The Treasury Department’s Office of the Comptroller of the Currency (OCC) proposed eliminating expedited or streamlined reviews of mergers for national banks and federal savings associations.

In a notice of proposed rulemaking (NPRM) issued Monday, the OCC suggested eliminating the agency’s current policy that allows mergers to be approved on the 15th day after the close of the comment period, unless the OCC takes action to remove the filing from expedited processing.

Acting Comptroller of the Currency Michael Hsu, in a speech delivered Monday at the University of Michigan, explained the move reflects the OCC’s view “that bank mergers are significant corporate transactions that require the OCC to make a decision.”

The OCC also proposed to remove its streamlined business combination application, instead opting that all mergers use the Interagency Bank Merger Act application.

The agency will accept public comments on the NPRM for 60 days after its publication in the Federal Register.

The NPRM also provided several areas of additional guidance to stakeholders around the OCC’s review of applications, according to a press release.

The NPRM laid out general principles that will guide the OCC’s review of applications under the Bank Merger Act, “including indicators for applications likely consistent with approval and applications that raise supervisory or regulatory concerns,” the OCC said in the release.

Among the indicators the OCC will consider, according to the NPRM, are:

  • The acquiring bank’s size and financial condition;
  • Its management, compliance, and Community Reinvestment Act (CRA) ratings;
  • The effectiveness of its Bank Secrecy Act (BSA) and anti-money laundering (AML) programs;
  • Whether it has any issues with fair lending;
  • Attributes of the target’s size and ratings;
  • Whether there are competition concerns; and
  • The absence of significant CRA or consumer lending concerns.

The OCC said it would not approve a merger if certain features and indicators raise supervisory or regulatory concerns, issues which would have to be addressed before a merger would be approved.

Those issues include a bank:

  • With a CRA rating of “needs to improve” or “substantial noncompliance”;
  • With compliance or management ratings of three or worse;
  • That is a global, systemically important banking organization or a subsidiary of one;
  • That has open or pending BSA/AML enforcement or fair lending actions, including referrals or notifications to other agencies;
  • That has failed to adopt, implement, and adhere to all the corrective actions required by a formal enforcement action in a timely manner; or
  • That has had multiple enforcement actions against the acquirer executed or outstanding during a three-year period.

The proposed policy statement also articulated the factors the OCC would consider in assessing financial stability for bank combination applications, including whether the transaction would pose a risk to the stability of the U.S. banking system.

In his speech, Hsu said the OCC needs to “develop modes of analysis for banking competition that go beyond retail deposits as a proxy for market power” and that the agency should “formulate a new framework for assessing competition that reflects the current state of the banking industry.”