# FDIC FIL-11-2022: FDIC Request for Information on Bank Merger Act

> Federal · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/FDIC_FIL22011

## Section

- **Citation:** FDIC FIL-11-2022
- **Heading:** FDIC Request for Information on Bank Merger Act
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** FDIC Financial Institution Letters / FDIC Request for Information on Bank Merger Act

## Text

This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules
Federal Register
18740
Vol. 87, No. 62
Thursday, March 31, 2022
1 Bank Merger Act, Public Law 86–463, 72 Stat.
129 (1960); Bank Merger Act Amendments of 1966,
Public Law 89–356, 80 Stat. 7 (codified as amended
at 12 U.S.C. 1828(c)(2018)), available at fdic.gov/
regulations/laws/rules/1000-2000.html#
1000sec.18c.
2 Prior to the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, Public Law 103–
328 (the Riegle-Neal Act of 1994), many states did
not permit intra-state branching and interstate
branch branching was not permitted. Following the
passage of the Riegle-Neal Act of 1994, many bank
holding companies chose to consolidate existing
bank charters.
3 See Financial Stability Board, 2020 list of global
systemic important banks, available at https://
www.fsb.org/wp-content/uploads/P111120.pdf.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 303
RIN 3064–ZA31
Request for Information and Comment
on Rules, Regulations, Guidance, and
Statements of Policy Regarding Bank
Merger Transactions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Request for information and
comment.
SUMMARY: The FDIC is soliciting
comments from interested parties
regarding the application of the laws,
practices, rules, regulations, guidance,
and statements of policy (together,
regulatory framework) that apply to
merger transactions involving one or
more insured depository institution,
including the merger between an
insured depository institution and a
noninsured institution. The FDIC is
interested in receiving comments
regarding the effectiveness of the
existing framework in meeting the
requirements of section 18(c) of the
Federal Deposit Insurance Act (known
as the Bank Merger Act)
t apply to
merger transactions involving one or
more insured depository institution,
including the merger between an
insured depository institution and a
noninsured institution. The FDIC is
interested in receiving comments
regarding the effectiveness of the
existing framework in meeting the
requirements of section 18(c) of the
Federal Deposit Insurance Act (known
as the Bank Merger Act).
DATES: Comments must be received by
May 31, 2022.
ADDRESSES: Commenters are encouraged
to use the title ‘‘Request for Comment
on Rules, Regulations, Guidance, and
Statement of Policy on Bank Merger
Transactions (RIN 3064–ZA31)’’ and to
identify the number of the specific
question(s) for comment to which they
are responding. Please send comments
by one method only directed to:
• Agency Website: https://
www.fdic.gov/resources/regulations/
federal-register-publications/. Follow
the instructions for submitting
comments on the agency’s website.
• Email: Comments@fdic.gov. Include
RIN 3064–ZA31 in the subject line of
the message.
• Mail: James P. Sheesley, Assistant
Executive Secretary, Attention:
Comments—RIN 3064–ZA31, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivery/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
NW building (located on F Street NW)
on business days between 7:00 a.m. and
5:00 p.m. ET.
Public Inspection: All comments
received will be posted without change
to https://www.fdic.gov/resources/
regulations/federal-register-
publications/—including any personal
information provided—for public
inspection. Paper copies of public
comments may be ordered from the
FDIC Public Information Center, 3501
North Fairfax Drive, Room E–1002,
Arlington, VA 22226, or by telephone at
877–275–3342 or 703–562–2200
comments
received will be posted without change
to https://www.fdic.gov/resources/
regulations/federal-register-
publications/—including any personal
information provided—for public
inspection. Paper copies of public
comments may be ordered from the
FDIC Public Information Center, 3501
North Fairfax Drive, Room E–1002,
Arlington, VA 22226, or by telephone at
877–275–3342 or 703–562–2200.
FOR FURTHER INFORMATION CONTACT: Rae-
Ann Miller, Senior Deputy Director,
Supervisory Examinations and Policy,
Division of Risk Management
Supervision, 202–898–3898, rmiller@
fdic.gov; or Ashby G. Hilsman, Assistant
General Counsel, Bank Activities and
Regional Affairs Section, Supervision,
Legislation and Enforcement Branch,
Legal Division, 202–898–6636,
ahilsman@fdic.gov.
SUPPLEMENTARY INFORMATION:
Background Information
Significant changes over the past
several decades in the banking industry
and financial system necessitate a
review of the regulatory framework that
applies to bank merger transactions
involving one or more insured
depository institutions pursuant to the
Bank Merger Act.1 First, more than three
decades of consolidation and growth in
the banking industry have significantly
reduced the number of smaller banking
organizations and increased the number
of large and systemically-important
banking organizations. Second, the FDIC
has a responsibility to promote public
confidence in the banking system,
maintain financial stability, review
proposed mergers, and resolve failing
large insured depository institutions.
Third, the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) amended the Bank
Merger Act to include, for the first time,
a financial stability factor. Fourth, and
finally, a recent Executive Order
instructed U.S. agencies to consider the
impact that consolidation may have on
maintaining a competitive marketplace
olve failing
large insured depository institutions.
