OCC Plans to Increase Scrutiny of Bank Merger Applications

Banks could face a tougher approvals process for mergers, following the Officer of the Comptroller of the Currency (OCC) proposing a stricter review process.

Acting Comptroller of the Currency Michael Hsu’s proposed rules would remove expedited bank merger review procedures and ensure deals are not automatically approved without sufficient scrutiny.

This would overturn the current policy that allows mergers to be approved 15 days after the close of the comment period unless the OCC takes action to remove the filing from expedited processing.

The aim of the proposed rules is to improve transparency and trust regarding the standards and procedures that the OCC applies to its approach to reviewing bank merger applications.

Hsu also called for the development of a “macro view” of the banking system, which would evaluate the impact of each bank merger on the banking system and overall US economy.

This view would inform bank merger policy and decisions as well as ensure that the overall structure of the banking system remains diverse, dynamic and balanced with the economy.

The proposals come amid industry criticism that regulators are being too opaque in their handling of bank deals and analysis that Basel II Endgame could increase the number of mergers and acquisitions.

In response to the proposed rules, the American Bankers Association (ABA) expressed support for making regulatory processes and standards clearer and more transparent.

However, the organisation urged regulators to ensure that the scope of required application information is tailored to each bank’s specific circumstances.

In a statement, ABA said: “Bank mergers should not be evaluated based on arbitrary asset thresholds — regulators must consider holistically financial, competitive, managerial and other relevant factors involving banks of any size.”