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A national bank may retain its stock held by it in a trust account:

a. Only where specifically permitted by the terms of the governing instrument.
b. Only where specifically permitted by local law.
c. Where the stock was received (inventoried) into the account and the governing instrument permits the retention of all assets so received.
d. Only when such stock is a prudent investment.

User Mentos
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Final answer:

A national bank can retain stock in a trust account if it is permitted by the trust's governing instrument, local law, if the governing instrument allows for the retention of all assets received into the trust, or if the stock is considered a prudent investment. Additionally, banks manage various assets including cash, reserves, loans, and bonds, adhering to regulations such as the reserve requirement.

Step-by-step explanation:

National Bank's Retention of Stock in Trust Accounts

A national bank may retain its stock held in a trust account under certain conditions. Specifically:

  • Terms of the governing instrument: The bank can retain the stock if it is expressly permitted by the terms set out in the trust agreement or governing document.
  • Local law: The retention of stocks may be dictated by local or state laws that the bank must adhere to.
  • Governing instrument permits retention of all received assets: If the stock was originally received into the trust account and the governing instrument allows for the retention of all such received assets, the bank may keep the stock.
  • Prudence as an investment: Banks must also consider whether holding the stock is a prudent investment according to trust and fiduciary standards.

In addition to these factors, a bank's assets typically include cash in vaults, reserves held at the Federal Reserve Bank, loans made to customers, and bonds. These assets are managed in accordance with regulations such as the reserve requirement, which mandates banks to keep a portion of depositor's money either in vaults or at the Federal Reserve.

User Stephen Tun Aung
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