Third, the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) amended the Bank
Merger Act to include, for the first time,
a financial stability factor. Fourth, and
finally, a recent Executive Order
instructed U.S. agencies to consider the
impact that consolidation may have on
maintaining a competitive marketplace.
Thus, the FDIC has determined that it is
both timely and appropriate to review
the regulatory framework and consider
whether updates or other changes are
warranted.
Consolidation in the Banking Sector
The banking sector has experienced a
significant amount of consolidation over
the last 30 years as shown in Tables 1
through 3. This period of consolidation,
fueled in large part by mergers and
acquisitions, has contributed to the
significant growth of the number of
large insured depository institutions,
especially insured depository
institutions with total assets of $100
billion or more.
In 1990, there was only one insured
depository institution with assets
greater than $100 billion; however, that
number had increased to 33 by 2020.2
Of these 33 insured depository
institutions with assets greater than
$100 billion, nine were owned by the
eight U.S. bank holding companies
designated as Global Systemically
Important Banks (U.S. GSIBs), and three
were owned by foreign banking
organizations designated as foreign
Global Systemically Important Banks
(foreign GSIBs).3 While insured
depository institutions with total assets
of more than $100 billion comprise less
than one percent of the total number of
insured depository institutions, they
hold about 70 percent of total industry
assets and 66 percent of domestic
deposits.
Consolidation also has contributed to
the economic landscape of insured
depository institutions with assets less
than $100 billion
While insured
depository institutions with total assets
of more than $100 billion comprise less
than one percent of the total number of
insured depository institutions, they
hold about 70 percent of total industry
assets and 66 percent of domestic
deposits.
Consolidation also has contributed to
the economic landscape of insured
depository institutions with assets less
than $100 billion. Over the same 30-year
period, the number of institutions with
assets less than $10 billion has declined
from 15,099 in 1990 to 4,851 in 2020,
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4 Based on Thrift Financial Reports (TFR) and
Consolidated Reports of Condition and Income (Call
Report) between 1990 and 2005, the number of
institutions with assets less than $10 billion
declined from 15,099 to 8,715, before falling to
4,851 in 2020. Over the same time period, the
percentage of industry assets held by those banks
declined from 66.4 percent in 1990 to 26.1 percent
in 2005, and then to 14.8 percent in 2020. Similarly,
the percentage of domestic deposits held by those
institutions declined from 73.9 percent in 1990 to
34.2 percent in 2005, and then to 15.4 percent in
2020.
5 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, section 604(f),
124 Stat. 1376, 1602 (2010) (codified as 12 U.S.C.
1828(c)(5) (2018)), available at https://
www.govinfo.gov/app/details/PLAW-111publ203.
6 See Federal Reserve Board and FDIC joint final
rules: Resolution Plans Required, 76 FR 67323,
(Nov. 1, 2011), available at https://
www.govinfo.gov/content/pkg/FR-2011-11-01/pdf/
2011-27377.pdf, and Tailored Resolution Plan
Requirements, 80 FR 59194, (Nov. 1, 2019),
available at https://www.govinfo.gov/content/pkg/
FR-2019-11-01/pdf/2019-23967.pdf
.govinfo.gov/app/details/PLAW-111publ203.
6 See Federal Reserve Board and FDIC joint final
rules: Resolution Plans Required, 76 FR 67323,
(Nov. 1, 2011), available at https://
www.govinfo.gov/content/pkg/FR-2011-11-01/pdf/
2011-27377.pdf, and Tailored Resolution Plan
Requirements, 80 FR 59194, (Nov. 1, 2019),
available at https://www.govinfo.gov/content/pkg/
FR-2019-11-01/pdf/2019-23967.pdf. See also, FDIC
final rule, Certain Orderly Liquidation Authority
Provisions under Title II of the Dodd Frank Wall
Street Reform and Consumer Protection Act, 76 FR
41626, (July 15, 2011), available at https://
www.govinfo.gov/content/pkg/FR-2011-07-15/pdf/
2011-17397.pdf.
7 Although the FDIC has developed a framework
of systemic resolution regulations, strategies, and
policies and procedures to operationalize its
authority to handle the orderly failure of a GSIB or
other systemically important financial company
under Title II of the Dodd-Frank Act, such a failure
would present additional risks for the FDIC and
could, depending on the circumstances, also
involve failure of a large insured depository
institution.
a reduction of approximately 68
percent.4 The declining number of
smaller insured depository institutions
may limit access to financial services
and credit in communities, potentially
adversely affecting the welfare of the
communities’ workers, farmers, small
businesses, startups, and consumers.
Over this same period, the number of
insured depository institutions with
assets between $10 billion and $100
billion has doubled from 59 in 1990 to
118 in 2020. However, the percentage of
total industry assets held by all insured
depository institutions with assets less
than $100 billion declined by 68 percent
and their percentage of insured deposits
held declined by approximately 70
percent.
Several insured depository
institutions with assets less than $100
billion were owned by either a U.S.
