OCC Proposes Greater Oversight of Bank Mergers

The OCC proposed amendments to its rules, and a related policy statement, governing mergers involving (i) national banks, (ii) federal savings associations and (iii) federal branches and agencies of foreign banks.

The rule changes are intended to provide enhanced transparency into the OCC’s review of applications under the Bank Merger Act ("BMA") and to strengthen that process. As previously covered, the OCC prioritized revising its rule framework for business combinations to account for changes in the banking industry and advances in technology, as well as increasing use of mobile banking. The rule proposal is also intended to ensure that mergers receive an appropriate level of review by (i) eliminating provisions for expedited reviews and (ii) discontinuing the use of "streamlined business combination applications."

The proposed policy statement would provide guidance on the OCC review process by:

• defining general principles applied to applications submitted under the BMA, that use identifying "indicators" previously found to lead to approval or denial based on supervisory and/or regulatory concerns (i.e.; details of acquirer's and target's financial status, size, compliance with the Community Reinvestment Act, adverse impacts on competition);
• reminding applicants of OCC's considerations on financial stability, managerial and financial resources and future prospects. The OCC provided examples of conditions that are factored into application review that include, but are not limited to, (i) financial and managerial resources, (ii) future business prospects, (iii) a less than satisfactory supervisory record, (iv) rapid changes in growth and (v) "convenience and needs" or effects of the business on the community it services; and
• explaining the decision process used by the OCC to close or extend comment periods and/or hold public meetings.

Comments on the amendments and policy statement are due 60 days from the date of publication in the Federal Register.