A final rule that provides an exception allowing longer than the standard withdrawal period for certain bank- or savings association-administered collective investment funds (CIF) was made final Friday by the Office of the Comptroller of the Currency (OCC).
The rule finalizes an interim rule that has was issued last August, with one change.
The rule codifies the time a bank generally has for withdrawing an account from a covered CIF, meaning one that is invested primarily in real estate or other assets that are not readily marketable, and establishes an exception to that requirement. Under that exception, a bank may receive an extension to the standard withdrawal period with OCC approval as long as certain conditions are met.
The final rule notes the exception was intended to enable a bank to preserve the value of a 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 provided that a bank may withdraw an account from a CIF up to one year beyond the standard withdrawal period with OCC approval and if certain conditions are met.
The final rule, in response to comments received, is unchanged from the interim rule except for one thing: It revises one of the enumerated conditions for extending the standard withdrawal period. Rather than stating that a bank’s board (or authorized committee ) must “commit” that the bank will act upon any withdrawal request as soon as practicable, the final rule states that the board (or committee) “represents that the bank will act upon any withdrawal request as soon as practicable and consistent with fiduciary duties.”
The final rule takes effect upon its publication in the Federal Register.