GSIB or a foreign GSIB
m 59 in 1990 to
118 in 2020. However, the percentage of
total industry assets held by all insured
depository institutions with assets less
than $100 billion declined by 68 percent
and their percentage of insured deposits
held declined by approximately 70
percent.
Several insured depository
institutions with assets less than $100
billion were owned by either a U.S.
GSIB or a foreign GSIB. For example, 12
insured depository institutions with
assets less than $10 billion were owned
by GSIBs, with six owned by U.S.
GSIBs, and six owned by foreign GSIBs.
Further, 11 insured depository
institutions with assets between $10
billion to $100 billion were owned by
GSIBs, with four owned by U.S. GSIBs,
and seven owned by foreign GSIBs.
TABLE 1—NUMBER OF INSURED DE-
POSITORY INSTITUTIONS
BY ASSET
SIZE
Asset size
Year
1990
2005
2020
$10B–$50B .............
52
86
102
$50B–$100B ...........
7
21
16
$100B–$250B .........
1
5
20
$250B–$500B .........
0
3
8
$500B–$700B .........
0
0
1
≥$700B ...................
0
3
4
Source: TFR and Call Reports.
TABLE 2—PERCENTAGE OF INDUSTRY
ASSETS HELD BY INSURED DEPOSI-
TORY INSTITUTIONS BY ASSET SIZE
Asset size
Year
1990
(%)
2005
(%)
2020
(%)
$10B–$50B .............
20.2
16.7
10.5
$50B–$100B ...........
10.0
13.1
5.3
$100B–$250B .........
3.4
7.2
13.3
$250B–$500B .........
0.0
11.1
13.9
$500B–$700B .........
0.0
0.0
2.5
≥$700B ...................
0.0
25.8
39.8
Source: TFR and Call Report.
TABLE 3—PERCENTAGE OF DOMESTIC
DEPOSITS HELD BY INSURED DEPOS-
ITORY INSTITUTIONS BY ASSET SIZE
Asset size
Year
1990
(%)
2005
(%)
2020
(%)
$10B–$50B .............
18.5
16.6
11.4
$50B–$100B ...........
6.4
12.2
5.9
$100B–$250B .........
1.2
6.4
13.9
$250B–$500B .........
0.0
12.8
14.3
$500B–$700B .........
0.0
0.0
2.6
≥$700B ...................
0.0
17.8
35.5
Source: TFR and Call Report
AGE OF DOMESTIC
DEPOSITS HELD BY INSURED DEPOS-
ITORY INSTITUTIONS BY ASSET SIZE
Asset size
Year
1990
(%)
2005
(%)
2020
(%)
$10B–$50B .............
18.5
16.6
11.4
$50B–$100B ...........
6.4
12.2
5.9
$100B–$250B .........
1.2
6.4
13.9
$250B–$500B .........
0.0
12.8
14.3
$500B–$700B .........
0.0
0.0
2.6
≥$700B ...................
0.0
17.8
35.5
Source: TFR and Call Report.
The Financial Stability Factor in the
Bank Merger Act and Large Bank
Resolution
The Dodd-Frank Act made a number
of statutory changes aimed at addressing
the risks posed by the largest banks,
including an amendment to the Bank
Merger Act requiring consideration of
the risk posed to the stability of the
United States banking or financial
system of a proposed bank merger.5 To
date, from a financial stability
perspective, efforts to improve the
resolvability of large banks have focused
on GSIBs.6 As shown above, given the
increased number, size, and complexity
of non-GSIB large banks, however, a
reconsideration by the FDIC of the
framework for assessing the financial
stability prong of the BMA and focused
attention on the financial stability risks
that could arise from a merger involving
a large bank is warranted.
In particular, the failure of a large
insured depository institution would
present significant challenges to the
FDIC’s resolutions and receivership
functions and could present a threat to
the financial stability of the United
States. Insured depository institutions
are resolved under the Federal Deposit
Insurance Act. For various reasons,
including their size, sources of funding,
and other organizational complexities,
the resolution of large insured
depository institutions can present great
risk to the Deposit Insurance Fund, as
well as extraordinary operational risk
for the FDIC
ncial stability of the United
States. Insured depository institutions
are resolved under the Federal Deposit
Insurance Act. For various reasons,
including their size, sources of funding,
and other organizational complexities,
the resolution of large insured
depository institutions can present great
risk to the Deposit Insurance Fund, as
well as extraordinary operational risk
for the FDIC. In addition, as a practical
matter, the size of an insured depository
institution may limit the resolution
options available to the FDIC in the
event of failure.7
In recent history, including the global
financial crisis that began in 2008, the
most common resolution transactions
have involved a purchase and
assumption transaction where an
acquiring institution takes all or a
substantial part of the failed insured
depository institution. For example,
between 2008 and 2013, there were a
total of 489 bank failures, of which 463,
or approximately 95 percent, were
resolved by the FDIC through purchase
and assumption transactions.
