Change in Bank Control

Change in Bank Control

Comptroller’s Licensing Manual

Washington, DC
April 2003

Change in Bank Control

Table of Contents

Introduction...................................................................................................1
Exemptions....................................................................................................1
Filing Exemptions ................................................................................1
Prior Notice Exemptions ......................................................................2
Rebuttal of Control ........................................................................................3
Key Policies...................................................................................................3
Decision Criteria........................................................................................... 3

Background Investigations ...................................................................4
Situations that May Result in Disapproval ............................................4
Agreements .........................................................................................5
Parallel-owned Banking Organizations ................................................5
Notice Process...............................................................................................6
General................................................................................................6
Notice Contents...................................................................................6
Publication and Comment Period ........................................................7
Changes to Business Strategy or Corporate Structure ............................8
Time Frame .......................................................................................8
Additional Information Request ...........................................................9
Appeals ...............................................................................................9
Consummation ..................................................................................10
Specific Requirements .................................................................................10
Director Qualifications ......................................................................10
Hart-Scott-Rodino Filing.....................................................................10
Pushdown Accounting.......................................................................11
Reporting of Stock Loans ...................................................................11
Tardy Notices ....................................................................................11
Tender Offers ....................................................................................11
Procedures ..................................................................................................13
Appendix.....................................................................................................19
Glossary ......................................................................................................23
References...................................................................................................25

ii

Change in Bank Control
Introduction
Parties who wish to acquire control of a national bank through the purchase,
assignment, transfer, pledge, or other disposition of voting stock must notify the
Comptroller of the Currency (OCC) and submit the information requested by the
Interagency Notice of Change of Control form.
This booklet provides detailed guidance, instructions, and policies and procedures
for persons submitting a change in bank control notice. The booklet includes
information on time frames for filing notices for changes in bank control; the
statutory factors the OCC considers in reaching a decision; the notice process,
including the prefiling process, filing the notice, determining when the notice is
technically complete, and processing time frames; and other specific requirements.
This booklet includes step-by-step procedures for an acquiring person and the OCC
to follow and a glossary of terms. Throughout this booklet there are hyperlinks to
forms, such as the Interagency Notice of Change in Control form and Interagency
Biographical and Financial Report, and other information that an acquiring person
may find useful when filing a change in bank control notice.
Under the Change in Bank Control Act (CBCA) (12 USC 1817(j)) and the OCC’s
change in control regulation (12 CFR 5.50), any party seeking to acquire the power
to vote 25 percent or more of a class of voting securities of a national bank must
give notice to the OCC at least 60 days prior to the acquisition (see Time Frame
discussion for timing aspects of the review process). In addition, persons seeking to
acquire the power to vote 10 percent or more of a class of voting securities are
presumed to have acquired control in certain circumstances. This includes
situations when two or more persons simultaneously acquire equal percentages of
10 percent or more of a national bank’s voting securities.
Persons intending to acquire control of a national bank without federal deposit
insurance, including a national trust bank or national credit card bank established
under the Competitive Equality Banking Act of 1987, also are subject to Part 5.50’s
notice requirements. This includes corporations, partnerships, certain trusts,
associations, and similar organizations that are not required to obtain Federal
Reserve approval under the Bank Holding Company Act (BHC Act) to acquire a
national bank.

Exemptions
Filing Exemptions
The following transactions are exempt from the notice requirements of section 5.50:
•

Acquisition of additional shares by a person who:

1

•

–

Has, continuously since March 9, 1979, or since the bank
commenced business, held the power to vote 25 percent or
more of the voting securities of the bank, or

–

Is presumed to have controlled the bank continuously since
March 9, 1979, if the transaction does not result in the
person’s direct or indirect ownership or power to vote 25
percent or more of any class of voting securities of the bank, or
in other cases, when the OCC determines that the person has
controlled the bank continuously since March 9, 1979, or

–

Has previously filed a notice for the subject bank and has not
been disapproved and the person has continuously maintained
a control position with the bank.

Transactions subject to approval under:
– Section 3 of the BHC Act, 12 USC 1842.
– Section 18 of the Federal Deposit Insurance Act, 12 USC 1828.
– Section 10 of the Home Owners Loan Act, 12 USC 1467a.

•

Certain transactions described in the BHC Act under:
– 12 USC 1841(a)(5).
– 12 USC 1842 (a)(A) and (B).

•

Transactions involving a customary one-time proxy solicitation or
receipt of pro rata stock dividends.

•

Transactions involving the acquisition of shares of a foreign bank that
has a federally licensed branch in the United States.

Prior Notice Exemptions
The following transactions are exempt from the prior notice requirements,
but these transactions do require the filing of a notice within 90 days after
they occur:
•

Acquisition of voting shares through testate or intestate succession.

•

Acquisition of voting shares as a bona fide gift.

•

A stock redemption resulting in a person’s percentage of outstanding
voting shares increasing.

•

Acquisition of control as the result of actions by third parties that are
not within the control of the acquirer. For example, the largest
shareholder sells a 30 percent interest to a number of individuals not
acting in concert. An unrelated shareholder, owning 22 percent of
2

the bank’s shares, now is the largest shareholder and needs to submit
a change in bank control notice or rebut the presumption of control
(see Rebuttal of Control).
•

Acquisition of voting shares in satisfaction of a debt previously
contracted in good faith. A person or persons acting in concert, who
purchases a previously defaulted loan secured by bank stock, cannot
rely on the prior notice exemption to foreclose on the loan, seize, or
purchase the underlying collateral, and acquire control of the bank.

