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    US Agencies Update Management Interlock Rules Under DIMIA

    October 10, 2019

    US Agencies (FDIC, FED, and OCC) issued a final rule that increases the thresholds in the major assets prohibition for management interlocks for purposes of the Depository Institution Management Interlocks Act (DIMIA). The updates provide relief for community banks that have USD 10 billion or less in total assets and remain unchanged from the proposal announced in December 2018. The final rule becomes effective on October 10, 2019.

    Prior to this final rule, a management official of a depository organization (or any affiliate of such organization) with total assets exceeding USD 2.5 billion could not serve as a management official of an unaffiliated depository organization (or any affiliate of such organization) with total assets exceeding USD 1.5 billion without seeking an exemption. The final rule increases both thresholds to USD 10 billion to account for changes in the United States banking market since the current thresholds were established in 1996. By increasing the major assets prohibition thresholds, the final rule reduces the number of depository organizations subject to the major assets prohibition. This will reduce burden by relieving depository organizations below the increased thresholds from having to ask the agencies for exemptions from the major assets prohibition.

    The agencies anticipate that raising the asset thresholds will assist small depository organizations in finding qualified directors by eliminating the need to file requests for exemptions from the major assets prohibition. Management officials will generally remain prohibited from serving with multiple depository organizations that are above the new thresholds, thus limiting the potential risk of anti-competitive conduct at larger institutions.

     

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    Effective Date: October 10, 2019

    Keywords: Americas, US, Banking, DIMIA, Management Interlock Rules, Asset Threshold, Operational Risk, US Agencies

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