While most of these purchase and
assumption resolution transactions were
for insured depository institutions with
assets under $10 billion, the largest
purchase and assumption transaction
completed by the FDIC was that of
Washington Mutual Bank, which failed
on September 25, 2008, with assets of
approximately $307 billion. However,
that transaction resulted in a larger and
more complex acquirer (JPMorgan Chase
& Co.), and the need for the resolution
heightened financial turmoil and
contributed to concerns about the safety
of the financial system
and assumption transaction
completed by the FDIC was that of
Washington Mutual Bank, which failed
on September 25, 2008, with assets of
approximately $307 billion. However,
that transaction resulted in a larger and
more complex acquirer (JPMorgan Chase
& Co.), and the need for the resolution
heightened financial turmoil and
contributed to concerns about the safety
of the financial system. As a result of
the systemic concerns arising from the
resolution of Washington Mutual Bank,
when Wachovia Bank required
resolution days later, the FDIC, the
Board of Governors of the Federal
Reserve System (Board), and the
Secretary of the Treasury invoked the
systemic risk exception (SRE) to allow
the acquisition of Wachovia by another
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8 While the systemic risk exception was
approved, Wachovia Corporation was ultimately
acquired by Wells Fargo & Company on an open-
institution basis without FDIC assistance. See FDIC,
Crisis and Response: An FDIC History, 2008–2013,
available at http://www.fdic.gov/bank/historical/
crisis/.
9 See https://www.whitehouse.gov/briefing-room/
presidential-actions/2021/07/09/executive-order-
on-promoting-competition-in-the-american-
economy/and https://whitehouse.gov/briefing-
room/statements-releases/2021/07/09/fact-sheet-
executive-order-on-promoting-competition-in-the-
american-economy/.
10 Bank Merger Act, Public Law 86–463, 72 Stat.
129 (1960); Bank Merger Act Amendments of 1966,
Public Law 89–356, 80 Stat. 7 (codified as amended
at 12 U.S.C. 1828(c)(2018)), available at fdic.gov/
regulations/laws/rules/1000-2000.html#
1000sec.18c
//whitehouse.gov/briefing-
room/statements-releases/2021/07/09/fact-sheet-
executive-order-on-promoting-competition-in-the-
american-economy/.
10 Bank Merger Act, Public Law 86–463, 72 Stat.
129 (1960); Bank Merger Act Amendments of 1966,
Public Law 89–356, 80 Stat. 7 (codified as amended
at 12 U.S.C. 1828(c)(2018)), available at fdic.gov/
regulations/laws/rules/1000-2000.html#
1000sec.18c.
11 Pursuant to Title III of the Dodd–Frank Act, all
functions of Office of Thrift Supervision relating to
federal savings associations were transferred to the
OCC, and all functions of the OTS relating to state
savings associations were transferred to the FDIC.
12 12 U.S.C. 1828(c)(1) and (2). For an uninsured
national bank, OCC approval of the bank’s
application under 12 CFR 5.33 is also required.
13 12 U.S.C. 1828(c)(3)–(5) and 1828(c)(11).
14 All things being equal, the number of
competitors in the market for banking products and
services can be affected by two different types of
transactions: Unaffiliated depository institutions
can merge with each other; or depository
institutions can be acquired by unaffiliated
companies that already own one or more depository
institutions. Companies that own or and control
depository institutions are commonly known as
depository institution holding companies and may
either be bank holding companies or savings and
loan holding companies. Depository institution
holding companies are regulated by the Board. Bank
holding companies are subject to the BHCA (for
companies owning state and national banks, see 12
U.S.C. 1841 et. seq.), and savings and loan holding
companies are subject to the HOLA (for companies
owning savings associations, see 12 U.S.C. 1461 et.
seq.). It has been through the acquisition of
depository institutions by existing depository
institution holding companies, or the merger of
these holding companies, that a number of
depository institutions have come under the
common control. The Board, in consultation with
the U.S
holding
companies are subject to the HOLA (for companies
owning savings associations, see 12 U.S.C. 1461 et.
seq.). It has been through the acquisition of
depository institutions by existing depository
institution holding companies, or the merger of
these holding companies, that a number of
depository institutions have come under the
common control. The Board, in consultation with
the U.S. Department of Justice (DOJ), analyzes the
competitive impact of these acquisitions under
standards similar to those applicable under the
Bank Merger Act. For example, when depository
institutions under common control merge, the DOJ
and the federal banking agencies have determined
that these mergers of affiliates are competitively
neutral. Competitive analysis under the Bank
Merger Act takes place when unaffiliated
depository institutions merge and is performed by
the responsible agency.
15 12 U.S.C. 1828(c)(5)(B).
16 12 U.S.C. 1828(c)(13)(A).
17 Id.
18 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, sec. 604(f), 124
Stat. 1376, 1602 (2010) (codified as 12 U.S.C.
