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4000 - Advisory Opinions


Transactions Subject to Approval by OTS at Holding Company Level Under Section 10 of HOLA or Section 3 of BHCA Do Not Require Separate Filing with FDIC Under CBCA

FDIC--93--15

February 25, 1993

Sandra Comenetz, Senior Attorney

This responds to your January 29, 1993 letter in which you seek confirmation of your contention that the Change in Bank Control Act ("CBCA"), 12 U.S.C. 1817(j), does not apply to certain aspects of the proposed restructuring of *** ("Bank").

As you present them, the essential facts are as follows. Bank, which is a wholly owned subsidiary of [Holding Company], is a federal savings bank the accounts of which are insured by the Savings Association Insurance Fund. Bank wholly owns [Savings Bank], a state-chartered savings bank, the accounts of which are insured by the Bank Insurance Fund. Pursuant to section 10(1) of the Home Owners' Loan Act ("HOLA"), 12 U.S.C. 1467a(1), [Savings Bank] has elected to be treated as a savings association for the purposes of section 10(1). Bank has proposed to enter into a restructuring, by the terms of which several insurance companies which are holders of certain of Bank's capital notes ("Noteholders") will exchange their notes for equity securities. The question is whether Noteholders must seek confirmation from the FDIC that the restructuring will not result in an indirect change in control of [Savings Bank].

Bank, by virtue of its ownership of [Savings Bank], is treated by the Office of Thrift Supervision ("OTS") as a savings and loan holding company under section 10 of the HOLA (the Savings and Loan Holding Company Act), 12 U.S.C. 1467a, as well as a savings association. OTS evaluates transactions in which a company is involved in a potential change in control of a savings association under section 10 of the HOLA and OTS's Acquisition of Control of Savings Associations Regulations ("Control Regulations"), 12 C.F.R. Part 574a. When individuals are involved in such a potential change in control, OTS evaluates the transactions under the CBCA and the Control Regulations. The Control Regulations implement both section 10 of the HOLA and the CBCA. OTS has reviewed the proposed restructuring and determined that the Noteholders will not be deemed to have acquired control of Bank or [Savings Bank] under section 10 of the HOLA or the Control Regulations. Letter to *** Counsel to Noteholders, from Carolyn Lieberman, Acting Chief Counsel, OTS (Feb. 16, 1993).

In light of OTS's review of the restructuring, you contend that it is unnecessary for the FDIC to "revisit" the OTS change in control determination concerning [Savings Bank], because CBCA exempts "transactions subject to section 1467a". You argue that Congress intended to avoid duplicative review of changes in control when it exempted transactions that are subject to approval at the holding company level under either section 10 of the HOLA or section 3 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1842). See 12 U.S.C. 1817(j)(17); 12 C.F.R. 303.4(c)(4).

We agree with your analysis. Accordingly, we confirm that because the restructuring is subject to approval under section 1467a, we will not require a separate filing under the CBCA regarding the affect of the restructuring on [Savings Bank].

The conclusion expressed herein is based on the representations you have made and is limited strictly to the facts and issues discussed. This conclusion should not be interpreted as an indication of our views on any other issue that may arise from the described transaction.


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