Updated Aug. 13, 2020
An Office of the Comptroller of the Currency (OCC) interim final rule that provides for an exception to the “standard withdrawal period” for a collective investment fund (CIF) was published in the Federal Register and took effect Thursday (Aug. 13).
The OCC, in its release on the rule last week, said the exception is aimed at allowing a bank to preserve the value of the CIF’s assets for the benefit of fund participants “during unanticipated and severe market conditions, such as those resulting from the current national health emergency concerning the coronavirus disease (COVID-19) outbreak.”
The interim final rule amends the OCC’s requirements applicable to national banks and federal savings associations administering CIFs invested primarily in real estate or other assets that are not readily marketable and codifies the time a bank generally has for withdrawing accounts from those CIFs. The interim rule’s limited exception allows a bank, with OCC approval, to withdraw an account from the CIF up to one year beyond the standard withdrawal period, with opportunities for up to two extensions if certain conditions are satisfied.
The OCC, in the interim final rule, states that under normal circumstances and pursuant to the standard withdrawal period in the rule’s new paragraph (b)(5)(iii)(B), a bank that requires notice of withdrawal by Dec. 31, 2020, is required to withdraw an account no later than Dec. 31, 2021. “However, if, due to exceptional circumstances, the bank receives a one-year extension of the standard withdrawal period pursuant to new paragraph (b)(5)(iii)(C), the bank is required to withdraw the account no later than Dec. 31, 2022. If the bank later receives an additional one-year extension pursuant to new paragraph (b)(5)(iii)(D), the bank is required to withdraw the account no later than December 31, 2023,” it states.
The OCC said it will accept public comments until Sept. 14. It also issued a bulletin Thursday on the rule.