WASHINGTON -- Federal regulators will scrutinize the supervisory system of a foreign bank's home country before approving its acquisition of a U.S. bank or thrift.
The Office of Thrift Supervision announced final rules Thursday governing foreign holding company applications to acquire thrifts.
Codifying Current Practice
The rules take effect in 30 days but, in fact, do not differ from current agency practice.
Congress instructed bank regulators to adopt these rules in section 211 of the Federal Deposit Insurance Corp. Improvement Act of 1991.
The federal regulator for bank holding companies, the Federal Reserve Board, previously adopted a rule to enforce the 1991 law's requirement. In it, the Fed said it would review each application on a case-by-case basis.
2 Grounds for Denying an Acquisition
The new OTS rules set forth two circumstances in which the agency is required to deny an acquisition application by a foreign bank holding company.
The first would be when a foreign bank acquirer is not subject to comprehensive supervision and regulation by its home government.
The second would be when a company fails to assure the OTS that it will provide any information the agency needs on the activities or operations of the company or its affiliates.
No Extra Data Requirement for U.S. Acquirers
The OTS said that, in general, it would not require additional assurances from domestic acquirers because it already uses its authority to obtain all the information it needs from them.
Few foreign banks have thrift subsidiaries.
The new OTS rule merged five holding company acquisition forms in one comprehensive form to reduce banks' paperwork and regulatory burden.