OCC BULLETIN 2012-39
Subject: Conversions of Depository Institutions
Date: November 26, 2012
To: Chief Executive Officers of National Banks, Federal Savings Associations, Federal Branches and Agencies, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Interagency Statement on Section 612 of the Dodd-Frank Act: Restrictions on Conversions of Troubled Banks
On November 26, 2012, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies), in conjunction with the Conference of State Bank Supervisors, issued the attached “Interagency Statement on Section 612 of the Dodd–Frank Act: Restrictions on Conversions of Troubled Banks” (statement).
Section 612 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd–Frank Act) imposes restrictions on conversions of certain national banks or federal savings associations to state-chartered institutions and on conversions of certain state-chartered banks or savings associations to national banks or federal savings associations (collectively, insured depository institutions). The agencies issued the statement to explain the requirements of section 612 in the processes through which banks or savings associations apply to convert their charters. Insured depository institutions should consider the statement in connection with the 2009 Federal Financial Institutions Examination Council “Statement on Regulatory Conversions,” which covers a broader range of circumstances than section 612 and remains in effect. Transactions within the statutory coverage of section 612, however, must comply with the provisions and requirements of section 612.
The statement describes the general prohibition on charter conversions by certain insured depository institutions. This prohibition occurs when the institution is subject to a cease-and-desist order or other formal enforcement action issued by, or a memorandum of understanding entered into with, its current federal banking agency or state bank supervisor concerning a significant supervisory matter. It details also the circumstances under which an institution may be eligible for an exception to the conversion prohibition. The agencies expect that such exceptions will be rare and generally will occur only when an insured depository institution has already largely addressed the matters in the enforcement action or when circumstances have changed substantially.
As addressed in the statement, section 612 requires an institution to provide a copy of its conversion application to the current and prospective federal banking agencies, regardless of whether the conversion is subject to the prohibition. Such notification will enable the agencies to identify instances when a proposed conversion warrants additional supervisory review. In such instances, the agencies intend to consult and share information as appropriate.
Please direct questions regarding this bulletin to your supervisory office or the Director for District Licensing at the appropriate district office.
John C. Lyons Jr.