Alert July 26, 2011

FRB Issues SR Letter Related to Savings and Loan Holding Company Deregistration

The FRB issued a Supervision and Regulation Letter (the “SR Letter”) explaining the procedure for deregistration as a savings and loan holding company (“SLHC”) for companies seeking to avail themselves of a change made by Section 604(i) of the Dodd-Frank Act. Section 604(i) amended the definition of SLHC in Section 10 of the Home Owners’ Loan Act to exclude a company that controls a savings association that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956, as amended. The SR Letter states that, as of July 22, 2011, an SLHC that qualifies for this exclusion may submit a request to the FRB to deregister as an SLHC. All other deregistration requests (such as those resulting from divestiture of the SLHC’s savings association subsidiary) should be directed to the appropriate Federal Reserve Bank. An SLHC seeking deregistration must affirm that its sole savings association’s activities meet the following requirements:

  • all or substantially all of the deposits of such institution are in trust funds and are received in a bona fide fiduciary capacity;
  • no deposits of such institution which are insured by the FDIC are offered or marketed by or through an affiliate of such institution;
  • such institution does not accept demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others or make commercial loans;
  • such institution does not obtain payment or payment-related services from any Federal Reserve Bank, including any service referred to in 12 U.S.C. § 248a; or exercise discount or borrowing privileges pursuant to 12 U.S.C. § 467(b)(7).

The SR letter also states that, in reviewing a request to deregister, the FRB will obtain a copy of the institution’s most recent examination report, will consult with the institution’s primary regulator, and may request other additional information in order to verify that the company satisfies the statutory requirements in order to qualify for the exclusion. The SR Letter indicates that the FRB will formally acknowledge and act on a deregistration request.