ABA Opposes OCC Proposal on Permissible Bank Premises

The American Bankers Association yesterday urged the OCC to withdraw a recent proposal making changes to its rules on national bank or federal savings ownership of real property. The OCC’s proposal would set a bright-line requirement for OCC-regulated banks to use more than 50 percent of the banking premises they own, or face eventual classification of such premises as other real estate owned, or OREO. This proposal would also affect state chartered banks in states with “wild card” statutes that establish parity with the bank powers and limitations of OCC regulated banks.

In a letter to the OCC, ABA noted that COVID-19 is transforming the commercial real estate market and forcing banks to completely reassess their banking premises needs, particularly as work-from-home arrangements gain wider acceptance. Both banks and the OCC will need as much flexibility as possible to adapt to a post COVID-19 environment, ABA said, adding that “now is simply not the time for the OCC to be revising its longstanding rules on the ownership of bank premises and the leasing of excess space.” ABA also highlighted several technical defects in the proposal, including that it fails to properly grandfather existing arrangements and gives bank examiners far too much influence over the business decisions of banks with regard to grandfathered properties.

ABA echoed these sentiments in a separate letter filed jointly with the Bank Policy Institute and the Independent Community Bankers of America.