Rebuttal of Control
The following situations create a rebuttable presumption of control where
any party proposes to acquire 10 percent or more, but less than 25 percent,
of a national bank’s voting securities:
•

The securities to be acquired or voted are subject to the registration
requirements of section 12 of the Securities Exchange Act of 1934
(15 USC 78l), or

•

Immediately after the transaction no other party owns a greater
proportion of that class of voting securities.

In either of these cases, the acquiring party must file a change in control
notice or rebut the presumption of control. Any person seeking to rebut the
presumption of control should contact the licensing manager in the
appropriate district office for further information.

Key Policies
Decision Criteria
The OCC seeks to enhance and maintain public confidence in the banking
system by preventing a change in control of a national bank that could have
serious adverse effects on a bank’s financial stability, among other statutory
factors. To prevent such adverse effects, the OCC may disapprove a change
in control if it finds that:
•

The proposed acquisition of control would result in a monopoly or
would further any monopoly or conspiracy to monopolize the
business of banking anywhere in the United States.

•

The effect of the proposed acquisition may substantially lessen
competition or tend to create a monopoly or in any other manner
restrain trade and the anticompetitive effects are not clearly
outweighed by benefits to the convenience and needs of the
community to be served.

•

The financial condition of any acquiring party is such as might
jeopardize the stability of the bank or prejudice the interests of its
depositors.
3

•

The competence, experience, or integrity of any of the acquiring
party(ies) or of the proposed management indicate that it would not
be in the interests of the depositors and the public for such persons to
control the bank.

•

The acquiring party does not provide the OCC with all required
information.

•

The proposal would result in an adverse effect on the FDIC funds.

Background Investigations
The OCC conducts an investigation of the competence, experience, integrity,
and financial ability of each party named in a change in bank control notice,
unless waived (see the “Background Investigations” booklet).
If the OCC receives adverse information on a person providing notice to
acquire control of a national bank, he or she is notified and allowed to
complete, correct, or challenge the information prior to the OCC making a
decision.

Situations that May Result in Disapproval
The OCC may disapprove a change in bank control notice under certain
circumstances, such as:
•

The acquiring person mismanaged any financial institution(s) when
the person had control, was a director or senior officer, or served in
another decision-making capacity.

•

The acquiring person received significant, improper benefit from
insider transactions at any financial institution with which he or she
was previously associated in a management or control position.

•

The acquiring person was convicted of a felony.

•

The acquiring person was subject to discipline, censure, or denial of
the right to do business or practice a profession by a state or federal
regulatory agency or a license granting body.

•

The acquiring person intentionally or deliberately submitted
insufficient, inaccurate, or misleading biographical and/or financial
information or failed to provide information the OCC requested.

•

The capital level of the target bank is below an acceptable level,
unless capital will be restored promptly to an appropriate level.

4

•

The proposed business plan or strategy raises significant concerns
about the acquiring person’s competence or experience, such as
when the business plan:
–

Does not satisfactorily address concerns with respect to strategic
planning, financial and risk management, or how the bank will
provide a competitive return on investment;

–

Contains unrealistic growth or earnings projections; or

–

Constantly changes during the CBCA notice process.

Agreements
In certain situations, the OCC will require that the acquiring person enter
into a written agreement with the OCC, enforceable under 12 USC 1818, to
address identified safety and soundness concerns before the OCC concludes
that the notice is technically complete. An agreement may require the
acquiring party to take, or refrain from taking, certain actions, such as
initiating a material change in the business plan or operations of the target
bank beyond those contained in the notice. An agreement also may require
the acquiring party to cause the target bank to enter into another enforceable
written agreement with the OCC. The agreement between the bank and the
OCC would require the bank to take, or refrain from taking, certain actions,
such as maintaining capital at or above a certain level.

Parallel-owned Banking Organizations
Parallel-owned banking organizations are created when a party that owns a
foreign bank acquires a national bank. Processing a change in control notice
that creates a parallel-owned banking organization is generally more
complex and time consuming than a normal change in bank control notice.
This processing disparity reflects the OCC’s need to fully understand how the
overall strategy and management of the parallel-owned banking organization
will affect the national bank, how the activities of the foreign bank are
supervised, how home-country supervisors view the condition and
operations of foreign affiliates, and how affiliates might affect the national
bank. The preceding matters of supervisory interest are in addition to the
concerns addressed in the OCC’s standard analysis of the background and
financial wherewithal of the individual(s) filing the change in control notice.
Concerns for the national bank that arise from a potential parallel-owned
banking organization typically result in expanded application or notice
requirements. The degree to which the OCC will expand requirements vary,
reflecting the specific structure of the proposed transaction and resulting
organization. Examples of possible additional information requirements may
be found in the Appendix under Possible Additional Information Requests.
The OCC may request commitments or representations to facilitate the
supervision of parallel-owned banking organizations. See the Appendix,
Possible Representations or Commitments for specific examples.

5

Due to the complexity of proposals that would establish a parallel-owned
banking organization and the case-by-case nature of their processing,
potential applicants are strongly encouraged to meet with Licensing staff
prior to submitting the notice.

