OCC proposes revised process for approving bank mergers

The Office of the Comptroller of the Currency today proposed a new rule to end the time limit for automatic approvals of mergers of the banks that it supervises. At the same time, the agency released a policy statement on how it would analyze future merger and acquisition applications, with a focus on separating mergers that can be quickly approved from those that require more scrutiny. The OCC said it views the statement as summarizing existing policy rather than setting new standards.

“Merger applications exist along a spectrum,” Acting Comptroller of the Currency Michael Hsu said in a speech at the University of Michigan. “Some have significant deficiencies. Others are straightforward because the acquiring bank is a model of safety and soundness and has earned the trust of the community and supervisors. The majority lie somewhere in between and require varying degrees of scrutiny and multiple rounds of inquiry. The transparency provided in our proposed policy statement effectively proposes chalk lines demarcating these three groups.”

The proposed changes seek to preserve and promote a diverse and dynamic U.S. banking system, Hsu said. The agency later this year plans to publicly release data on the bank mergers that it supervises. It also plans to hold a symposium on the topic at its Washington, D.C., headquarters on Feb. 10. In the meantime, Hsu noted that, currently, certain merger applications are automatically approved by the OCC on the 15th day after the close of the comment period unless the agency takes action to remove the filing for expedited processing.

“The forthcoming [notice of proposed rulemaking]proposes to remove that, reflecting our view that bank mergers are significant corporate transactions that require the OCC to make a decision,” Hsu said. The related policy statement sets forth the features of applications and indicators that are generally consistent with OCC approval under the Bank Merger Act, as well as the features and indicators that raise supervisory or regulatory concerns that may be inconsistent with OCC approval, he added.