Bank Holding Company - Section 3 Waiver Request/Section 4 Thrift Acquisition Waiver Request

Section 225.12(d) of Regulation Y (Subpart B - Acquisition of Bank Securities or Assets)  

Who must file?

The Board’s regulations permit the waiver of applications otherwise required by the Bank Holding Company Act of 1956 (“BHC Act”) in certain circumstances to avoid duplicative review of the same transaction by federal banking agencies.  Section 225.12(d) of the Board’s Regulation Y identifies certain bank holding company related transactions and the circumstances under which the application normally required by the BHC Act may be waived.  In some cases, an application by the holding company may be waived because the proposed transaction is also subject to approval by a federal banking regulator under section 18(c) of the Federal Deposit Insurance Act (Bank Merger Act or “BMA”) and meets certain other criteria.

Transactions that meet all of the requirements of sections 225.12(d)(1) and (3) of Regulation Y do not require Federal Reserve approval and are automatically exempt under law.  Therefore, the BHC involved is not required to file a waiver request.  Certain multi-step transactions that meet the requirements of section 225.12(d)(2), may qualify for a waiver of the application requirements under section 3 of the BHC Act.  A waiver is available under this provision only if the bank merger is simultaneous with the holding company merger or acquisition and the acquiring company does not hold or operate the target as a separate entity.  In addition, although section 225.12(d)(2) of Regulation Y does not apply specifically to transactions that involve a BHC acquiring control of a thrift, if such a proposal is consistent with the purposes of section 225.12(d)(2), a waiver request may be filed.  Filers are encouraged to consult the appropriate Reserve Bank for assistance in determining the applicability of waiver provisions, including those circumstances where the structure of the transaction does not conform with the waiver criteria in section 225.12(d)(2) but nonetheless may still qualify for a waiver if review of the bank holding company transaction would be duplicative of the review under the Bank Merger Act.   

For acquisition proposals not qualifying for one of the waiver criteria (or for organizations otherwise directed by the Federal Reserve to do so), a company must file an application for prior Federal Reserve approval under section 225.15 of Regulation Y.

Publication requirements - newspaper/Federal Register

No publication is required.

Required information

There is no standard form requirement for waiver requests under this section.  At least 10 days prior to a transaction described in section 225.12(d)(2) of Regulation Y, the acquiring BHC must provide to the Reserve Bank written notice of the transaction that contains a copy of the filing made to the appropriate federal banking agency under the BMA and a description of the holding company’s involvement in the transaction, including, at a minimum, the purchase price, and the funding source.

Processing time frames

Generally, a waiver request that conforms to all of the criteria in section 225.12(d)(2) of Regulation Y would be acted on within 10 days following receipt provided that sufficient time has passed since the filing of the BMA for the Reserve Bank to obtain the views of the primary regulator and Reserve Bank due diligence can be completed.  In other cases where certain information cannot be obtained from the requesting BHC or the other banking agencies or other issues are present that must be resolved, the waiver request can be submitted, but the 10-day prior notice period does not commence.  Reserve Bank staff will notify the filer in such instances.  The processing clock would start once the waiver is deemed complete and the Reserve Bank has all information necessary to act on the waiver.

Factors reviewed

A waiver cannot be granted in any case in which a section 3 application, if required, may not be approvable.  In particular, the Federal Reserve may require an application under this subpart if it determines that the merger or consolidation would have a significant adverse impact on the financial condition of the bank holding company, or otherwise requires approval under section 3 of the BHC Act. 

Consummation period

Proposals granted a waiver from the filing requirements of Section 3 of the Bank Holding Company Act may be consummated immediately, subject to the expiration of all other required waiting periods, including the Department of Justice waiting period associated with the BMA filing.