Notice Process
General
Parties wishing to acquire control of a national bank must submit an original
and five copies of responses to information requested by the Interagency
Notice of Change in Control form and Interagency Biographical and
Financial Report. Parties filing by diskette need only submit a hard copy of
the page(s) in the notice or attachments where a signature is required. The
appropriate filing fee, in accordance with the current annual “Notice of the
Comptroller of the Currency Fees,” must accompany the notice. In addition,
the acquiring party must publish an announcement of the proposed change
in bank control (see the Publication and Comment Period discussion).
Upon receipt, the OCC reviews the change in bank control notice to
determine whether it is technically complete. After the OCC determines that
the notice is technically complete, the OCC makes a decision on the change
in bank control notice within the time frames established in the statute (see
the Time Frame discussion).

Notice Contents
The OCC will consider the following factors before determining that a notice
is technically complete:
•

The acquiring person provided all information requested in the notice,
including biographical and financial information.

•

The acquiring person demonstrated the financial ability to
consummate the transaction and service any debt, if the purchase is
not transacted with cash.

•

The acquiring person satisfactorily addressed lapses in employment
history.

•

Information submitted to shareholders in a tender offer, if applicable,
is adequate and accurate.

•

The appraiser acknowledged the independence of any appraisals used
to support asset values, if applicable.

•

If the acquiring person proposes to inject additional capital into the
bank, the notice includes a realistic plan for providing a competitive
return on investment.

6

•

The acquiring person’s business plan or strategy adequately addresses
strategic planning and growth strategies, capital, and financial and risk
management, including applicable risk measurement, monitoring, and
control processes.

•

The acquirer(s) provided any additional information in such form as
the OCC requested, such as a written agreement described in the
Agreements section of this booklet.

Publication and Comment Period
The acquiring party must publish in a newspaper generally circulated in the
community in which the bank is located an announcement containing:
•

The name of the affected national bank.1

•

The identity of each party proposing to acquire the national bank.

•

A statement that comments may be furnished to the appropriate district
office within 20 days of publication and the identity of the office by
name and address.

•

A statement that the OCC will keep the information in the notice
confidential until it has acted, except for certain information that may be
released and made available for public inspection and copying under the
Freedom of Information Act.

Within 10 days of the public notice, the person must provide the appropriate
district office with a statement containing the date of publication, the name
and address of the newspaper that published the public notice, a copy of the
public notice, and any other required information (refer to “Public Notice
and Comments” booklet).
Under certain circumstances, the OCC may:
•

Waive or shorten the publication requirement.

•

Delay the public announcement.

•

Waive or shorten the public comment period in limited cases.

•

Act on a notice prior to the expiration of the public comment period if
an emergency exists.

Any interested person may participate in the OCC licensing process by
commenting in writing on any corporate filing during the applicable public
1

If a bank is operating under more than one name or under a name not substantially similar to its
legal name, the public notices of any application published in accordance with 12 CFR 5 must
contain both the legal name of the bank and the name(s) the bank uses in the community in which
the publication circulates.
7

comment period. For a discussion of how the public may participate, refer to
the “Public Notice and Comments” booklet.

Changes to Business Strategy or Corporate Structure
The Interagency Notice of Change in Control form asks the acquiring party to
indicate any planned significant change to the bank’s business strategy or
corporate structure. Persons with such intentions are expected to provide a
thorough description of the changes. Examples of changes include, but are
not limited to: intentions to increase significantly the rate of bank asset
growth; a change in geographic market, such as from local to statewide;
realignment of funding sources, such as from core deposits to brokered
funds; changes in lines of business, such as adding commercial real estate
lending where none was done previously or substantially reducing an
existing product line.
If an acquiring person proposes significant or extensive changes to the bank’s
overall business plan or plans to introduce new services and products, the
OCC will require the filer to provide the business plan information consistent
with the Business Plan Guidelines issued as part of the “Charters” booklet.
Such business plans should clearly articulate the risks of the proposed
changes and the systems and processes that will be used to measure,
monitor, and control those risks. The OCC will rigorously analyze proposed
business plans and strategies and may use agreements to impose substantive
requirements equivalent to conditions and pre-opening requirements that
apply to a de novo charter (See Agreements for additional discussion).

Time Frame
The OCC has 60 calendar days to review the proposed transaction from the
date the notice is deemed technically complete. The OCC has the discretion
to extend the 60-day review period for 30 more days. The review period may
be extended an additional two times, for not more than 45 days each, if the
OCC determines that:
•

An acquiring party did not furnish all of the information required.

•

Any material information submitted is substantially inaccurate.

•

It is unable to complete the investigation of an acquiring party,
because of delay by, or inadequate cooperation of, the acquiring
party.

•

It requires additional time to decide that no acquiring party has a
record of failing to comply with the requirements of the Bank Secrecy
Act (31 USC 5311).

If the OCC fails to act within the relevant period, the acquiring party may
consummate the acquisition.

8

The OCC may issue a no objection letter prior to receiving information on all
of its background investigations. However, if adverse or previously withheld
information is received subsequently, the OCC will consider available
remedies under applicable statutes or regulations.

Additional Information Request
When requesting additional information, the OCC will send a letter to the
acquirer that includes a response due date. The OCC may determine that a
notice is not technically complete or disapprove a notice if an acquirer fails
to provide the requested information.
An acquiring party should contact the OCC as soon as possible if he or she
cannot submit the additional information on or before the deadline. The
OCC may consider the notice withdrawn if it does not receive the
information requested by the response due date.
The OCC may require the acquiring party to file an amended Interagency
Notice of Change in Control and restart the entire notification process if the
additional information needed is substantial. In such instances, the OCC
may require the acquirer to republish the notice of change in control and
may require an additional filing fee.

