Proposed merger rule would remove ‘expedited’ review procedures, ‘streamlined’ application

Rules for mergers involving national banks and federal savings associations that would remove expedited bank merger review procedures and aim to provide transparency around the features of merger applications and indicators “that are consistent with and inconsistent with approval” were proposed Monday by the regulator of national banks.

The Office of the Comptroller of the Currency (OCC) said its proposed rulemaking also includes a policy statement meant to clarify its review of applications under the Bank Merger Act (BMA).

In a release, the OCC said its proposed rule offers “two substantive changes” to is rules on mergers (referred to as “business combination” regulations). The proposal, OCC said:

  • Removes provisions related to expedited review. The agency said any business combination subject to a filing is a significant corporate transaction requiring OCC decisioning, which should not be deemed approved solely due to the passage of time.
  • Removes the OCC’s streamlined business combination application. The OCC said the Interagency Bank Merger Act Application (IBMA) provides the appropriate basis for the OCC to review a business combination application.

The proposed policy statement, if finalized, would address several points, the agency said. Those include outlining general principles the agency uses in its review of applications under the BMA and the OCC’s consideration of the financial stability, financial and managerial resources and future prospects, and convenience and needs factors. The statement would also discuss the criteria informing the OCC’s decision on whether to hold a public meeting on an application subject to the BMA, the agency said.

In a speech Monday, Acting Comptroller of the Currency Michael J. Hsu said developing a view on the overall structure of the U.S. banking system could help ensure that the system remains diverse, dynamic, and balanced with the economy, as well as inform bank merger policy and decisions.

Hsu reiterated that the proposal, if finalized, would eliminate the possibility that merger applications will be deemed approved solely by the passage of time. “Under a rule adopted by the OCC in 1996, certain merger applications are deemed approved by the OCC on the 15th day after the close of the comment period unless the OCC takes action to remove the filing from expedited processing,” Hsu noted. “The forthcoming NPR proposes to remove that, reflecting our view that bank mergers are significant corporate transactions that require the OCC to make a decision.”

Regarding the proposed policy statement, the acting comptroller maintained that merger applications “exist along a spectrum.”

“Some have significant deficiencies,” he said. “Others are straightforward because the acquiring bank is a model of safety and soundness and has earned the trust of the community and its supervisors. The majority lie somewhere in between and require varying degrees of scrutiny and multiple rounds of inquiry.”

He said the transparency contemplated in the statement “effectively proposes chalk lines demarcating these three groups.”

For example, Hsu said, the proposed policy statement notes that applications where the acquiring bank has satisfactory supervisory ratings, no open enforcement actions, and no fair lending, CRA, Bank Secrecy Act (BSA), or consumer compliance concerns, along with other features, are consistent with timely approval.

“On the other hand, applications where the acquirer has unsatisfactory supervisory ratings, open or pending BSA enforcement actions, poor CRA ratings, or other supervisory concerns are highly unlikely to receive approval unless and until such concerns are resolved.”

He said the OCC expects most applications are likely to fall between these broad areas. “We look forward to getting comments on the policy statement including the appropriateness and effectiveness of where these lines are set,” he said.

OCC Requests Comments on Proposed Rulemaking and Policy Statement on Bank Mergers

Acting Comptroller of the Currency Michael J. Hsu “What Should the U.S. Banking System Look Like? Diverse, Dynamic, and Balanced,” University of Michigan School of Business, Jan. 29, 2024