673 billion to \$12.1 trillion.
    Contracts with remaining maturities of one to five years rose by
    \$439 billion to \$8.6 trillion, and contracts with maturities of
    five years or more increased by \$339 billion to \$3.9 trillion.

-   Relative to risk-based capital, total credit exposures for the top
    seven banks decreased to 309 percent in the first quarter from 324
    percent the previous quarter. The \$19 billion decrease in total
    credit exposure for the quarter is largely attributable to decreases
    in aggregate market values.

-   During the first quarter, banks charged off \$59 million due to
    credit losses from off-balance sheet derivatives. That amounts to
    less than 0.02 percent of the total credit exposure from derivative
    contracts. By comparison, net loan charge-offs relative to total
    loans for the quarter were 0.15 percent.

A copy of the *Bank Derivatives Report: First Quarter 1999* is available
on the OCC web site: *occ.treas.gov.*

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The OCC charters, regulates and examines approximately 2,500 national
banks and 61 federal branches and agencies of foreign banks in the
United States, accounting for 59 percent of the nations banking assets.
Its mission is to ensure a safe, sound and competitive national banking
system that supports the citizens, communities and economy of the United
States.