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4000 - Advisory Opinions

Applying a Single Real Estate Lending Policy to Two Closely Affiliated Institutions


October 25, 1993

Martha L. Coulter, Counsel

Your letter of September 30, 1993, to James Leitner of the FDIC has been referred to my office for response. The letter seeks confirmation of a September 16, 1993, telephone conversation with Mr. Leitner.

In the letter, you indicate that [BANK Z] would like to have a single real estate lending policy that would apply to two closely affiliated institutions, one a state nonmember bank and the other a federal savings bank. You have requested confirmation that the FDIC would not object to this approach.

As a general matter, I do not perceive a problem with the concept of two closely affiliated institutions having substantially similar real estate lending policies, either in the form of separate documents or in a single document, provided that the document(s) clearly distinguish between the institutions as needed in order to comply with the legal requirements applicable to the respective institutions. As you acknowledge; approval by the board of directors of each institution would be necessary.

Your letter suggests that the policy would need to note only a few differences between the two institutions. However, you should be careful to ensure that differences not only with regard to charter type but also to other characteristics are reflected in the policy. For example, the uniform real estate lending standards set forth in Part 365 of the FDIC's regulations, 12 C.F.R. 365, require that the written policy adopted by each institution "[b]e appropriate to the size of the institution and the nature and scope of its operations".

I trust this letter is responsive to your request.

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