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4000 - Advisory Opinions

Notification Requirements for Change in Ownership or Control of a Financial Institution


February 19, 1991

Walter P. Doyle, Counsel

This responds to your letter of January 22, 1991 pertaining to the notification requirements for changes in ownership or control of a financial institution.

Under the FDIC's regulations, when there is a proposed acquisition of control of a financial institution the FDIC (or other appropriate federal banking agency) must publish the name of the institution to be acquired and the name of each person who has proposed to acquire the institution. Also, the appropriate federal banking agency usually solicits public comment on the proposed acquisition, especially from persons in the geographic area where the institution is located. However, if the safety or soundness of the institution would be threatened by such disclosure or solicitation, these notification procedures may be eliminated.

Generally, in the case of a merger or consolidation of a financial institution, notice to depositors is required whenever the insured status of deposit liabilities is voluntarily terminated and the deposits are not assumed. The notice is given in a manner and at a time that the FDIC deems appropriate. Furthermore, the FDIC may require the institution to take other steps that it considers necessary for the protection of depositors.

It is standard practice for an acquiring financial institution to notify the borrowers of the acquired financial institution of any information that may be necessary to preserve the debtor-creditor relationship. For example, borrowers would be notified of a change in address of the corporate office or a change in payment procedures. However, notice may not be required when there are only minor changes in business practices and there is little or no effect on the business relationship between the new institution and its borrowers.

I hope this information is helpful to you. Should you have additional questions, please feel free to contact us.

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