1828(c)(5) (2018)), available at https://
www.govinfo.gov/app/details/PLAW-111publ203.
large insured depository institution. At
the time that the SRE was granted—the
first-ever use of the SRE—Wachovia had
total holding company assets of
approximately $800 billion.8
Recent Executive Order
Additionally, on July 9, 2021, the
President signed an Executive Order on
Promoting Competition in the American
Economy (Executive Order).9 This
Executive Order, in part, instructs U.S.
agencies to consider the impact that
consolidation may have on maintaining
a fair, open, and competitive
marketplace, and on the welfare of
workers, farmers, small businesses,
startups, and consumers
der
Additionally, on July 9, 2021, the
President signed an Executive Order on
Promoting Competition in the American
Economy (Executive Order).9 This
Executive Order, in part, instructs U.S.
agencies to consider the impact that
consolidation may have on maintaining
a fair, open, and competitive
marketplace, and on the welfare of
workers, farmers, small businesses,
startups, and consumers. With respect
to the banking sector specifically, the
Executive Order directs the Attorney
General, in consultation with the
Chairman of the Board of Governors of
the Federal Reserve System, the
Chairperson of the Board of Directors of
the Federal Deposit Insurance
Corporation, and the Comptroller of the
Currency, to adopt a plan for the
revitalization of merger oversight under
the Bank Merger Act and the Bank
Holding Company Act (BHCA).
Conclusion
In light of the significant
consolidation in the banking industry
over the past three decades, the federal
banking agencies requirement to
consider financial stability risk under
the BMA, the FDIC’s responsibilities for
the resolution of large insured
depository institutions, and the
Executive Order, the FDIC is soliciting
comments from interested parties
regarding the rules, regulations,
guidance, and statements of policy
(together, regulatory framework) that
apply to bank merger transactions
involving one or more insured
depository institutions. The FDIC is
interested in receiving comments
regarding the effectiveness of the
existing regulatory framework in
meeting the requirements of the Bank
Merger Act
comments from interested parties
regarding the rules, regulations,
guidance, and statements of policy
(together, regulatory framework) that
apply to bank merger transactions
involving one or more insured
depository institutions. The FDIC is
interested in receiving comments
regarding the effectiveness of the
existing regulatory framework in
meeting the requirements of the Bank
Merger Act.
Bank Merger Act Overview
The Bank Merger Act established a
framework that required, in general,
consent of the responsible agency prior
to a merger.10 With respect to merger
transactions solely involving insured
depository institutions, the responsible
agency is the FDIC if the resulting
institution is a state nonmember bank or
state savings association, the Federal
Reserve Board if the resulting institution
is a state member bank, and the Office
of the Comptroller of the Currency
(OCC) if the resulting institution is a
national bank or federal savings
association.11 With respect to any
merger transaction involving an insured
depository institution and a noninsured
institution, the FDIC is the responsible
agency notwithstanding the charter of
the insured depository institution.12
In addition, the Bank Merger Act
generally requires that, prior to
approving any merger, the responsible
agency must (a) ensure that notice of a
proposed transaction be published; (b)
request a report on competitive factors
from the Attorney General of the United
States for merger transactions involving
nonaffiliates; (c) not approve any
proposed merger that would result in a
monopoly or produce substantial
anticompetitive effects; and (d) consider
certain additional factors, including the
financial and managerial resources and
future prospects of the existing and
proposed institutions, the convenience
and needs of the community to be
served, the risk to the stability of the
United States banking or financial
system, and the effectiveness of any
insured depository institution involved
in the merger at
tive effects; and (d) consider
certain additional factors, including the
financial and managerial resources and
future prospects of the existing and
proposed institutions, the convenience
and needs of the community to be
served, the risk to the stability of the
United States banking or financial
system, and the effectiveness of any
insured depository institution involved
in the merger at combatting money
laundering.13
When assessing the potential
anticompetitive effects of the proposed
merger, the responsible agency is
required to consider whether the merger
would substantially lessen competition,
tend to create a monopoly, or otherwise
be in restraint of trade.14 In no case may
the responsible agency approve a merger
transaction that would result in a
monopoly, and the responsible agency
may not approve any merger that
exhibits anticompetitive effects unless
the responsible agency determines ‘‘that
the anticompetitive effects of the
proposed transaction are clearly
outweighed in the public interest by the
probable effect of the transaction in
meeting the convenience and needs of
the community to be served.’’ 15 Further,
the responsible agency may not approve
an application for an interstate merger
transaction if the resulting insured
depository institution would control
more than 10 percent of the total
amount of deposits of insured
depository institutions in the United
States.16
In addition to consideration of
anticompetitive effects, the Bank Merger
Act requires that: ‘‘In every case,
[emphasis added] the responsible
agency shall take into consideration the
financial and managerial resources and
future prospect of the existing and
proposed institutions, the convenience
and needs of the community to be
served, and the risk to the stability of
the United States banking or financial
system.’’ 17 The latter condition—that
the responsible agency consider
financial stability—was added in 2010
by section 604(f) of the Dodd-Frank
Act.18
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agerial resources and
future prospect of the existing and
proposed institutions, the convenience
and needs of the community to be
served, and the risk to the stability of
the United States banking or financial
system.’’ 17 The latter condition—that
the responsible agency consider
financial stability—was added in 2010
by section 604(f) of the Dodd-Frank
Act.18
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19 12 CFR part 303, available at https://
www.fdic.gov/regulations/laws/rules/2000-
250.html.
20 12 CFR 5.33, available at https://www.ecfr.gov/
current/title-12/chapter-I/part-5.
