Late last week, the FDIC released new Q&As related to its Statement of Policy on Qualifications for Failed Bank Acquisitions ("Statement of Policy"). The Statement of Policy was issued on August 26, 2009 in order to provide guidance to investors interested in acquiring the assets and liabilities of failed banks and thrifts. The new Q&As supplement Q&As the FDIC first published this past January in three principal areas and include, among other things, the following clarifications:
- Investments in existing bank holding companies and recapitalizations. The Statement of Policy excludes “investors in partnerships or similar ventures with bank or thrift holding companies or in such holding companies (excluding shell holding companies) where the holding company has a strong majority interest in the resulting bank or thrift and an established record for successful operation of insured banks or thrifts." The new Q&As clarify that pre-existing stockholders of an existing holding company, which are required to own at least two-thirds of the equity for the holding company to have a "strong majority interest" in the failed bank and to avoid application of the Statement of Policy to new private investors, are not required to have held their equity for any minimum time period. Rather, the FDIC will take into consideration" whether a "significant portion" of the total equity or voting shares held by pre-existing investors was "recently acquired" or was "part of a recapitalization" of the existing institution. In addition, subject to certain limitations, recapitalizations of existing institutions "are not subject to the Statement of Policy."
- De minimis investors. The Statement of Policy also excludes “any investor with 5 percent or less of the total voting power of an acquired depository institution or its bank or thrift holding company provided there is no evidence of concerted action among these investors.” However, FDIC will presume concerted action among such investors who own less than 5% of voting stock, if the aggregate, they hold more than two-thirds of the total voting power, thereby subjecting them to the Statement of Policy. The new Q&As clarify that the exemption for less than 5% investors is subject to a minimum of one-third ownership by other investors, an "anchor group" who must be bound by the Statement of Policy. In addition, the anchor group can satisfy this one-third test with either voting or non-voting shares, and the one-third ownership test "only needs to be met at the time of the failed bank acquisition."
- Secrecy law jurisdiction issues. The FDIC will not make determinations as to whether an investor, operating through a US subsidiary, but whose parent company operates through or is domiciled in "Secrecy Law Jurisdictions," is in compliance with all relevant tax laws. The FDIC will consider those investors to be in compliance with the Statement of Policy as long as each offshore investor makes its investment in the bank or the bank or thrift holding company through at least one wholly-owned U.S subsidiary and the offshore investor agrees to maintain in the U.S. and at the offices of its subsidiary or subsidiaries, its business books and records (or duplicates), a current list of all investors in the offshore investor, and further agrees to provide such books and records to the FDIC upon request.