USA Law and Practice Contributed by: Edward P. O’Keefe, Neil T. Bloomfield, John A. Stoker and Kathryn (Kate) G. Wellman, Moore & Van Allen, PLLC
required for a BHC to either acquire a subsidiary bank, more than 5% of a class of a bank’s voting securities, or all, or substantially all, of a bank’s assets by one of its non-bank subsidiaries. The agencies evaluate several factors in review - ing the notice, including any public comments on the transaction, competitive impacts, and the financial stability of the bank, as well as the inter - est of depositors, the deposit insurance fund, and the public. Unless otherwise provided by the agency, a person deemed to have control due to owner - ship of more than 10% but less than 25% of the bank’s voting securities would be required to file another notice if their ownership interests later increase to 25% or more, but subsequent increases in ownership beyond that point would not be subject to additional filing requirements under the CBCA. The review period is generally 60 days but may be extended. The agencies may impose con - ditions on an acquiror, such as not materially changing the bank’s business or committing to providing capital and liquidity support to the bank. In the event of an adverse decision, the person may appeal the decision. State-chartered Banks If the target bank is a state-chartered bank, the laws of the applicable chartering state should also be considered for potential change in con - trol filing requirements. 4. Governance 4.1 Corporate Governance Requirements Federal bank regulators have established stand - ards for the safe and sound operation of a bank.
Banks are expected to have internal operational and management systems and capabilities that are appropriate for the bank’s size, complexity, and risk profile, including for: • internal controls and information systems; • audit systems;
• loan documentation practices; • credit underwriting practices; • interest rate exposure; • asset growth practices; • asset quality practices; and • earnings practices.
The agencies have also set standards for infor - mation security practices and to prevent exces - sive compensation. The agencies have not established safety and soundness standards for diversity and inclusion. The OCC has also established guidelines for risk management for national banks with at least USD50 billion of total assets. The guidelines set heightened standards for the establishment of: • a framework for the management of risk; • the roles and responsibilities of risk-creating units at the bank, independent risk manage - ment, and audit; • strategic plans, risk appetites, and concentra - tion limits; and • talent and compensation management pro - grammes. The guidelines also set standards for the role of the bank’s board of directors with respect to risk management. At the BHC level, the Federal Reserve Board requires each BHC with at least USD50 billion or more of total assets to have a global risk man - agement framework establishing policies and
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