Appeals
The OCC’s notice of disapproval to the acquiring party will describe the
available appeal procedures. The process allows a disapproved person to
seek review of the OCC’s decision by filing a written request for a hearing
within 10 days of receipt of the notice of disapproval. Failure to request a
hearing in a timely fashion will result in the notice of disapproval
constituting a final and unappealable order.
Upon receipt of a timely request for a hearing, the Comptroller’s designee
will issue a hearing order establishing the legal authority for the OCC’s
jurisdiction over the proceeding and addressing the request for hearing. The
disapproved person must answer the hearing order within 20 days after
service of the order. Generally, failure to file an answer constitutes a waiver
of the person’s right to appear and contest the allegations in the hearing
order.
Any final order issued by the Comptroller based upon a person’s failure to
answer is deemed a consent order and, as a result, cannot be appealed.
Upon issuance of the hearing order, an administrative law judge will be
assigned to preside over the matter. If the OCC’s disapproval stands after the
administrative hearing and the entry of a final decision of the Comptroller,
the person may seek judicial review of the Comptroller’s decision.

9

Consummation
Acquiring parties must consummate a change in control within six months
from the OCC decision date. The OCC generally does not extend this time
period. However, if extenuating circumstances exist, the OCC may consider
extending the time period.

Specific Requirements
Director Qualifications
All persons who become bank directors after a change of control must
comply with the requirements in 12 USC 72. Every national bank director
must be a citizen of the United States throughout his/her term of service.
The OCC, however, may waive this requirement for a minority of the total
number of directors of any national bank (see the “Director Waivers”
booklet).
A majority of a national bank’s directors must reside in the state in which the
bank is located (that is, the state(s) in which the bank has its main office or
branches) or within 100 miles of its main office for at least one year
immediately preceding their election. The OCC has discretion to waive this
residency requirement (see the “Director Waivers” booklet).

Hart-Scott-Rodino Filing
Persons required to file a notice under the CBCA should consider the
applicability of the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(HSR), 15 USC 18a, to their proposed acquisition. The HSR established
premerger notification and waiting requirements for persons planning to
consummate large mergers and acquisitions.
The Federal Trade Commission (FTC), by regulation, can exempt acquisitions
subject to the CBCA from the HSR requirements. That exemption is
available only if copies of all information and documentary materials filed
with the OCC are filed simultaneously with the FTC and the Department of
Justice (DOJ) at least 30 days prior to consummation of the proposed
acquisition.
Only those transactions that meet certain threshold tests are subject to the
HSR. Generally, those threshold tests relate to the asset size of the parties to
the transaction and the purchase price of the transaction. The acquiring
party and the target bank must determine the applicability of the HSR to the
proposed transaction and, if required, file a copy of the CBCA notice with
the FTC and the DOJ. The HSR authorizes the assessment of civil money
penalties for failure to comply with its provisions.
An exemption from the HSR notice and waiting period is permitted if the
change in control prevents a probable bank failure. In such situations, the
10

proposed acquirers must notify the FTC and the DOJ of their intent to rely on
this exemption and request that the OCC act under the exemption.

Pushdown Accounting
Pushdown accounting is required for financial reporting if an arms-length
transaction results in a change in bank control of at least 95 percent of the
bank’s voting stock. Under pushdown accounting, when a bank is acquired
yet retains its separate corporate existence, the assets and liabilities of the
acquired bank are restated to their fair values as of the acquisition date.
Those values, including any goodwill, are reflected in the financial
statements of the parent and the acquired bank. With the OCC’s approval,
pushdown accounting may be used when more than 80 percent, but less
than 95 percent, is acquired. Acquiring persons should include in the
change in bank control notice a pro forma balance sheet for the bank when
pushdown accounting is appropriate. Acquiring persons may refer to the
OCC’s Consolidated Reports of Condition and Income (call report)
Instructions and Bank Accounting Advisory Series for guidance in preparing
the pro forma balance sheet.

Reporting of Stock Loans
Any foreign bank, or any affiliate of a foreign bank, must file a consolidated
report if they have credit outstanding to any person or group of persons that
is secured, directly or indirectly, by 25 percent or more of any class of voting
securities of a national bank. Other reporting requirements may be
applicable (12 CFR 5.50(h)).

Tardy Notices
The OCC may prevent an unlawful acquisition or require divestiture if a
bank is acquired in violation of the CBCA or OCC requirements. The agency
may subpoena records and take testimony to determine if a party provided
false information in a notice or otherwise violated those requirements. The
OCC also may assess persons filing tardy notices civil money penalties. In
addition, the OCC may publicize any remedial action taken against a person
who has filed a tardy notice. Persons filing tardy notices should not vote
shares acquired in violation of the CBCA or Part 5.50 until the OCC issues a
non-objection decision.
In reviewing a tardy notice, the OCC uses the same procedures and analysis
as it does in reviewing a timely notice. Specifically, the OCC advises
acquiring person when the tardy notice is deemed technically complete and
performs the same review, investigation, and verification procedures as for a
notice filed prior to an acquisition.

Tender Offers
The OCC must review and clear any tender offer to purchase national bank
stock that will result in a change of control of a national bank with a class of
11

securities registered under the Securities Exchange Act of 1934 (Exchange
Act). A copy of any tender offer must be provided with the notice. Stock
purchase information in a tender offer that is also submitted must be
summarized and incorporated by reference in the notice. Tender offer
materials should be filed with the Securities and Corporate Practices Division
of the OCC in Washington, D.C.
The OCC may treat confidentially notices filed in contemplation of a public
tender offer that are subject to the requirements of the Exchange Act. The
OCC may delay (but not waive) publication requirements for those notices
up to 34 days after the notice is deemed technically complete. The public
notice may be delayed at times out of concern that an acquiring party or
bidder complying with the Exchange Act may be disadvantaged by the
delays imposed under the notice review period. The OCC may delay
publication requirements if:
•

The acquiring party requests such treatment and states that a public
announcement of the tender offer and the filing of appropriate forms
with the OCC will occur within 34 days from the filing of the notice.