21 See 12 CFR 303.1–303.19.
22 See 12 CFR 303.60–303.65.
23 63 FR 44762, August 20, 1998, effective
October 1, 1998; amended at 67 FR 48178, July 23,
2002; 67 FR 79278, December 27, 2002; and 73 FR
8871, February 15, 2008, available at https://
www.fdic.gov/regulations/laws/rules/5000-
1200.html.
24 The FDIC’s Application Procedures Manual
provides a non-exhaustive list of quantitative
metrics, as well as qualitative factors, to be
considered when evaluating the financial stability
factor. FDIC Application Procedures Manual:
Mergers, available at https://www.fdic.gov/
regulations/applications/resources/apps-proc-
manual/section-04-mergers.pdf.
25 See, e.g., OCC Conditional Approval No. 1031
(April 6, 2012). See also the ‘‘Business
Combinations’’ booklet of the Comptroller’s
Licensing Manual, available at https://occ.gov/
publications-and-resources/publications/
comptrollers-licensing-manual/files/bizcombo.pdf.
26 In September 2020, DOJ sought comment on
whether to revise the Guidelines or its competitive
analysis of bank mergers. See https://
www.justice.gov/opa/pr/antitrust-division-seeks-
public-comments-updating-bank-merger-review-
analysis
e Comptroller’s
Licensing Manual, available at https://occ.gov/
publications-and-resources/publications/
comptrollers-licensing-manual/files/bizcombo.pdf.
26 In September 2020, DOJ sought comment on
whether to revise the Guidelines or its competitive
analysis of bank mergers. See https://
www.justice.gov/opa/pr/antitrust-division-seeks-
public-comments-updating-bank-merger-review-
analysis.
27 Available at http://justice.gov/atr/bank-merger-
competitive-review-introduction-and-overview-
1995.
28 The HHI is a statistical measure of market
concentration and is also used as the principal
measure of market concentration in the Department
of Justice’s Merger Guidelines. The HHI for a given
market is calculated by squaring each individual
competitor’s share of total deposits within the
market and then summing the squared market share
products. For example, the HHI for a market with
a single competitor would be: 1002 = 10,000: for a
market with five equal competitors with equal
market shares, the HHI would be: 202 + 202 + 202
+ 202 + 202 = 2,000.
29 Section 2 of the Interagency Guidelines,
available at www.justice.gov/atr/bank-merger-
competitive-review-introduction-and-overview-
1995.
FDIC and OCC Regulations and
Statement of Policy Regarding Bank
Mergers
The requirements of the Bank Merger
Act are incorporated into 12 CFR part
303 of the FDIC’s regulations 19 and into
the OCC’s regulations at 12 CFR 5.33.20
In the FDIC’s regulations, subpart A of
12 CFR part 303 provides regulations
that are generally applicable for all
filings and includes general filing
procedures, computation of time, the
effect of Community Reinvestment Act
(CRA) performance on filing, and the
administrative procedures associated
with a filing.21 Subpart D of 12 CFR part
303 provides regulations specifically
pertaining to mergers involving an
insured depository institution and
includes definitions, transactions
requiring prior approval, filing
procedures, expedited and standard
processing procedure
the
effect of Community Reinvestment Act
(CRA) performance on filing, and the
administrative procedures associated
with a filing.21 Subpart D of 12 CFR part
303 provides regulations specifically
pertaining to mergers involving an
insured depository institution and
includes definitions, transactions
requiring prior approval, filing
procedures, expedited and standard
processing procedures, and public
notice requirements.22 Additional
guidance on the FDIC’s processing of
merger transactions is set forth in the
FDIC Statement of Policy on Bank
Merger Transactions (FDIC Policy
Statement).23
For those transactions requiring FDIC
approval, the FDIC Statement of Policy
describes the four factors that the FDIC
will consider in its review: Competitive
factors, prudential factors, convenience
and needs factor, and anti-money
laundering record. The FDIC Policy
Statement also describes related
considerations such as those related to
interstate bank merger transactions,
interim merger transactions, branch
closings, legal fees and other expenses,
and trade names. The FDIC Policy
Statement, however, does not address
the financial stability provisions added
to the Bank Merger Act under section
604(f) of the Dodd-Frank Act.24
The OCC’s regulation, at 12 CFR 5.33,
provides a framework for evaluating
mergers, which includes the
consideration of the risk to financial
stability. 12 CFR 5.33 generally
addresses business combinations
involving a national bank or federal
savings association. Section 5.33(c)
covers the licensing requirements for
business combinations. The factors the
OCC considers in all business
combinations, including business
combinations under the BMA, are set
forth in § 5.33(e)(1)(i), and
§§ 5.33(e)(1)(ii) & (iii) provide the
additional factors that the OCC
considers for business combinations
under the Bank Merger Act
ank or federal
savings association. Section 5.33(c)
covers the licensing requirements for
business combinations. The factors the
OCC considers in all business
combinations, including business
combinations under the BMA, are set
forth in § 5.33(e)(1)(i), and
§§ 5.33(e)(1)(ii) & (iii) provide the
additional factors that the OCC
considers for business combinations
under the Bank Merger Act.
