On September 17, the FDIC Board approved its Final Statement of Policy on Bank Merger Transactions (SOP), updating the guidelines for evaluating bank mergers. The OCC recently released its final rule on the BMA to provide clearer guidelines for institutions to align the regulatory framework with current processes (covered by InfoBytes here). The FDIC’s final SOP addressed the scope of transactions requiring the FDIC’s approval, the process for evaluating merger applications, and the principles that guide the FDIC’s consideration of the applicable statutory factors as set forth in the BMA.
The final SOP updated the FDIC’s procedures for evaluating bank merger applications. The BMA prohibits a bank from engaging in a merger without regulatory approval. The SOP emphasized the importance of pre-filing meetings, complete applications and public feedback, including by providing those bank transactions of $50 billion or more in total assets be “subject to public meetings,” and $100 billion or more be “subject to added scrutiny” regarding impact on U.S. financial stability. It also retained the FDIC’s authority to deny any merger application or act on applications where statutory factors are not favorably resolved.
Additionally, the SOP outlined circumstances that could lead to unfavorable findings, such as non-compliance with regulations or unsafe conditions, while also clarifying that in some situations, mergers may result in less financial risk than the institutions would pose individually. Furthermore, the SOP communicated the FDIC’s expectation that mergers will result in a better ability of the resulting IDI to meet community needs.
The SOP addressed the adjudication process for merger applications, emphasizing the importance of public feedback and the FDIC’s independent analysis of competitive factors. Additionally, the SOP included provisions for evaluating interstate mergers, non-bank mergers, and mergers with operating non-insured entities, ensuring these mergers would receive a comprehensive review.