•

The OCC determines that it is in the public interest to grant such
treatment.

In each of those instances, the acquiring party must send proof of the
publication of the announcement to the appropriate licensing manager
within 10 days of the date of its publication.

12

Procedures
Prefiling Meeting
Licensing Staff
1.

Refers acquiring party that requests instructions to the “General Policies and
Procedures” booklet, the ”Background Investigations” booklet, and this
booklet of the Comptroller’s Licensing Manual. Parties may also find the
“Directors Waivers,” “Public Notice and Comments,” and ”Changes in
Directors and Senior Executive Officers” booklets useful.

2.

Requests an optional prefiling meeting with the acquiring party to review
procedures for change in bank control and factors that may influence the
OCC’s review of the notice. A prefiling meeting should be held when the
transaction will result in a parallel-owned banking organization.

3.

If any prefiling discussion or meetings reveal significant policy, legal, or
supervisory issues, including creation of a parallel-owned banking
organization or significant change to the bank’s overall business plan,
contacts Headquarters Licensing (HQ LIC) to decide whether specific issues
should be carved out for headquarters action while the notice continues to
be processed in the appropriate district office.

4.

Prepares memoranda on all prefiling meetings and records pertinent
information from telephone calls. Retains memoranda and other information
in a pending file.

Rebuttal of Control
Acquiring Party
5.

Submits a rebuttal of control letter to the appropriate licensing manager, if
applicable.

Licensing Staff
6.

Notifies district counsel, the appropriate assistant deputy comptroller (ADC),
and the ADC analyst of rebuttal of control letter. Forwards a copy and
requests any comments by the 15th day after receipt.

7.

Reviews rebuttal of control letter to determine if it successfully refutes the
presumption of control.
•

If yes, notifies acquiring party that presumption of control has been
successfully rebutted.

•

If no, notifies acquiring party to file notice, with appropriate filing fee
and to publish notice.
13

8.

Advises ADC and ADC analyst of determination. If warranted,
provides a copy of any commitments made by the acquiring person
for future compliance.

Filing the Notice and Publication
Acquiring Party
9.

Submits notice (original and five copies), filing fee, and request for
delay (in the case of a proposed tender offer) or waiver of publication,
if applicable, to the appropriate licensing manager.

10.

Publishes notice within 10 days of filing with the district office.

Licensing Staff
11.

Initiates and enters appropriate information into the Corporate
Activities Information System (CAIS).

12.

Establishes the official file to maintain all original documents.

13.

Forwards the filing fee and the deposit memorandum (Form 6043-01)
to the Comptroller of the Currency, P.O. Box 73150, Chicago, Illinois
60673-7150. Retains copy of the deposit memorandum. Contacts the
acquiring person if the filing fee is not received or is inaccurate.

14.

Within five business days of receipt:
•

Acknowledges receipt of filing, advises acquiring person that
the notice is under review to determine whether or not it is
technically complete, provides CAIS Control Number, and, if
applicable, advises the acquiring person that he/she may not
vote shares acquired in violation of the CBCA or Part 5.50 until
the OCC issues a non-objection decision.

•

Notifies appropriate ADC and ADC analyst of receipt of notice
and forwards a copy of the notice to them, requesting by the
15th day after receipt, any comments.

•

Sends copies of notice to other regulatory agencies, as
appropriate, and requests comments.

•

If a legal issue has been identified, or a legal opinion has been
submitted with the filing, forwards relevant materials to the
Law Department and requests a response on whether a
significant legal issue is present by the 15th day after the
receipt date.

14

•

15.

16.

If acquiring person has already acquired control of the bank, makes
recommendation and forwards request to district counsel to determine
if civil money penalties should be pursued (refer to PPM 5000-7 (Rev.)
June 16, 1993).

Makes determination on request for delay or waiver of publication
requirement, if applicable.
•

If yes, consults with HQ LIC and prepares approval waiver letter for
signature by the appropriate delegated official.

•

If no, documents reasons that the filing does not qualify and sends a
copy of the waiver request to HQ LIC.

If Licensing staff determines at any time that the filing presents significant
policy, legal, or supervisory issues, including Bank Secrecy Act compliance
or systems integration concerns, contacts HQ LIC to decide if and when to
forward:
•

The filing to HQ LIC for processing, or

•

Specific issues to HQ LIC for action (while continuing to process the
filing in the appropriate district office).

17.

Together with the Supervisory Office and other OCC staff, as appropriate,
determines what, if any, information is needed to determine that the notice is
technically complete. Such necessary information may include written
agreements that Licensing will develop with Legal and Supervisory Office
staff, as appropriate.

18.

As appropriate:

19.

•

Notifies the acquiring person that the notice is technically complete
and specifies the latest date on which the OCC will issue its intent to
disapprove, not disapprove, or extend the processing. (If technically
complete, makes appropriate CAIS entries and goes to step 23); or

•

Requests additional information, notifying the acquiring person that
the information is required for the notice to be technically complete
and specifying a date by which the information should be received.
Provides a copy of the request to the ADC and the ADC analyst.