When considering the risk to the
stability of the banking or financial
system pursuant to a BMA application,
the OCC considers six factors: (1)
Whether the proposed transaction
would result in a material increase in
risks to financial system stability due to
an increase in size of the combining
institutions; (2) whether the transaction
would result in a reduction in the
availability of substitute providers for
the services offered by the combining
institutions; (3) whether the combined
institution would engage in any
business activities or participate in
markets in a manner that, in the event
of financial distress of the combined
institution, would cause significant
risks to other institutions; (4) whether
the transaction would materially
increase the extent to which the
combining institutions contribute to the
complexity of the financial system; (5)
whether the transaction would
materially increase the extent of cross-
border activities of the combining
institutions; and (6) whether the
transaction would increase the relative
degree of difficulty of resolving or
winding up the combined institution.25
1995 Bank Merger Competitive Review
Guidelines 26
In order to expedite the competitive
review process required by the BHCA,
Home Owners Loan Act (HOLA), and
the Bank Merger Act, and to reduce
regulatory burden, the DOJ, in
consultation with the federal banking
agencies, developed the 1995 Bank
Merger Competitive Review Guidelines
(Guidelines).27 The Guidelines state that
merger review will rely primarily on the
effects of competition in predefined
markets determined by the Board
process required by the BHCA,
Home Owners Loan Act (HOLA), and
the Bank Merger Act, and to reduce
regulatory burden, the DOJ, in
consultation with the federal banking
agencies, developed the 1995 Bank
Merger Competitive Review Guidelines
(Guidelines).27 The Guidelines state that
merger review will rely primarily on the
effects of competition in predefined
markets determined by the Board. To
the extent that the post-merger
Herfindahl-Hirschman Index (HHI) does
not exceed 1800 or increase by more
than 200, the federal banking agencies
generally are unlikely to review further
the competitive effects of the merger.28
However, the Guidelines provide that
the federal banking agencies may
examine a merger transaction in greater
detail if the federal banking agencies
believe additional scrutiny is necessary.
As part of this further examination
under the Guidelines, the federal
banking agencies may consider, among
other things, whether there is evidence
that (a) the merging parties do not
significantly compete with one another;
(b) rapid economic change has resulted
in an outdated geographic market
definition and an alternate market is
more appropriate; (c) market shares are
not an adequate indicator of the extent
of competition in the market; (d) a thrift
institution is actively engaged in
providing services to commercial
customers, particularly loans for
business startup or working capital
purposes and cash management
services; (e) a credit union has such
membership restrictions, or lack of
restrictions, and offers such services to
commercial customers that it should be
considered to be in the market; (f) there
is actual competition by out-of-market
institutions for commercial customers,
particularly competition for loans for
business startup or working capital
purposes; and (g) there is actual
competition by non-bank institutions for
commercial customers, particularly
competition for loans for business
startup or working capital purposes.29
Request for Comment
The
be in the market; (f) there
is actual competition by out-of-market
institutions for commercial customers,
particularly competition for loans for
business startup or working capital
purposes; and (g) there is actual
competition by non-bank institutions for
commercial customers, particularly
competition for loans for business
startup or working capital purposes.29
Request for Comment
The FDIC is seeking comment on all
aspects of the existing regulatory
framework that applies to bank merger
transactions. In responding to the
following questions, the FDIC asks that
commenters please include quantitative
as well as qualitative support for their
responses, as applicable.
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Federal Register / Vol. 87, No. 62 / Thursday, March 31, 2022 / Proposed Rules
Question 1. Does the existing
regulatory framework properly consider
all aspects of the Bank Merger Act as
currently codified in Section 18(c) of the
Federal Deposit Insurance Act?
Question 2. What, if any, additional
requirements or criteria should be
included in the existing regulatory
framework to address the financial
stability risk factor included by the
Dodd-Frank Act? Are there specific
quantitative or qualitative measures that
should be used to address financial
stability risk that may arise from bank
mergers? If so, are there specific
quantitative measures that would also
ensure greater clarity and
administrability? Should the FDIC
presume that any merger transaction
that results in a financial institution that
exceeds a predetermined asset size
threshold, for example $100 billion in
total consolidated assets, poses a
systemic risk concern?
Question 3
y risk that may arise from bank
mergers? If so, are there specific
quantitative measures that would also
ensure greater clarity and
administrability? Should the FDIC
presume that any merger transaction
that results in a financial institution that
exceeds a predetermined asset size
threshold, for example $100 billion in
total consolidated assets, poses a
systemic risk concern?
Question 3. To what extent should
prudential factors (for example, capital
levels, management quality, earnings,
etc.) be considered in acting on a merger
application? Should bright line
minimum standards for prudential
factors be established? If so, what
minimum standard(s) should be
established and for which prudential
factor(s)?
