Enter Search TextSubmitSearch Advanced Search     Home     Deposit Insurance     Consumer Protection     Industry Analysis     Regulations & Examinations     Asset Sales     News & Events     About FDIC

		Home > Regulation & Examinations > Laws & Regulations > FDIC Law, Regulations, Related Acts

FDIC Law, Regulations, Related Acts

[Main Tabs]     [Table of Contents - 4000]     [Index]     [Previous Page]     [Next Page]     [Search] 4000 - Advisory Opinions Prior Notification under Section 7(j) of the FDI Act Not Necessary for Bank's Transfer of Stock FDIC-83-12 August 25, 1983 Roger A. Hood, Assistant General Counsel   This responds to your July 15 letter to Katharine Haygood regarding the applicability of the Change in Bank Control Act of 1978 to the transfer of ownership of * * * (the "Bank") from one wholly-owned subsidiary of * * * to another. {{4-28-89 p.4130}}   At present, approximately 98 percent of the outstanding stock of the Bank is held by * * *, a wholly-owned subsidiary of * * *. * * * was created solely for the purpose of holding the Bank's stock. You state that * * * now proposes to create a wholly-owned subsidiary under New Jersey law (* * *) which will acquire 100 percent of the shares (excluding directors' qualifying shares) of the Bank in exchange for shares of * * *. The effect of the transaction will be to eliminate minority shareholders, presently holding 1.38 percent of the Bank's outstanding shares, and to shift ownership of the Bank from one wholly-owned subsidiary of * * * to another wholly-owned subsidiary. Neither of these subsidiaries engages in nor will engage in any activity other than holding shares of the Bank.   Section 7(j) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)), as amended by the Change in Bank Control Act of 1978, requires prior notification to FDIC prior to a transfer of voting stock of an insured State nonmember bank which results in a change of control of the bank within the meaning of the Act. A transfer of more than 98 percent of the stock of the Bank from one corporation to another corporation would come within the literal meaning of section 7(j). However, under the precise facts presented here, we do not believe that any useful purpose would be served in requiring prior notification of the proposed transaction under section 7(j).   At the time * * * acquired control of the Bank (then called * * *), a notification of change of control was filed with the FDIC. In assessing that notification, * * *, along with its wholly-owned subsidiary, * * *, was recognized as the acquiring party and the factors to be considered by FDIC in assessing the notification were applied accordingly. Whether the voting stock of the Bank is held by * * * or * * *, the effective control of the Bank is in * * * and the transfer of direct control from one wholly-owned subsidiary to another amounts more to a corporate reorganization than a change of effective control.   For these reasons, we have determined that the proposed transfer of the stock of the Bank from * * * to * * * will not require the prior notification provided for in section 7(j) of the Federal Deposit Insurance Act.   We emphasize that this determination is based solely on the facts of this case, i.e. both the current holder of bank stock and the proposed holder are wholly-owned subsidiaries of an entity which was the parent organization of the present holder when control was first acquired (or when the bank first became insured); all, or substantially all, of the voting stock of the bank is involved in the transaction; and each of the subsidiaries engaged in holding the bank stock are engaged solely in that function and are not engaged in other business activity. [Main Tabs]     [Table of Contents - 4000]     [Index]     [Previous Page]     [Next Page]     [Search]

regs@fdic.gov

Home    Contact Us    Search    Help    SiteMap    Forms Freedom of Information Act (FOIA) Service Center    Website Policies    USA.gov

FDIC Office of Inspector General