What ACME National Bank Must Do to Obtain Smith Brothers Insurance Agency
Question
ACME national bank plans to acquire Smith Brothers insurance agency and make it an operating subsidiary of the bank. ACME is considered a well-managed and adequately capitalized bank. What regulatory-related action must ACME take to obtain the agency?
Answers
Explanations
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A. B. C. D.D
The acquisition of a regulated entity, such as an insurance agency, by a bank is subject to regulatory oversight by the Office of the Comptroller of the Currency (OCC), the primary federal regulator of national banks. In this scenario, ACME National Bank plans to acquire Smith Brothers insurance agency and make it an operating subsidiary of the bank.
The correct answer to the question is D. Notify the OCC before completing the sale.
Before proceeding with the acquisition, ACME National Bank must notify the OCC of its intent to acquire Smith Brothers insurance agency. The bank is required to submit an application to the OCC for prior approval of the acquisition, pursuant to 12 CFR 5.33. The application must include information such as the terms of the proposed acquisition, the source of funds, the impact of the acquisition on the bank's capital and management, and the bank's plans for integrating the insurance agency into its operations.
The OCC has 60 days from the receipt of a complete application to act on the request, although this period may be extended for up to an additional 30 days. During this time, the OCC will evaluate the application to determine whether the proposed acquisition is consistent with the bank's safe and sound operation and whether it complies with applicable laws and regulations.
If the OCC approves the application, the bank may proceed with the acquisition subject to any conditions or limitations imposed by the OCC. If the OCC denies the application, the bank may not proceed with the acquisition.
It is important to note that failure to notify the OCC of the proposed acquisition or proceeding with the acquisition prior to receiving approval could result in significant regulatory consequences, including fines and other enforcement actions.
In summary, when a bank plans to acquire a regulated entity such as an insurance agency, it must notify the OCC and seek prior approval of the acquisition by submitting an application that includes information about the proposed acquisition, the source of funds, and plans for integrating the entity into the bank's operations. The OCC will evaluate the application to determine whether the acquisition is consistent with the bank's safe and sound operation and whether it complies with applicable laws and regulations.
