FDIC Reminds Banks of Required Procedures for Changes in Control

The FDIC reminded banks and other supervised institutions of its new rule on filing requirements and processing procedures in connection with changes in control. The new rule goes into effect on January 1, 2016. The rule consolidates and conforms the regulations of state nonmember banks, state savings associations and certain parent companies, and is intended to make existing FDIC practices more transparent.

The rule adopts definitions for previously undefined terms, such as "Acting in Concert," "Convertible Securities" and "Voting Securities." Under the rule, the acquisition of convertible securities, options or warrants is presumed to constitute the acquisition of voting securities. The rule imposes additional filing requirements on a person whose ownership, control or power to vote will increase to 25 percent or more of any class of voting securities issued by a bank. Further, the rule requires foreign banks and their affiliates to file a consolidated report with the FDIC on their outstanding stock loans. Lastly, after the consummation of a change in control, a covered institution must notify the FDIC of changes to CEO or board positions.