Related Organizations

Transactions with Insured and Uninsured Bank Affiliates

Regulation W provides that a bank’s covered transactions with an insured bank affiliate may be eligible for certain exemptions from the restrictions of section 23A and Regulation W, such as the Bank Merger Act ("BMA") and sister-bank exemptions. However, a bank’s transactions with an uninsured bank affiliate do not qualify for most exemptions from section 23A and thus are generally subject to all of section 23A’s restrictions, unless the uninsured bank is a subsidiary of the bank and is not controlled by an affiliate of the bank that is not an insured depository institution.

With respect to section 23B, Regulation W provides that insured banks are not considered affiliates at all, and thus transactions by a bank with an insured depository institution are not covered by section 23B. Uninsured sister depository institutions, however, are treated as affiliates subject to the arm’s-length standard and other applicable restrictions of section 23B. As is the case under 23A, however, a bank’s transactions with a subsidiary uninsured bank are generally exempt from section 23B.

Exemptions from sections 23A and 23B are discussed in more detail below; however, banks considering engaging in affiliate transactions may wish to consult with the OCC in advance because of the complexity of the exemptions.

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