BPI Comments on OCC’s Bank Merger Proposal

Ladies and Gentlemen:

The Bank Policy Institute[1] is filing this comment on the notice of proposed rulemaking issued by the Office of the Comptroller of the Currency entitled Business Combinations under the Bank Merger Act.[2] Although the OCC describes its proposal as increasing the transparency of the standards that apply to the agency’s review of business combinations[3] under the Bank Merger Act of 1960,[4] the purported “clearer guidelines”[5] would, in multiple ways, actually inject considerable confusion and uncertainty by questioning or even rejecting long-established precedent and statutory standards. The proposal would thereby discourage, and outright disqualify, numerous legally permissible and meritorious business combinations.

Executive Summary

Policy Statement: The policy statement includes “General Principles of OCC Review” in Section II that identify “positive indicators” (i.e., indicators in BMA applications “that are consistent with approval”) and “negative indicators” (i.e., indicators in applications where “the OCC is unlikely to find that the statutory factors under the BMA are consistent with approval unless and until the applicant has adequately addressed or remediated the concern”).[6] As written, we are concerned that the absence of even one “positive” indicator is actually a negative indicator, creating a presumption against approval, and that the presence of any one “negative” indicator is actually a prohibition. Although we are in general agreement with the proposal’s stated objective of transparency, certain terms of the proposal undercut that objective and have multiple adverse consequences.

We recommend that the proposal, which if adopted would effectively be a final rule in substance, be withdrawn for the following reasons:

  • The absence of any of the positive indicators with respect to a particular transaction would seemingly create a presumption against approval of that business combination. If the OCC intended some other implication or result, the proposal’s absence of any explanation creates confusion for firms considering a strategic transaction, running counter to the stated objective of transparency. Moreover, as discussed in this letter, a number of these positive indicators establish metrics and other standards that depart from precedent, statutory standards and sound policy.
  • The presence of any of the “negative indicators” (including characteristics that by their nature cannot realistically be “addressed or remediated,”[7] such as being a subsidiary of a G-SIB) would seemingly be conclusive as to disapproval. At the very least, the presumption against approval would be so unlikely to be rebutted that the transaction would never be attempted in the first place. These negative standards depart from precedent, statutory standards and sound policy.
  • The costs of delay and risk of eventual denial of an application for both acquirers and targets are so high that they would be unlikely to proceed with a transaction even if there were only a presumption against approval under this indicator framework. Merger policy should not be established through regulatory ambiguity and uncertainty.

To read the full comment letter, please click here, or click on the download button below.


[1] BPI is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

[2] OCC, Notice of Proposed Rulemaking: Business Combinations under the Bank Merger Act, 89 Fed. Reg. 10010 (Feb. 13, 2024).

[3] See id. at 10010 (stating that the OCC is inviting comment on a proposed rule to “increase the transparency of the standards that apply to the agency’s review of business combinations”).

[4] Pub. L. No. 86-463, 74 Stat. 129, 129 (1960); 12 U.S.C. § 1828(c) (as amended).

[5] What Should the U.S. Banking System Look Like? Diverse, Dynamic, and Balanced, University of Michigan (Jan. 29, 2024) (the “January 29 Speech”) at 15, https://www.occ.gov/news- issuances/speeches/2024/pub-speech-2024-6.pdf

[6] 89 Fed. Reg. 10010, 10016.

[7] Id.