Question 4. To what extent should the
convenience and needs factor be
considered in acting on a merger
application? Is the convenience and
needs factor appropriately defined in
the existing framework? Is the reliance
on an insured depository institution’s
successful Community Reinvestment
Act performance evaluation record
sufficient? Are the convenience and
needs of all stakeholders appropriately
addressed in the existing regulatory
framework? To what extent and how
should the convenience and needs
factor take into consideration the impact
that branch closings and consolidations
may have on affected communities? To
what extent should the FDIC
differentiate its consideration of the
convenience and needs factor when
considering merger transactions
involving a large insured depository
institution and merger transactions
involving a small insured depository
institution? To what extent should the
CFPB be consulted by the FDIC when
considering the convenience and needs
factor and should that consultation be
formalized?
Question 5
differentiate its consideration of the
convenience and needs factor when
considering merger transactions
involving a large insured depository
institution and merger transactions
involving a small insured depository
institution? To what extent should the
CFPB be consulted by the FDIC when
considering the convenience and needs
factor and should that consultation be
formalized?
Question 5. In addition to the HHI, are
there other quantitative measures that
the federal banking agencies should
consider when reviewing a merger
application? If so, please describe the
measures and how such measures
should be considered in conjunction
with the HHI. To what extent should
such quantitative measures be
differentiated when considering mergers
involving a large insured depository
institution and mergers involving only
small insured depository institutions?
Question 6. How and to what extent
should the following factors be
considered in determining whether a
particular merger transaction creates a
monopoly or is otherwise
anticompetitive?
Please address the following factors:
(a) The merging parties do not
significantly compete with one another;
(b) Rapid economic change has
resulted in an outdated geographic
market definition and an alternate
market is more appropriate;
(c) Market shares are not an adequate
indicator of the extent of competition in
the market;
(d) A thrift institution is actively
engaged in providing services to
commercial customers, particularly
loans for business startup or working
capital purposes and cash management
services;
(e) A credit union has such
membership restrictions, or lack of
restrictions, and offers such services to
commercial customers that it should be
considered to be in the market;
(f) There is actual competition by out-
of-market institutions for commercial
customers, particularly competition for
loans for business startup or working
capital purposes; and
ses and cash management
services;
(e) A credit union has such
membership restrictions, or lack of
restrictions, and offers such services to
commercial customers that it should be
considered to be in the market;
(f) There is actual competition by out-
of-market institutions for commercial
customers, particularly competition for
loans for business startup or working
capital purposes; and
(g) There is actual competition by
non-bank institutions for commercial
customers, particularly competition for
loans for business startup or working
capital purposes. With respect to the
preceding factors, how and to what
extent should the activity of current
branches or pending branch
applications be considered?
Question 7. Does the existing
regulatory framework create an implicit
presumption of approval? If so, what
actions should the FDIC take to address
this implicit presumption?
Question 8. Does the existing
regulatory framework require an
appropriate burden of proof from the
merger applicant that the criteria of the
Bank Merger Act have been met? If not,
what modifications to the framework
would be appropriate with respect to
the burden of proof?
Question 9. The Bank Merger Act
provides an exception to its
requirements if the responsible agency
finds that it must act immediately in
order to prevent the probable failure of
one of the insured depository
institutions involved in the merger
transaction
Bank Merger Act have been met? If not,
what modifications to the framework
would be appropriate with respect to
the burden of proof?
Question 9. The Bank Merger Act
provides an exception to its
requirements if the responsible agency
finds that it must act immediately in
order to prevent the probable failure of
one of the insured depository
institutions involved in the merger
transaction. To what extent has this
exception proven beneficial or
detrimental to the bank resolution
process and to financial stability?
Should any requirements or controls be
put into place regarding the use of this
exemption, for example when
considering purchase and assumption
transactions in a large bank resolution?
Are there attributes of GSIB
resolvability, such as a Total Loss-
Absorbing Capacity (TLAC)
requirement, that could be put into
place that would facilitate the resolution
of a large insured depository institution
without resorting to a merger with
another large institution or a purchase
and assumption transaction with
another large institutions?
Question 10. To what extent would
responses to Questions 1–9 differ for the
consideration of merger transactions
involving a small insured depository
institution? Should the regulations and
policies of the FDIC be updated to
differentiate between merger
transactions involving a large insured
depository institution and those
involving a small insured depository
institution? If yes, please explain. How
should the FDIC define large insured
depository institutions for these
purposes?
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on December 6,
2021.
Harrel M. Pettway,
Executive Secretary.
Editorial note: This document was
received for publication by the Office of the
Federal Register on March 25, 2022.
[FR Doc. 2022–06720 Filed 3–30–22; 8:45 am]
BILLING CODE 6714–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No
rder of the Board of Directors.
Dated at Washington, DC, on December 6,
2021.
Harrel M. Pettway,
Executive Secretary.
Editorial note: This document was
received for publication by the Office of the
Federal Register on March 25, 2022.
[FR Doc. 2022–06720 Filed 3–30–22; 8:45 am]
BILLING CODE 6714–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2022–0382; Project
Identifier MCAI–2021–01452–T]
RIN 2120–AA64
Airworthiness Directives; Airbus SAS
Airplanes
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
SUMMARY: The FAA proposes to adopt a
new airworthiness directive (AD) for all
Airbus SAS Model A350–941 and –1041
airplanes. This proposed AD was
prompted by reports that passenger door
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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FDIC_FIL22011. Check the current official text before relying on it. Not legal advice.