OCC Reinstates Streamlined Bank Merger Review Process – Corporate and Company Law
On May 8, 2025, the Office of the Comptroller of the Currency
(OCC) issued an interim final rule (the Interim Final Rule),
rescinding its prior changes to the bank merger review process
under the Bank Merger Act.1 The Interim Final Rule
reinstates expedited review procedures and a streamlined
application form for bank mergers that had previously been removed
by a 2024 OCC rule (the 2024 Final Rule),2 and it also
rescinds a policy statement issued by the OCC in 2024 that provided
details on how the agency evaluates proposed bank mergers.
Background
The Bank Merger Act (12 U.S.C. § 1828(c)) requires federal
banking agencies to assess specific statutory factors when
reviewing proposed mergers involving insured depository
institutions. In September 2024, the OCC eliminated its expedited
review process, streamlined applications for certain low-risk
transactions, and introduced a detailed policy statement describing
how it interpreted Bank Merger Act factors and handled public
input. Those changes took effect January 1, 2025.
Reinstatement of Expedited Review Procedures and the
Streamlined Application Form
The Interim Final Rule reinstates an “expedited
review” for two categories of transactions: “business
reorganizations” and “streamlined applications.”
Under the expedited review provision, a filing is deemed approved
on the 15th day after the close of the comment period, unless the
filing is ineligible for expedited review (and the OCC has informed
the filer of such) or the review period is extended pursuant to 12
CFR § 5.13(a)(2).3 By reintroducing faster review
processes, the OCC intends to focus the OCC’s efforts on
applications that are novel, complex, or could pose risks to the
institutions involved.4
A business reorganization can be a combination of eligible
banks, savings associations, or depository institutions that are
controlled by the same holding company5 or a combination
between an eligible bank or savings association and an interim
institution in which investors exchange their shares of the
eligible institution for those of a newly formed holding
company.6
Transactions eligible for streamlined applications are those
that meet one of the following categories:
Withdrawal of Policy Statement
The OCC also withdrew a policy statement included in the 2024
Final Rule in order to “provide insured depository
institutions and the public with a better understanding of how the
OCC considers certain statutory factors” under the Bank Merger
Act.12 However, in its May 8 Interim Final Rule, the OCC
wrote that the policy statement “generated confusion and
generally did not succeed in providing additional clarity to banks
or the public.”13 Comments on the Interim Final
Rule are due 30 days after its publication in the Federal Register,
and the OCC will consider issuing a new policy statement after
reviewing any comments submitted.
Takeaways
The OCC’s rescission of the 2024 Final Rule is another
example of the swift repudiation of Biden-era financial regulatory
actions across the federal banking agencies that Steptoe has followed closely. The Interim Final Rule may
substantially reduce regulatory friction for routine bank mergers
and internal reorganizations. Financial institutions should
consider the following:
- Renewed Opportunity for Strategic
Combinations: Transactions previously deemed too
burdensome may now proceed under the expedited framework.
Institutions considering intra-holding company mergers or
acquisitions of small institutions may benefit immediately. - Prefiling Communications Remain Key:
Institutions should continue engaging in prefiling discussions with
the appropriate OCC licensing office to confirm eligibility for
streamlined treatment, particularly in less conventional
transactions. - Reduced Public Scrutiny: By rescinding the
policy statement, the OCC downplays the previously emphasized role
of managerial assessment factors in routine mergers. This may
decrease both internal documentation and public opposition
risk.
On May 7, the Senate approved a joint resolution under the Congressional
Review Act that would disapprove of the 2024 Final Rule. The
measure is now pending consideration by the House of
Representatives; it is unclear if the House will take up the
measure or if Congress will take the view that the OCC’s action
settles the matter. Under the Congressional Review Act, a rule that
is disapproved (by a joint resolution approved by the House and
Senate and signed by the President) may not be reissued in
“substantially the same form” unless doing so is
authorized by a law enacted after the date of the joint resolution
disapproving the rule.14 Thus, notwithstanding the
OCC’s current position, its ability to regulate this area of
conduct may be constrained if the House and President Trump also
approve the joint resolution.
Footnotes
1 Office of the Comptroller of the Currency, OCC
Issues Interim Final Rule on Bank Mergers, News Release
2025-44 (May 8, 2025)
2 The expedited review procedures and streamlined
application rule provisions were located at 12 CFR §§
5.33(i) and 5.33(j), respectively, and will be restored at those
locations by the Interim Final Rule. The 2024 rule removing them
was published at 89 Fed. Reg. 78,207 (Sep. 25, 2024).
3 Interim Final Rule at 17-18.
4 Id. at 7.
5An “eligible” institution is one that meets
certain criteria (capitalization, CAMELS rating, etc.) described at
12 CFR § 5.3.
6 See Interim Final Rule at 17.
7 “Eligible” as defined at 12 CFR §
5.3.
8 As reported in each institution’s Consolidated
Report of Condition and Income filed for the quarter immediately
prior to the filing of the application.
9 As reported in each institution’s Consolidated
Report of Condition and Income filed for the quarter immediately
prior to the filing of the application.
10 A merger of a national bank with its nonbank
affiliates resulting in a national bank. See 12 CFR §
5.33(g)(4).
11 As reported in each institution’s Consolidated
Report of Condition and Income filed for the quarter immediately
prior to the filing of the application.
12 89 CFR 78,218 (Sep. 25, 2024).
13 Interim Final Rule at 9.
14 5 U.S.C. § 801(b)(2).
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.
link