Makes appropriate CAIS entries.

Acquiring Party
20.

Prepares and submits additional information if requested. As appropriate,
executes written agreement with the appropriate Supervisory Office staff.

15

Licensing Staff
21.

Receives and forwards additional information received from acquiring
party to ADC and ADC analyst and, as appropriate, other OCC staff
and other regulatory agencies.

22.

Reviews additional information and goes to step 17.

Investigation
Licensing Staff
23.

Conducts background investigations to assess competence,
experience, and integrity of each acquiring party named in the notice.
Also, analyzes financial ability (see the ”Background Investigations”
booklet).

24.

Forwards completed fingerprint cards to HQ LIC for processing.

25.

Completes the background investigation checklist to document
responses received from the background checks and to comply with
the statutory requirement that the investigation’s findings be
maintained as a record of the agency.

26.

If applicable, notifies acquiring party of adverse information received
from the background checks.

Acquiring Party
27.

If applicable, submits information to the licensing manager to
complete, correct, or challenge adverse information received from
background checks.

Review
Licensing Staff
28.

If copies of the notice are requested, follows the guidance in the
“Public Notice and Comments” booklet.

29.

If public comments are filed, follows the procedures in the ”Public
Notice and Comments” booklet.

30.

Reviews additional information received after determining that the
notice is technically complete and extends, as necessary, the review
period and notifies the acquiring person of the new target date for
consummation.

31.

Makes appropriate CAIS entries.
16

32.

Reviews the file, prepares the confidential memo (including the background
investigation checklist) and decision letter, recommending a decision to the
delegated official. Forwards the official file to the appropriate official for
decision.

Decision
33.

Decides notice under delegated authority or forwards the official file to HQ
LIC for decision at least 14 days prior to the end of the 60-day review period
or any extension thereof. If forwarded to HQ LIC, makes appropriate CAIS
entries and skips steps 34 and 35.

34.

If decision is not to object to the notice:

35.

•

Issues a letter of no objection and forwards a Satisfaction Survey to the
acquiring party.

•

Forwards a copy of the no-objection letter to the bank.

•

Notifies interested parties of decision.

•

Notifies appropriate ADC and ADC analyst of the decision by
forwarding updated CAIS comments and a copy of the decision letter.

Makes appropriate CAIS entries.

HQ LIC
36.

Makes appropriate CAIS entries.

37.

Reviews the file and all relevant information and solicits comments from
other OCC divisions, as appropriate.

38.

If disapproval will be recommended, forwards the draft transmittal letter to
Enforcement and Compliance (E&C) for review prior to routing for decision.

39.

Prepares confidential memo with recommendation and decision letter, and
forwards the official file to the appropriate official for decision.

40.

If acquiring person has already acquired control of a national bank,
coordinates with Litigation and E&C for appropriate action, if disapproval is
recommended.

41.

Notifies licensing manager and acquiring person of the decision.

42.

Notifies appropriate ADC and ADC analyst of the decision by forwarding
updated CAIS comments and a copy of the decision letter.

43.

Issues the decision letter and forwards a Customer Satisfaction Survey within
three days of decision to the acquiring person.
17

44.

Notifies all interested parties of the decision.

45.

Notifies Washington personnel and other affected federal agencies,
whenever appropriate, on a case-by-case basis (see PPM 6100-3
(Rev.), January 22, 1986).

46.

Makes appropriate CAIS entries.

47.

Returns official file to the district if additional processing is required.

48.

For non-disapprovals where the acquiring person executed a written
agreement with the OCC, sends copy of the confidential
memorandum, the decision, decision letter, and a copy of the written
agreement to the director, Licensing Policy and Systems.

Consummation and Close Out
Acquiring Party
49.

Sends written notice of the consummation to the licensing manager
within 10 days of consummation.

Licensing Staff
50.

If notification of consummation is not received within 180 days after
the decision letter, contacts the acquiring party to determine whether
the acquisition has been consummated. If contact is made by
telephone, documents the content of the conversation for the official
file.

51.

Makes appropriate CAIS entries.

52.

Forwards the official file to Central Records.

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Appendix
POSSIBLE REPRESENTATIONS OR COMMITMENTS
For CHANGE IN BANK CONTROL NOTICES RESULTING in
A PARALLEL-OWNED BANKING ORGANIZATION
1.

Acquiring party agrees to provide all information, without regard to whether
such information is located within or without the United States, when
requested, relating to:
(a)

Enforcement or possible enforcement of, or any proceeding under,
any U.S. Law;

(b)

The direct or indirect ownership or control of Bank [Bank Holding
Company, if appropriate]; and

(c)

The operations or activities of Bank [Bank Holding Company, if
appropriate], or any IAP with respect to each thereof under the U.S.
Law, including any unsafe or unsound practice or breach of fiduciary
duty by Bank [Bank Holding Company, if appropriate], or by any IAP
with respect to each thereof.

2.

Acquiring party agrees to provide the OCC and its staff access, to permit the
OCC and its staff to examine, and to provide the OCC and its staff with
copies of, all books and records; access to electronic records that accurately
reflect the information in the books and records; and any other information,
of or concerning Bank, as requested by the OCC or its staff, without regard to
whether such books and records or other information are located within or
without the United States.

3.

