Academic journal article ABA Banking Journal

Revised Entrance, Exit Fees Proposed

Academic journal article ABA Banking Journal

Revised Entrance, Exit Fees Proposed

Article excerpt

Acquirors of thrifts take note: Comments are due to FDIC by May 21 on the schedule of fees for entering and exiting deposit insurance funds run by the agency.

The document the FDIC issued is an interim rule. It became effective on March 21. However, it is subject to revision after comments have been considered. FDIC structured the proposal this way to permit thrift acquisitions to proceed without delay.

The changes of most interest to bankers cover transfers of insured deposits from the Savings Association Insurance Fund to the Bank Insurance Fund. This includes transfers accomplished by charter conversions; mergers; and transfers of insured deposits from a SAIF member to a BIF member. (Such moves are subject to FDIC approval under a five-year moratorium contained in FIRREA that includes numerous exceptions.)

Key points for bankers:

(1) Insured deposit transfers-transactions in which an acquiror becomes FDIC's paying agent in anticipation of holding on to the accounts involved-will be covered by exit and entrance fee requirements. However, acquirors will only be liable for these fees to the extent they have paid FDIC a premium for the deposits. In other words, the premium paid covers the fees-no other expenditure is required.

(2) The exit fee for conversions from SAIF to BIF will be 90 basis points of the deposits being transferred.

For transfers involving healthy thrifts, the deposit base will consist of the total deposit dollars being moved. For cases involving resolutions of insolvent thrifts, a "retained deposit base" will be calculated by FDIC. This base, to be included in Resolution Trust Corp. …

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