Broad range of policies for bank transactions would be revised under OCC proposal

A broad range of policies and procedures for corporate activities and transactions involving national banks and federal savings associations (FSAs) – including permitting the financial institutions to elect to follow procedures applicable to state-chartered institutions – would be revised under a proposal issued Friday by the federal regulator of national banks.

The Office of the Comptroller of the Currency (OCC) said its proposal would (among other things): make the definition of “well managed” consistent for all filing types; eliminate the filing requirement for FSAs that adopt without change the OCC’s model or optional bylaws; and add numerous provisions to OCC rules permitting national banks and FSAs to elect to follow the procedures applicable to state banks or state savings associations, respectively, for certain business combinations.

Other proposed changes include providing procedures for granting and revoking citizenship and residency waivers for national bank directors, permitting national banks to request approval for a reduction in capital over more than four quarters, and changing the definition of “troubled condition” for purposes of changes in directors and senior executive offers to align with the agency’s supervisory practices.

The OCC said the updated definition, for the latter change, would specify that an enforcement action (a cease-and-desist order, consent order, or formal written agreement) must require the national bank or FSA to improve its financial condition for it to be considered in “troubled condition” solely as a result of the enforcement action.

The agency also proposed several changes for operating subsidiaries and non-controlling investments by a national bank and pass-through investments by an FSA. For operating subsidiaries, proposed changes include:

  • Permission for an eligible operating subsidiary of a qualifying national bank or FSA to engage in an activity that is substantively the same as a previously approved bank or FSA activity, respectively, by filing a notice with the OCC (national banks) or an application through expedited review (FSAs).
  • Removal of the annual national bank operating subsidiary reporting requirement.

For non-controlling national bank investments, and pass-through investments by an FSA, proposed changes include:

  • Permission for investments in enterprises that have not agreed to OCC supervision (with prior OCC approval);
  • Provision for an expedited review procedure for the investments under certain conditions;
  • Expansion of the investments eligible for notice;
  • Permission for investments without a filing in enterprises conducting activities limited to those previously reported by the national bank or FSA in a previous non-controlling investment or pass-through investment filing.

The proposed changes were issued with a 60-day comment period, ending May 4.

Licensing Amendments: Notice of Proposed Rulemaking