(a) Notice by the Board. If the Board finds that a financial holding
company controls any depository institution that is not well capitalized
or well managed, the Board will notify the company in writing that
it is not in compliance with the applicable requirement(s) for a financial
holding company and identify the area(s) of noncompliance. The Board
may provide this notice at any time before or after receiving notice
from the financial holding company under paragraph (b) of this section.
(b) Notification by a
financial holding company required.
(1) Notice to
Board. A financial holding company must notify the Board in writing
within 15 calendar days of becoming aware that any depository institution
controlled by the company has ceased to be well capitalized or well
managed. This notification must identify the depository institution
involved and the area(s) of noncompliance.
(2) Triggering
events for notice to the Board.
(i) Well capitalized. A company becomes aware
that a depository institution it controls is no longer well capitalized
upon the occurrence of any material event that would change the category
assigned to the institution for purposes of section 38 of the Federal
Deposit Insurance Act (12 USC 1831o). See 12 CFR 6.3(b)-(c), 208.42(b)-(c),
and 325.102(b)-(c).
(ii) Well managed. A company becomes
aware that a depository institution it controls is no longer well
managed at the time the depository institution receives written notice from
the appropriate federal or state banking agency that either its composite
rating or its rating for management is not at least satisfactory.
4-056.21
(c) Execution
of agreement acceptable to the Board.
(1) Agreement
required; time period. Within 45 days after receiving a notice
from the Board under paragraph (a) of this section, the company must
execute an agreement acceptable to the Board to comply with all applicable
capital and management requirements.
(2) Extension
of time for executing agreement. Upon request by a company, the
Board may extend the 45-day period under paragraph (c)(1) of this
section if the Board determines that granting additional time is appropriate
under the circumstances. A request by a company for additional time
must include an explanation of why an extension is necessary.
(3) Agreement requirements. An agreement required by paragraph (c)(1)
of this section to correct a capital or management deficiency must—
(i) explain the specific actions that the company will take to correct
all areas of noncompliance;
(ii) provide a schedule within which
each action will be taken;
(iii) provide any other information
that the Board may require; and
(iv) be acceptable to the Board.
4-056.22
(d) Limitations
during period of noncompliance. Until the Board determines that
a company has corrected the conditions described in a notice under
paragraph (a) of this section—
(1) the Board may impose any limitations
or conditions on the conduct or activities of the company or any of
its affiliates as the Board finds to be appropriate and consistent
with the purposes of the BHC Act; and
(2) the company and its affiliates may
not commence any additional activity or acquire control or shares
of any company under section 4(k) of the BHC Act without prior approval
from the Board.
4-056.23
(e) Consequences of failure to correct conditions
within 180 days.
(1) Divestiture
of depository institutions. If a company does not correct the
conditions described in a notice under paragraph (a) of this section
within 180 days of receipt of the notice or such additional time as
the Board may permit, the Board may order the company to divest ownership
or control of any depository institution owned or controlled by the
company. Such divestiture must be done in accordance with the terms
and conditions established by the Board.
(2) Alternative
method of complying with a divestiture order. A company may comply
with an order issued under paragraph (e)(1) of this section by ceasing
to engage (both directly and through any subsidiary that is not a
depository institution or a subsidiary of a depository institution)
in any activity that may be conducted only under section 4(k), (n),
or (o) of the BHC Act. The termination of activities must be completed
within the time period referred to in paragraph (e)(1) of this section
and in accordance with the terms and conditions acceptable to the
Board.
(f) Consultation with other agencies. In taking
any action under this section, the Board will consult with the relevant
federal and state regulatory authorities.
