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4000 - Advisory Opinions

FDIC May Not Take Action for Violation of Insured Branch Closing Notice Required by Section 228 of FDICIA Where Terms of Present ATM Lease Make Compliance Impossible


March 19, 1992

Roger A. Hood, Assistant General Counsel

Your February 18, 1992 letter to the FDIC's Chairman, William Taylor, concerning the notice requirements for a branch closing, has been forwarded to me for response. As you know, these requirements are set forth in section 228 of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA ").

In your letter to Chairman Taylor, you write that you seek an exception to the branch closing notice requirements when the lease for a bank's ATM authorizes the bank's landlord to give the bank such short notice to remove its ATM that it is impossible for the bank to comply with section 228. This exception would presumably apply only to present leases, since you note that "[o]bviously, future leases can provide for the required notice time."

Because of the broad language of FDICIA, and the FDIC's long-held interpretation that an ATM qualifies as a branch, section 228 is triggered when an ATM is closed by the institution which owns, or is the sole lessee of, that ATM. Thus, section 228's notice requirements would apply to the situation you describe. However, the FDIC's Division of Supervision might choose not to take any action against such a violation, at least where present leases make the required notice an impossibility.

For this reason, I am forwarding your letter to Jesse G. Snyder, Assistant Director of the Division of Supervision's Office of Supervision and Applications, for his decision.

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