Based on the opinions of counsels in the foreign jurisdictions where
acquiring party is a citizen, and where party resides, party understands and
represents that there are no statutory or regulatory requirements of, or
judicial interpretations in, these jurisdictions that would preclude or limit
examination in such jurisdictions, or use in the United States, of the books
and records of applicant by the OCC and its staff. In addition, based on
these opinions of counsels, applicant understands and represents that there
are no statutory or regulatory requirements of, or judicial interpretations in,
these jurisdictions that otherwise would limit the ability of party to comply
fully with commitments/ representations 1 and 2 above, except to the extent
that waivers of confidentiality by acquiring person would be necessary to
permit such examination or use of acquiring person’s books and records,
which waivers person hereby grants and agrees to grant on a continuing
basis. Acquiring person understands and represents that there are no
statutory or regulatory requirements of any jurisdiction that preclude, limit,
or make ineffective in whole or in part any waiver of confidentiality as
described in this commitment or representation.
19

4.

Acquiring person consents and submits to the personal jurisdiction of any
United States federal court of competent jurisdiction and of any Federal
Banking Authority for purposes of any investigation or possible investigation,
action, subpoena, examination, or proceeding by any Federal Banking
Authority, the United States Department of Justice, or the United States
Department of the Treasury, relating to the administration or enforcement of
any U.S. Law or pursuant to any U.S. Law, including, in particular, section 8
of the Federal Deposit Insurance Act. For purposes of this commitment or
representation, the acquiring person shall at all times maintain in the United
States a designated agent, acceptable to the OCC, to accept service on the
acquiring person’s behalf, including service of any process, notice, order, or
subpoena. The acquiring person, as of the date hereof, designates [Name of
Agent], located at [Address, City, and State], as his agent to accept such
service. The person will not change this designation without notice to, and
consent of, the OCC or its staff.

5.

The acquiring person agrees to submit the following documents to the OCC
prior to the OCC's consideration of the proposal in connection with which
these commitments/representations are submitted:
(a)

A notarized and authenticated or certified document, designating the
agent(s) specified in commitment or representation No. 4 above to
accept service on behalf of the acquiring person;

(b)

An opinion of independent counsel in the jurisdiction where
applicant is a citizen and, if different, where applicant resides (i) that
each of the commitments/representations is enforceable under the
laws of the relevant jurisdiction, and (ii) that there are no statutory or
regulatory requirements of, or judicial interpretations in, the relevant
jurisdiction that would limit the ability of applicant to comply fully
with commitments or representations 1 and 2 above, subject to the
need for a waiver of confidentiality as provided in commitment or
representation No. 3 above, or that would preclude, limit, or make
ineffective in whole or in part any such waiver of confidentiality that
is granted; and

(c)

Properly executed written documentation to affect a full waiver of
confidentiality under the law of the relevant jurisdiction, as provided
in commitment or representation No. 3 above.

6.

No later than the time of consummation of the transaction, applicant will
provide to Bank a list of his or her "related interests" (as defined in section
215.2 of Regulation O, 12 CFR 215.2) and a list of Bank's affiliates (as
defined in 12 USC 371c(b)(1)) to be maintained by Bank. Applicant will
update these lists annually or more frequently as changes occur in "related
interests" or affiliates. Applicant and each company that from time to time is
controlled directly or indirectly by applicant, acting alone or in concert with
one or more other persons, will be deemed to be "insiders" of Bank in all
dealings with Bank for purposes of Regulation O (12 CFR 215).

7.

[NOTE: The OCC will request one of the following commitments or
20

representations or a similar commitment or representation after considering
such factors as the adequacy of foreign supervision, the ability and
willingness of the foreign supervisors to cooperate and share information
cross-border, and the condition of Bank and Foreign Bank.]
(a)

There will be no transactions between Bank and foreign affiliates.

(b)

There will be no covered transactions under 12 USC 371c and no
transactions covered by 12 USC 371c-1 between Bank and foreign
affiliates.

(c)

Applicant commits or represents that dealings between Bank and any
company that is an "affiliate" of Bank, which may include certain
companies in which applicant holds an interest, will be subject to the
restrictions in 12 USC 371c and 371c-1. For purposes of this
commitment or representation, an extension of credit also includes a
deposit by Bank with an affiliate.

8.

Applicant and Bank commit or represent that they will notify the OCC if
Bank engages in the following types of affiliate transactions: (1) transactions
that will materially affect Bank's capital, (2) transactions that will materially
affect the affiliate's financial position, and (3) any back-to-back loan
transactions between Bank and any person (including affiliates) that benefit
Members of the Control Group.

9.

Applicant or Bank will notify the OCC of any loan or deposit made by Bank
to an affiliate that has deposited or loaned funds to Bank, provided the
funding for the loan or deposit by Bank is directly or indirectly linked to the
affiliate's funds on loan or deposit with Bank.

10.

Applicant or Bank will notify the OCC of any increase in permanent capital
when the capital funds invested were received from any person who has
obtained a loan or a deposit from Bank or any affiliate, provided the funds for
the increase in capital are directly or indirectly linked to the funds from the
loan or deposit from Bank.

11.

Applicant will notify the OCC of any loan received by a Member of the
Control Group from any person who has obtained a loan or a deposit from
Bank, provided the funding for the Control Group loan is directly or
indirectly linked to the funds from the loan or deposit from Bank.

12.

While a change in control notice is pending, the notificant will promptly
notify the OCC of any changes or pending changes in affiliation.

13.

Applicant and Bank commit or represent that Bank will not engage directly in
the international transfer, remittance, or payment of customer or bank funds
except through an unaffiliated correspondent bank. Approval of the OCC
will be obtained before Bank begins to engage directly in the international
transfer of funds.

