Directors or other management officials at banks with assets of $10 billion or less would no longer face restrictions from serving at more than one depository institution or holding company at the same time (and at the same asset threshold of $10 billion or less) under a final rule issued Wednesday by the federal banking agencies.
However, the agencies noted that management officials will generally remain prohibited from serving with multiple depository organizations that are above the new thresholds, limiting the potential risk of anticompetitive conduct at larger institutions.
The Federal Deposit Insurance Corp. (FDIC), Federal Reserve, and the Office of the Comptroller of the Currency (OCC) released the joint final rule on management interlocks, which they said would account for changes in the market since the thresholds were adopted in 1996. The final rule is unchanged from the proposal made in December of last year.
The final rule is the first time that the thresholds have been changed since 1996.
According to the agencies, the management interlock rules previously prohibited a management official working at a depository institution or holding company with more than $2.5 billion in total assets from simultaneously working at an unaffiliated depository organization with more than $1.5 billion in total assets. Under the final rule, both thresholds are raised to $10 billion.
The final rule, according to the three agencies, responds to comments received during the recent review required by the Economic Growth and Regulatory Paperwork Reduction Act (EGRRPA).
The rule implements requirements of the Depository Institution Management Interlocks Act (DIMIA). The DIMIA major assets prohibition bars a management official of a depository organization with total assets at a certain level or any affiliate of such an organization) from serving at the same time as a management official of an unaffiliated depository organization with total assets at another defined level (or any affiliate of such an organization). The statute also permits the agencies to adjust, by regulation, the major assets prohibition thresholds in order to allow for inflation or market changes.
The final rule takes effect upon publication in theFederal Register.