On September 17, the FDIC Board of Directors approved a proposed rule that would substantially revise the agency’s framework for reviewing merger transactions under the Bank Merger Act. The proposal is intended to shorten processing times, provide greater certainty to applicants, and modernize the FDIC’s review of competition and other statutory factors.
The proposal would create new processing categories and establish more defined standards for transactions subject to FDIC review. Specifically, the proposed rule would:
- Create rapid processing for certain smaller transactions. The FDIC would establish a new category of “de minimis merger transactions” eligible for streamlined letter filings and deemed approval, generally five business days after the applicable review requirements are satisfied. Qualifying transactions would include certain acquisitions below the Hart-Scott-Rodino Act threshold that also involve less than 5 percent of the acquiring institution’s assets.
- Establish processing deadlines. Standard filings involving a resulting institution with less than $50 billion in assets generally would be subject to a 90-day review period, while other standard filings generally would have a 150-day period. he proposal also would require the FDIC to notify applicants within 21 days if a filing is incomplete.
- Revise the competitive-effects analysis. The FDIC’s initial Herfindahl-Hirschman Index analysis would account for credit union shares and centrally booked deposits and establish a competition safe harbor for certain transactions falling within specified concentration thresholds.
- Clarify the treatment of asset acquisitions.A transaction involving the acquisition of at least 80 percent of another institution’s assets over a rolling 12-month period would generally constitute a “merger in substance.” Separately, certain asset transfers increasing an FDIC-supervised institution’s assets by at least 25 percent would be subject to a new notice and non-objection process.
- Limit disruptions to expedited processing. Adverse public comments or Community Reinvestment Act protests would not automatically remove an otherwise qualifying filing from expedited processing.
Putting It Into Practice: The FDIC has been reworking its approach to bank mergers (previously discussed here). This proposal gives a clearer picture of where that process may be heading, with defined transaction categories, processing deadlines, and new standards for evaluating competition. For banks considering acquisitions or internal reorganizations, those changes could make it easier to determine at the outset what review path a transaction is likely to follow and how regulatory timing may affect the deal. The revised HHI methodology and new framework for significant asset transfers also may affect transaction structuring before a filing is submitted. Institutions contemplating transactions subject to FDIC review should evaluate how the proposal could affect deal planning and consider whether to submit comments before the rulemaking closes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