Alternatively:
21

Applicant and Bank agree that Bank will not engage in the international
transfer, remittance, or payment of customer or bank funds except in
compliance with safe and sound formally adopted internal control
procedures and operational safeguards, which shall include in all cases
written documentation of all relevant information concerning each such
transfer, remittance and payment, as adopted as a policy of Bank and in
compliance with all laws, regulations, orders, and directives applicable to
Bank and its officers, directors, and affiliates.
14.

Applicant represents that the funds being used to establish or purchase Bank
are not derived directly or indirectly from the Foreign Bank or its affiliates
except to the extent that these funds are derived from usual profits and
dividends from Foreign Bank or its affiliates obtained over the years.

15.

Neither the applicant nor the Bank will incur any additional debt (other than
small amounts incurred in the ordinary course of business) to any third party
without the prior approval of the OCC.

16.

None of the capital stock of debt of the Bank will be transferred or pledged
to any third party without the prior approval of the OCC.

17.

Applicant commits that the Bank will maintain total risk-based capital ratios
so that the Bank is at all times considered well-capitalized under 12 CFR 6.

22

Glossary
An acquisition includes the purchase, assignment, transfer, pledge or other
disposition of voting securities, or an increase in the percentage ownership of a
bank resulting from a redemption of voting securities by another party.
Acting in concert means knowingly participating in a joint activity or parallel action
toward a common goal of acquiring control whether or not pursuant to an express
agreement. It also can mean combining voting or other interests for a common
purpose pursuant to any contract, understanding, relationship, agreement, or other
arrangement whether or not written.
A beneficiary includes the members, parties, or participants of a voting trust.
Control is the power, directly or indirectly, to direct the management or policies, or
to vote 25 percent or more of any class of voting securities of a national bank.
Good faith, in the context of debt previously contracted, means that a person
acquires control of a national bank by obtaining voting shares in satisfaction of a
previously contracted debt, and that such debt was made or acquired without prior
knowledge of any default.
A national bank means an insured or uninsured national banking association and
any bank or trust company located in the District of Columbia operating under the
OCC’s supervision.
A party or person means an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, voting trust or voting agreements, or any other form of entity and
includes any group of persons acting in concert.
A parallel-owned banking organization exists when at least one national bank and
one foreign bank are controlled either directly or indirectly by the same person or
group of persons who are closely associated in their business dealings or otherwise
acting in concert. It does not include structures in which one depository institution
is a subsidiary of the other, or the organization is controlled by a company subject
to the Bank Holding Company Act, 12 USC 1841 et seq., or the Savings and Loan
Holding Company Act, 12 USC 1467a.
A technically complete notice must contain personal and biographical information,
detailed financial information, details of the proposed change in control,
information on any structural or managerial changes contemplated for the national
bank, and other relevant information required by the OCC.
A trustee is the person or persons designated by a voting trust to vote national bank
stock subject to a voting trust agreement (also termed voting trustee or voting
representative in the case of a voting agreement).

23

Voting securities mean shares of common or preferred stock, or similar
interests, such as options, if the shares or interests, by statute, charter or, in
any manner, allow the holder to vote for or select directors (or persons
exercising similar functions) of the issuing national bank, or to vote on or to
direct the conduct of the operations or other significant policies of the issuing
national bank. (See section 5.50 for instances when preferred stock or
similar interests will not be considered voting securities (12 CFR 5.50(d)(6)).
A voting trust or agreement includes any legally binding action by
shareholders attempting to aggregate and control the voting of a national
bank’s stock subject to it.

24

References
Administrative Hearings
Regulations

12 CFR 19.160-19.161

Background Investigations
Regulations

28 CFR 16.34 and 50.12

Bank Holding Company Act
Laws

12 USC 1842-1850

Bank Secrecy Act (BSA)
Law
Regulation

31 USC 5311
31 CFR 103

Capital Requirements
Laws
Regulation

12 USC 51c, 56, and 59
12 CFR 3 and 6

Capital Stock
Law

12 USC 52

Capital Structure Change
Regulation

12 CFR 5.46

Change in Bank Control
Laws
Regulation
Issuance

12 USC 93a and 1817(j)
12 CFR 5.50
Policies and Procedures
Manual (PPM) 6100-3
(Rev.)

Civil Money Penalties
Laws
Issuance

12 USC 504, 18 USC 1001
PPM-5000-7 (Rev.)

Depository Institution Management Interlocks Act
Law
12 USC 3201
Regulation
12 CFR 26
Directors
Law
Citizenship Waiver
Law
Convicted of a Crime
Law
Engaged in Underwriting
Law
Number
Law

12 USC 71
12 USC 72
12 USC 1829
12 USC 78
12 USC 71a
25

Oath

Law
President
Law
Purchases and Sales
Law
Residency
Law
Qualifications
Law
Regulation

12 USC 73
12 USC 76
12 USC 375
12 USC 72
12 USC 72
12 CFR 7.2005

Exempt Transactions
Laws
1842

12 USC 1467a, 1828(c),

Filing Fees
Regulation

12 CFR 5.5

Fraudulent Schemes
Regulations

16 CFR 801-2

Hart-Scott-Rodino Antitrust Improvements Act of 1976
Law
15 USC 18a
Regulation
16 CFR 800
Interagency Exchange and Coordination of Corrective Action
Issuance
PPM 6100-3 (REV)
Proxy

Regulation

12 CFR 11

Shareholders’ List
Law

12 USC 62

Voting Trust
Regulation

12 CFR 7.2022

26