OCC’s bank premises proposal out for comment until March 22, notice says

A proposed rule setting standards for a bank or federal savings association (FSA) acquiring and holding real estate used as premises is out for comment until March 22, according to a Federal Register notice for the Office of the Comptroller of the Currency (OCC).

The OCC issued a bulletin on the proposal Friday, noting that the proposed standards, announced Jan. 4, would be used by the OCC in determining whether the acquisition and holding of real estate is necessary for the transaction of a bank’s business. It highlighted the following:

  • The proposed rule would create a new percentage test: Banks may acquire, hold, or convey real estate for use as “bank occupied premises.” “Bank occupied premises” are real estate in which more than 50 percent of each building or severable piece of land is used by bank persons for the transaction of the bank’s business.
  • The proposed rule would limit the uses of real estate not used by bank persons for the transaction of the bank’s business. Proposed 12 CFR 7.1024(c) applies the excess capacity doctrine, which recognizes banks’ need to optimize the value of bank property, by authorizing banks to sell or lease excess space or capacity in that property. The proposal provides that such excess space or capacity must have a nexus with the transaction of the bank’s business or operations such that the real estate is acquired or held to provide the bank with a business location rather than as an investment.
[There is a discrepancy between the comment due dates shown in the Register notice vs. the OCC Bulletin, with the bulletin stating a deadline of March 20 (a Saturday).]

Federal Register notice

OCC Bulletin 2021-6